Ebooks and book pricing...

Over at the Mad Genius Club, Amanda finds a publisher talking about ebooks as a "service" and charging more for them than printed books because they are convenient for the reader. Both sides have valid points, but the discussion hook is Amanda's conclusion:

But to say an e-book should cost considerably more than a print book because it is more convenient is ludicrous. It is especially so when the publisher refuses to admit that a reader buys the book instead of just licensing the right to read the book. As for Luby, well, he needs to quit drinking the kool-aid and realize that the reading public isn’t quite as naive — or foolish — as he seems to think it is. As for the publishers and bean counters still doing their song and dance of joy over what he had to say, they need to adapt t changing times and demands or be left behind. As the song says, “the times, they are a-changing.”

Amanda is right that it is ludicrous for an ebook to cost more than a physical book. The physical book obviously has more expenses associated with it (paper, ink, binding, shipping...), and all the expenses that the ebook itself has (royalties to writer, editing and layout, proofreading, possibly marketing, etc).

But the publisher is right that convenience also has a value for the reader, and that prices are determined by the market. If the publisher thinks he can get more money for the ebook than for a print copy of the book, he's free to change his asking price to reflect that and readers can decide whether to pay the increased prices or not. Raising his prices on ebooks may end up increasing his profits (by bringing in more money from ebooks, but more importantly, by cannibalizing his hardcover sales less). It's unlikely to increase the number of readers buying the book, however. At best he will shift ebook purchases to print purchases. At worst he will lose readers completely by offending them, because readers already feel that hardcover books are absurdly overpriced.

But ebooks have a special quality that printed books don't, at least for publishers; the price can be changed after publication. The optimal pricing algorithm for an ebook for a legacy publisher who also has printed copies of the same book is a function of time and the prices of other available printed editions. Price the ebook to match the hardcover when it first comes out. People will buy their preferred edition. When you are just about out of hardcover copies, release the paperback and price the ebook at the same price as the paperback. When you run out of paperbacks, either print more or drop the ebook price to matching-or-slightly-higher-than the going price for indie or self-published ebooks.

It's that simple. Adjust the price over time, don't cannibalize your print sales with your ebooks but don't charge an absurd premium that will offend your customers either, and recognize that at the tail end of the publication process, your ebook has no ongoing costs per copy -- so ANY sale, at any price, is profit if your earlier sales paid your costs.

This entry was published Wed May 07 13:52:21 CDT 2014 by Matthew and last updated 2014-04-08 10:29:41.0.

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