Things to Consider When Pricing an eBook

The eBook is still a relatively new format and so there is still plenty of room for experimentation with eBook pricing. One of the benefits of the digital format is that there need not be any standard retail price. Prices can be changed at any time to remain competitive, promote the title, and take advantage of market trends. Beth Bacon outlines strategies for pricing an eBook in her article “7 Must-Consider Strategies for Ebook Pricing.”

One strategy is to charge extra for convenience. She suggests that immediate access may be worth something to consumers and thus worth a few dollars more. Instant gratification is something that appeals greatly to today’s consumers. Readers would likely be willing to pay a little more so that they can keep reading without the interruption of a trip to the store.

Another strategy involves raising the prices of an eBook based on the value of the book. Books by premium authors should be worth more than books by unknown authors. She argues that in print books, the price of the book is more often determined by the price of paper and the print costs rather than the value of the book. With eBooks, the cost remains the same, or close to the same, for all books. Creating a brand for an author, and charging more for that brand is a potential way to raise prices on eBooks. If a particular author is seen to be worth more than consumers will pay to read that author.

She addresses the possibility of marking books as free to gain market share. This is not always effective, especially when so many self-published authors are doing it, and it can also be seen to devalue the book; however, it does have the potential to generate sales if done correctly. For example, marking the first book of a series as free may result in sales for the next book in the series, as readers would be willingly to pay to find out what happens next. Setting an eBook as free is a worthwhile experiment that is only an option because of the freedoms and flexibility of digital publishing. Authors and retailers can experiment with prices with essentially no risk in order to find the “sweet spot” as Bacon calls it. It is possible to discover what the reader is willing to pay for what titles by experimenting with prices. This experimentation will increase sales and give the consumer the price they want, and hopefully one that both the author and publisher are happy with.

Another valuable suggestion is to price the newer eBooks higher than the older ones. When it comes to books, new is always better, and this proves true in digital publishing as well. In print books, if a reader wants to save money, that reader has to wait for the soft cover. This model can be carried over into the world of digital publishing. The reader who wants the book right away is willing to pay more than the reader who waits.

Bacon’s article clearly demonstrates the various options presented with digital publishing with regards to pricing. The eBook industry is new and still open to experimentation. Publishers should take advantage of this flexibility to discover what price works best for what titles. Essentially, the price of a book is whatever a reader is willing to pay for it, not the number stamped on the back.

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Harlequin’s Struggle with eBook Pricing

According to Jeremy Greenfield’s article in Forbes, “Love Affair With Digital Over For Romance Publisher Harlequin?” Harlequin is struggling with the dropping book prices spurred on by digital publishing. Harlequin CEO Craig Swinwood blames companies problems on pricing and self-publishing.

Aggressive discounting from online retailers is driving down the prices of books and Harlequin finds that it cannot compete when its mass market paperbacks appear at the same price as hardcover titles. Harlequin also lost much of its business in mass market paperbacks as its readership moved to digital reading. The prices for Harlequin’s digital titles are constantly being driven down by the rise of self-publishing. Many of the successful self-published titles are romance books because of the popularity of the genre digitally. As sales for self-published books commonly range from $0.99 to $2.99, customers come to see a book as only being worth this much.

As Swinwood accounts for in the article, there is a difference between self-published and Harlequin published titles, and that lies in the quality of the work. Swinwood is quoted in the article, saying “We believe quality can demand a higher price.”

Swinwood’s statement likely proves true. Though customers are spurred on by low prices, acquiring many titles for free or $0.99, many of these titles are never read. I know this from experience as a self-published author. After setting my novel to free, more than 400 people picked up my book over the course of a week; however, I only acquired one new review from the experiment and generated no new sales after I returned the book to its usual price of $2.99. I can only conclude that majority of the people who acquired my book never got around to reading it (either that or they thought it was horrid). It appears that as much as people want cheap books, the content of these books must remain at the forefront.

From the perspective of a reader, free or heavily discounted eBook prices are sometimes a cause of distrust.  I know that if a book is cheap (for reasons other than a scheduled promotion) then it is likely a self-published, amateur title that is, more than likely, not any good. Higher prices show a certain level of professionalism. In the mindset of a consumer, in any industry, a higher price equals a higher level of quality.  Publishers can work off this mindset to keep their eBooks reasonably priced.  Quality does demand a higher price. A Customers will pay the extra money for nice formatting, professional edits and known authors, and thus, publishers can and should continue to charge higher prices from their books.

To read the full interview with Craig Swinwood, see “Harlequin CEO Craig Swinwood on Harlequin Results, Book Pricing and Self-Publishing” on the Digital Book World website.

All About The eBook Price War

The eBook price war refers to the lawsuit that ensued between Amazon, Apple and the big six book publishers. In 2013, Apple was charged with colluding with publishers to fix eBook prices. Laura Miller sums up the situation nicely in her article “Everything you need to know about the great e-book price war.”

Essentially, the problem with eBook pricing lies in the publishers’ failure to see the eBook as separate from the printed book, and subject to its own separate practices and regulations surrounding sales and distribution. The eBook, unlike the print book, is a piece of software, and as software, it cannot be sold in the physical sense like a print book. An eBook’s content is licensed to the purchaser as they gain access to the digital software.

There are two different models through which publishers can sell books to retailers: the wholesale model and the agency model. Using the wholesale model, the publisher sets a retail price for the book and sells it to the retailer at a discounted price. Retailers can then sell the book for whatever price they choose. This is the model that has been employed in publishing companies for years. The agency model differs is that the publisher sets the price of the book and the retailer sells it to consumers, taking a cut of the sales as commission. Apple commonly employs this method to sell music and apps. The publishers’ mistake was to continue to use the wholesale model when selling eBooks to Amazon. They chose to stick with the model they knew, rather than adapting their practices to suit the new technology.

Problems arose when Amazon, perhaps in an attempt to promote the Kindle, or even to gain control of the eBook market, began selling eBooks at a loss, and thus making them available to customers at hugely discounted prices. Amazon’s actions began to devalue books in the eyes of customers, as a book that would usually be sold for $23.95 was sold for $9.99. To fix this problem, publishers teamed up with Apple and proposed selling eBooks using the agency model so as to fix the cost of eBooks. The Department of Justice filed an antitrust suit against Apple and the publishers, arguing that they colluded together to raise the price of eBooks. The publishers lost the case and were forced to reimburse consumers who had been overcharged.

From the perspective of a publisher it is easy to see Amazon as a monster set on world domination (or at least industry domination). But the reader may see it differently.  As a reader, I don’t want to pay full price for an eBook. After all, I’m not getting a book; I’m getting access to a file. I can’t hold it in my hands, or put it on my shelf. The lack of the concrete object makes it worth less to me, and I would argue, to most readers. But, that begs the question, what are you paying for when you buy a book? Are you paying for paper, or are you paying for the content?

Publishers save money on the production cost of the book, paper, binding, etc. But the author advance and royalties, the formatting costs, the editorial and design costs, these all remain.  An eBook is still a book. The same amount of work goes into it, the same amount of time and effort. Most importantly, the reader gets the same level of enjoyment out of it.  The eBook is worth less to the redaer because Amazon’s price cutting has made it worth less, and this is devaluation is threatening the industry that book lovers should be fighting to protect.

Publishers need to differentiate between the cost of a book (binding, print and paper) and the value of the book (content, quality of writing, time invested). If publishers could make readers see the eBook as valuable for what it contains, rather than as a format, then perhaps they could convince them to pay more for it.