What Price E-books?

That’s been a question plaguing the industry since e-books really entered the picture. We all remember how the then-Big Six publishers threatened to pull their books from Amazon if Jeff Bezos and company didn’t raise prices above the $9.99 threshold. That went over like a lead balloon and the agency pricing model emerged along with Apple’s entry into the e-book market. Then along came the Department of Justice’s price fixing law suit against five of the Big Six, state lawsuits to match, settlements from most of the parties involved and finally the judge ruling that Apple was liable under the suit. Appeals are going on as are objections to the court appointed monitor.

But it hasn’t just been the publishers and retailers trying to figure out just exactly how to price e-books. Readers have been debating the issue ever since the first e-book hit the market. If you visit the Kindle boards on Amazon, or just about any other reader-related discussion board, you will find somewhere on it a debate about pricing. Some will never buy an e-book priced less than $2.99. To them, anything less means the e-book is of poor quality, usually in the editing or formatting variety, and not worth their money. Others won’t pay more than $4.99 for an e-book because they don’t see how it can cost more than that to produce the book. After all, there are no printing, warehousing or distribution costs for an e-book. The general consensus seems to be that an e-book has to be by a really favored author for most of us to pay more than $9.99 for it.

And the debate continues.

Last year, when Baen Books made an agreement with Amazon to sell their e-books, part of the agreement was that Baen would not undersell Amazon. That meant a restructuring of the Baen monthly e-book bundles and — gasp — an increase in price for newly released Baen e-books. I daresay most of us were thrilled with the fact that Baen now had access to a larger market for its e-books. Oh, we hated the fact that prices were going up — who doesn’t? — but we saw it as the price of doing business. After all, it had been years since Baen had increased the price of its e-books and now it was actually following the market trend.

There are still those who periodically whine about the changes. Most often that is because past monthly bundles (where you can buy all the e-books for that particular month at a discounted price) are no longer available once the new titles in the bundle go up for sale individually. Okay, I’m simplifying it slightly here, but that’s the gist of the deal with Amazon. The major component of the argument seems to be that there might be a bundle someone wants to buy and they forget to do so before the magic cut off date. Well, sorry, but that’s their problem. Baen has been kind enough to let us know what that date is. It also publishes the e-book schedule several months in advance so you can see what the bundles will be. Mark your calendars. Give up that extra latte and buy the damned bundle.

What started this rant anew — rant for me — was reading a post in a forum I follow asking why e-book prices aren’t lowered to match the price of used mass market paperbacks three years after the title first comes out in hardback. Well, you can imagine the mess created as my head exploded on that. Especially when you take into account the price the poster recommended was $3 (according to the poster, that is a penny for the book and then the average cost of shipping and handling).

I have problems with this idea on so many different levels. First is how this person equates an e-book with a used mmpb. Just in case there is someone out there who doesn’t know, an author gets absolutely nothing on the sale of a used book unless tat authors is actually the seller. There are no royalties. The sale isn’t reported to BookScan so it doesn’t help improve the author’s numbers. There are no rules or regulations on how to price a used book either.

Beyond that, where did this person come up with the idea that the average price for a used mmpb is a penny? Yes, there are a lot of used books listed on Amazon and elsewhere for that price. But if you look closer, those books are usually described as being in poor condition. I don’t know about you, but I don’t want a book that is falling apart — not unless it is a book I have to have for some reason and there is no other alternative.

But an e-book isn’t a used paperback. It isn’t rated by condition. Under current laws, you can’t resale an e-book either. So, when you buy an e-book, you are buying a NEW book for all intents and purposes. Just because you haven’t gotten around to buying it for several years after its initial release, that doesn’t mean it should automatically be discounted to a point where the author will get basically nothing out of it if he happens to be traditionally published and represented by an agent.

Let’s look at some hypothetical figures here (and remember, it is very early for me and I am math challenged, especially when I haven’t had but one cup of coffee.)

The e-book is sold for $3.00 under this proposed system. It is published by a legacy publisher and the author has an agent. Those are the parameters of out equation. Assuming Amazon then pays the publisher 70%, the publisher gets $2.10. Assuming the publisher doesn’t take out anything but their percentage of the sales price and pays the authors a whopping 25%, a check for 52 cents. Of that 52 cents, the author’s agent will get 15% or approximately 8 cents (again, all assuming my math is right). That leaves the author 44 cents out of the sale.

Oh, and that is assuming the author has already earned out his advance. If he hasn’t, this drop in price is almost guaranteed to prevent him from ever earning it out before the publisher writes the book off as out of print. Even then, the author has to fight to get his rights back.

But let’s take the poster’s idea one step further. Under his line of thought, if an author does manage to get his rights back to a title, that author should be limited to pricing a re-release of the book under his own imprint to $3.00. Why? Because the book has been out for three years or more already. So what is the impetus for an author to 1) fight to get their rights back and 2) take the time and effort to re-edit, have a new cover created, promote and format/convert the title for re-release? Especially when so many readers think a book priced that low isn’t of the same quality as an e-book priced even a dollar more.

The point is, e-book pricing is still a work on progress. I doubt prices will ever match those of used mmpb — at least I hope they never do. As an writer, I like to eat. As a reader, I like to support the writers whose work I buy and I’m willing to pay to do so. I want them to make enough money from their writing that it doesn’t become such a financial burden to write that they have to quit and take on a second or third job just to make their monthly bills.

But that’s me. I don’t judge an e-book by its price, although I am guilty of judging it by its cover. I use the preview function to see if the writing style is one I enjoy, if it has been well edited and if there are any formatting issues. I will pay as little as 99 cents and as much as $9.99. Anything over that and it has to be a book I need for research and can’t get in hard copy. The average price I pay for e-books is $6.99. But, again, that’s me and to each his own.

17 Comments

  1. Personally, I still prefer dead-tree books and only buy ebooks if the book is not available in a paper format. However, if I *were* to start buying ebooks instead, I would absolutely refuse to pay more for the ebook then I would pay for the full priced mass market paperback. I don’t have a problem with the authors making money, I do have a problem with paying more for something that has *less* production costs.

    1. I agree that once the paperback version of the title comes out, the e-book price should be no more than that costs. But the idea of arbitrarily dropping the price to the price of used books without taking into account the fact that authors don’t get royalties off the sale of those used books and without considering that they may not have yet earned out their royalties just rubbed me wrong.

      1. Totally agree! The author *deserves* to make money on the *normal* price of the book. While I do personally buy used books, I am well aware that authors do not receive royalties from those purchases, and generally reserve those purchases for books I can’t normally find otherwise. When I was a teenager, used books were perfect for me (libraries were good, but the selection was smaller and I like to keep my books).

  2. I generally won’t go below $2.99 unless it’s an author I know. I’m not a huge fan of the “$0.99 and see if they bite” club. A lack of faith in their work reflects in the pricing of self-pubbed authors. Granted, I also think they’re on some low-quality crack if they price a 250 pg book at $9.99… I guess for ebooks, there’s a Goldilocks zone that every buyer has that is individual to them.

    1. Jason, most of the e-books I buy that are priced below $2.99 are either short stories or they are promos for the first book in a series. Even then, I do check out the reviews and the preview of the book. And I agree with you about pricing the 250 pg book at $9.99. Of course, I feel the same way at pricing a 10 pg short story at $2.99 and calling it a novella – or a novel (and yes, I have seen that.) That’s why I tend to look at the the size of the file and the number of pages.

      1. I think the most I’ve ever spent on an ebook was $15 (eARC for Darkship Renegades). I try not to spend more than $4.99 for an ebook personally, unless I really must have the book (which is a rare occasion, but it happens).

  3. This is “off-topic” from “price of ebooks”, but one author (left un-named) wished that the price of his books including “pay back” for the amount of research he did in writing the book. IE if he did tons of research for Book A and very little research for Book B, then the price of Book A would be greater than the price for Book B.

    While I have some sympathy for authors wanting the “best price” for their work, I had to wonder how the accounting would work for his idea (especially if he was traditionally published).

    Oh, as a reader, I wouldn’t want to pay for his “research” if the story wasn’t worth it.

    1. I missed that one and it’s probably a good thing that I did. I know what I do for research when it comes to my books. Some books require more than others. The two I am currently working on will require quite a bit of different types of research. But that is my choice. I wouldn’t want to charge a reader for this part of my work any more than as I reader I’d want to pay for it. It’s not like we get the benefit of actually reading the research materials that go into the background of writing a book. In fact, if it is a novel, there is a very good chance, we won’t even know what reference sources the writer may have used. Research is part of the job. If you don’t want to do it on your own dime, so to speak, then write something that doesn’t require it.

      But that’s just me.

      1. Yeah, I didn’t want to “argue” with the author on that statement (I argued enough earlier in the discussion which started about ebook pricing). I probably should have suggested that the writer should have used the research costs when he filed his tax returns.

  4. While Ii love “free” and $.99 ebooks, I will pay up to $9.99 if the book or subject matter is intriguing enough. I am a big reader of samples to screen those books, though.

    1. I have found some good books by taking advantage of the free promos. More often than not, I’ve been burned by the 99 cent books but there have been a few exceptions. But, unless the book is really special, I won’t pay more than $9.99 for an e-book.

  5. Personally, I think that e-books should cost as much or more than a regular paper copy and the profits from those sales should go to the authors. The most important part of any book is the CONTENT. The creators of that content should benefit accordingly. Since there is a reduction in all the other costs associated with publishing, printing, distributing, and marketing a book, the PRICE COULD drop BUT I would be willing to pay the same amount or even MORE for the convenience of an E Book. If I can afford an e-reader, I can probably afford the regular price of a paper book. The convenience factor makes the book MORE Valuable to me. I don’t have to go to the library, I HAVE ONE in my POCKET! I don’t have to lug around a box of books; it fits in my POCKET! I don’t even have to GO to a bookstore! It’s in my POCKET!
    I would certainly pay more for all that convenience and accessability. For those who are truly unable to afford that cost, there are still public libraries, electronic lending systems, and of course discounts for students and/or seniors.
    My author friends who live without health insurance, among other things need and deserve the additional income. They make our lives so much richer than they would be without their wonderful gifts. In a just and equitable society, my favorite authors would live like royalty.
    JMO, thanks for asking!

    1. Thanks for the comment, Bridget. I wish authors did get a greater percentage of the sales price for all their books. I know publishers are in business to make money but all too many of them have fallen into the mindset of thinking of authors as nothing more than a bunch of interchangeable widgets. I even remember one publisher basically saying as much in an interview. They tend to forget that without the content their writers provide, there would be no books.

      I think we will see pricing and the royalty structure evolving as the industry adapts to new demands. It may be a bumpy road along the way but I’m hoping the surviving publishers learn that they need to form what are basically partnerships with authors and not the lord and serf relationship they seem to desire now.

  6. I have a simple means of pricing (i.e., what _I’m_ willing to pay). “1) How bad do I want it? 2) How good is the author? 3) Is it likely to provide that much worth of entertainment value?” I agree to pay $12.96(?) for L.E. Modessit’s newest book, “Rex, Regis (Kindle).” I *might* pay as much for the new David Weber in the Safehold series (in Kindle). I only have $52/month to spend, and most of it is already spoken for.
    My thinking is that $2.99-4.99 is about right, for _indie publishing_. Baen and others, still have to write off cover art, editing, etc., so I’ll pay them more. Yes, I know that Indie authors do to, but they pay it out of their royalties, and Amazon may yet drop their charges (30%, plus $0.15.MB).

    1. Walter, what you are forgetting is that a lot of publishers wind up taking those costs out of sales BEFORE the author ever sees a penny of royalties. Contracts are written so that royalties are paid only after the advance has been earned out and only after publisher costs have been recouped. So sure the author gets an upfront payment in the form of an advance from the publisher but they are still, in one form or fashion, paying for those expenses you so easily sign away to an indie’s royalties.

      The reality is, if I want to hire someone to edit my manuscript, it is going to cost me anywhere from $50 to several hundred dollars up front. Even if I design my own cover, I have to buy the rights to the cover elements if I can’t find appropriate artwork that isn’t under copyright restrictions. So anywhere from free to $20. Add in the cost of any programs I might have to buy to do the cover layout, etc. So, assuming I have expenses of even $100 for a new title, if I sell it at $2.99 on Amazon, I have to sell more than fifty copies before I start to see any profit.

      Add in the fact that there is a growing number of readers who won’t pay less than $4.99 for an e-book, whether it is indie or trad published, and the lower price is going to actually work against me. I like the $4.99 price point for indie and small press published e-books. At least for authors who don’t have name recognition. But, again, that’s me and each of us have our own price range we are willing to pay. That’s what makes this industry so “interesting” right now.

  7. One of the problems with “Traditional Publishing” is that real world companies don’t make any profits… Unless your accountants and managers are idiots, all the money they take in is spent on payroll, promotion, capital investment, dividends to the shareholders and other tax deductions.

    Under those circumstances it’s hard to get a handle on just what they are making off an book without an audit specifically targeting an individual title’s process.

    I’d MUCH rather buy e-publications where I know the author is getting their split of the pie…

    I’ve bought full priced titles that were just plain crap, and gotten amazing stories for free… but the middle of the road $5-$10 prices are pretty reasonable for a full length novel.

    We’re in the same world as the Music Industry where best selling albums are written off as not making a penny after the promotions, advances, complementary accommodations, transportation, expenses, concert venues, etc…

    Ending up with “The Artist(s)” not even having a bus ticket home when their popularity fails…

    As I see “Traditional” houses promoting authors who don’t write things I want to read, leverage an agenda I don’t approve of, and witness the emphasis on “literature” instead of readable content… I have less and less reason to enter a bookstore unless I’m looking for a back title at the Book Exchange or local works in our smaller shops scattered around the region…

  8. Like many, I wrestled with what I should charge for my e-books. I realize that my situation is rather unique as I was transitioning from “Free” to charging for my work. I decided that I would charge $2.99 for my books and have left it that way since the beginning — except for one book which should have been two — it’s 350k words and the Createspace version is the size of War and Peace. I admit that I charge what I do partly for my convenience — the royalty comes to just a tad more that $2/unit. My one large book is $3.99 and sales are my second worst of my novels — although there is an “adult language” caveat that may affect things, One irony is that I have a short short novel (29k words) priced at 0.99 — one reader complained that “a novella at the same price as a novel is always at a disadvantage in the ratings.” 99 cents is the lowest price you can sell an e-book for through Amazon for one thing 😀

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