The following is something I wrote as a comment on a TeleRead blog post, which was apparently a reblog, but I didn’t copy my comment to the original post. Instead I’m posting it here. Basically, it’s another article discussing how $2.99 is the “magical price point” for eBooks, and forecasting that all eBooks will eventually have to lower to that price, because … well, because that’s just how much the author is willing to pay, is why. Some eBooks are cheap, sometimes, therefore he’s never going to pay more than $2.99 for an eBook!
It’s all about value, he declares, and this idea is based on the premise that if an eBook will ever in its future be discounted, the full/original/list price was never an appropriate value. Which is ridiculous. Here is my response:
The whole discussion of eBook pricing is skewed by a very vocal minority who do not comprehend the foundations of the publishing industry’s economic model. First: One must realize, when trying to make sense of publishers’ attempts to price eBooks, that historically the majority of the profit comes from the sale of the hardcover release. There are plenty of people who have quite happily paid full price ($25-$35) for new books, and they are the ones who have turned publishing into an industry of note. Not you, oh vocal minority, oh ye who would (imagining that there may be a future sale) wait patiently for a lower price on the same book, wait to buy it until it reaches your “magic price point”. The most vocal of the “Cheap eBooks now! Cheap eBooks forever!” crowd seem to correspond to the same readers who would not only wait for the paperback, but the mass-market paperback, and often for the used paperback; for the biggest publishers, readers in these last two categories aren’t even their customers – mmpb is farmed out to companies which do just that (and know how to operate on the tiny margins), and used books, well, that’s another matter – something all large media companies are trying to wipe out in the shift to digital. Windowing has everything to do with selling full-value books to people willing to pay for quality ($30), then selling discounted books to people who value books less and are willing to wait ($15), then selling the scraps to the mmpb-producers ($7), who then sell the books to the people who value new books just a little more than the used-book buyers (who can be said to barely value books at all; $3). Thus: The fact that books are available at different price points at different times, that they go on sale, and that some customers are willing to wait until they’re paying what amounts to a nominal price (i.e.: paying in name only), is not a new (or eBooks-related) phenomenon. Likewise, the fact that publishers would like to continue to sell their books at something close to their full value to the readers willing to pay full price should not come as a shock or as an affront to those who have always stood as the least-valuable customers; when a publisher prices an eBook at $15, it isn’t about YOU – it’s about the people who have been gladly paying $15-$35 for books all along! They’re also buying $12-$15 eBooks quite happily, despite all the moaning from the other end of the price/value spectrum.
Is $2.99 the magic price for eBooks? Well, for a certain class of reader, the ones for whom mmpb and used were the first times they’d consider buying a book (magically quite near the same $3 price point), maybe. But not for everyone. Not for publishers on the first day of a book’s hardcover release. You $3 book buyers are not the market at that time; you’ll be the market later. Feel free to wait, as you always have. The publishers are not in business to serve you; they’re primarily in business to serve those willing to pay 10x more for the same story, and are willing to let you eat those customers’ scraps.
In addition, since this is my blog, I want to add, about my books:
I write, publish, and sell books. Paper books, audio books, and eBooks. I’ve tried a lot of price points over the years, for each medium. I’m in the midst of another pricing experiment, right now (as you may know), where I lower the prices of my books the more money they make, until they reach the minimum price I can sell them at and still make a couple bucks a copy; this scheme is based on the rantings of the vocal minority derided above! This pricing scheme is founded on the oft-repeated claim about the marginal-costs of producing eBooks being close-to-zero, so why aren’t eBooks close-to-free? The whole “there’s no paper, so what am I paying you for?” argument – the one which insists that the writing itself, the story or information contained therein has negligible (not even nominal) value. So several of my books (the ones which have “earned out” and paid for their initial costs of production) are priced at this floor – $2.99 for an eBook, $5-7 for paperbacks; that’s as low as I can go. (Especially considering I give all my books away, too.)
With my most recent two books, Sophia and Emily, I started the eBooks at $9.99 apiece (largely because of Amazon rules/rates), and I priced the hardcover release at $35. Within the first month, I sold more than enough hardcovers to cover all the upfront/fixed costs of production, and I dropped the price of the eBooks all the way to $2.99. Theoretically, if the “Cheap eBooks now!” crowd is correct, dropping the price should have increased my sales volume. Of course, as I expected (based on my experiences with this price experiment and several others over the years), they did not go up – they stopped. I’d say they stopped altogether, but since dropping the prices to $2.99, a single copy of one of the eBooks has sold.
$2.99 is not a “magic price” for eBooks.
I consistently get more sales of my higher priced books, and see a massive drop in sales whenever I drop the price, even temporarily. I announce all around the books will be $0.99, or $1.99, or $2.99, but only for a day, or a week, or a month, and that day/week/month will have fewer sales than those before and after it. People want something of value, and they’re willing to pay for it. When I put my books out there with a $2.99 price tag, it says “This book is cheap! This book can’t compete! This book isn’t worth your money, or your time!” and they go buy one of the $8.99-$14.99 eBooks which, at those prices, must be a better book.
At Phoenix Comicon, I was certainly trying to push the hardcover books, the paperback books, the things I could easily sell, in person for ready money – rather than the things that people would maybe get later. Rather than the things people could go get for free. Yet, there are a lot of young people at Comicon – people without a lot of financial means (yet), who were interested in my stories, but maybe didn’t have the cash to buy the limited-edition hardcover (or even a paperback). So I gave them my card and told them that if they really couldn’t afford to buy, they could go to my website and get the eBooks for free. Or go listen to my podcast, and hear the books for free. All unabridged, of course. At least two young people, people who knew they could just go get the same exact book, the same story, for free on my website, came back later in the weekend having scrounged together the cash, and bought the full-price hardcovers. People are willing to pay more for what they value. Yes, they can go get it for free, but the book is worth something to them, and they’d rather pay what it’s worth than simply get the best deal.
Probably I’ll cancel this pricing experiment, soon, and raise all my eBook prices, again. Having low prices doesn’t really seem to get me more sales. Price, as they say, is the last tool in the salesman’s bag of tricks. What gets me more sales is writing great stories, connecting with readers, and building relationships with their imaginations. People who love my books are happy to pay for them. To pay full price for them. Even to pay more than full price for them, and support them in other ways. All those people for whom $2.99 is a “magic price” are probably happier getting it for free, anyway.