mariongropen ([info]mariongropen) wrote,
@ 2007-01-02 11:18:00
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Current mood:optimistic
Entry tags:book publishing, ebooks, pricing

How Much Should an Ebook Cost?
Nothing? The same as the current print version? Whatever the market will bear?

Your answer will probably depend upon what role you play in the ebook world. If you're a reader, you probably said "FREE!"

If you're an author, you probably want your royalties. Most authors don't think that the costs will be much more than that, so the price should be pretty low.

If you're a publisher, you consider royalties, formatting, discounts to retailers, and overhead. You have to cover them all and then juggle the price so that it maximizes your profit. But what about the reported increase in print sales if you simply give away ebooks? And piracy -- won't that make selling ebooks hopeless anyway? And . . . It's simpler to just beat your head on a wall until the thoughts stop.

Truly, there are issues to be resolved before much of the most popular content is released in ebook form. And ebooks need bestselling content to really become popular.

The real problem, in my opinion, is that we book-people haven't decided what we want the ebook to do. Is it a promotional item? Or is it to be a new revenue-generating format for our "content"?

We all know that there are extravagant costs associated with the physical nature of books. Printing, paper and binding are only the start. There are returns, shipping, receiving, pick and pack lines and warehousing at several points in the distribution chain, and more.

It is often said that the feel of a book more than justifies the extra cost. I wonder if that's true for the people who buy paperbacks (trade or mass market). I suspect that most of them would happily forego the feel for a 50% drop in price.

If I'm right, then ebooks will eventually replace the paperback.

If I'm right, book folks need to find a way to make ebooks profitable if we are to weather that transition well. I suspect that we'll need to increase the volume, which will be helped by a lower price, and easier storage, and drop the price far enough that it's easier to buy than to pirate.

So, my answer is: how low can you afford to go? For now, I suggest that many ebooks can be effectively priced below cost. Consider the difference a promotional expense. Meanwhile, you are helping to make the format more popular, recouping some of the cost of the ebook promotion, and getting your future customers more used to the idea that ebooks aren't supposed to be free.

What say you?


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[info]bccreations
2007-01-02 05:02 pm UTC (link)
This is definitely a topic I'm well versed in. I began four years ago as the project manager working on electronic and print ancillary material for a publishing company. Ancillary material has grown so prolific in the field, that titles without at least a CD or accompanying website have an extremely difficult time in finding adoption (this isn't fiction publishing, but educational/professional publishing) and in the end my team was dissolved because there was too much content for just the five of us to handle. Now all the other project managers handle their own ancillaries.

Since then, I have moved directly into the multimedia department and work daily with electronic development. The cost differences between a book and an ebook are clearly measurable. PP&B costs alone supercede any development costs, and we haven't touched on shipping costs, storage costs, etc. In an environment where there is a lot of electronic material, online space, bandwidth, server space, etc. become negligible in comparison.

I get very frustrated when my company charges full price for an electronic book (which they do, often) because the cost differences are so blatantly clear that they're essentially bilking the customer to increase the profit margin. A lower price would not only increase sales, but increase buyer satisfaction (although certainly not free; if it costs 20% less to make the book, why not charge 10%-20% less and pass some of those savings on to the customer?).

However, it is still a long time in coming before electronic product replaces the tangible page. It's a scientific fact that people read slower and retain less when looking at a screen rather than a page. Also, the convenience of the electronic medium isn't so much that there's any motivation to make the change. People generally need a good reason to move out of their comfort zones.

Now, last year, the groundwork was laid, however, to change this trend. A millimeters thin "paper" (a plastic composite, if I recall correctly) with magnetized particles could receive an electric charge, moving the particles into a certain shape to represent letters, pictures, etc and can hold that shape indefinitely (I think the degradation time was estimated at 1000 years). With this kind of technology, where a book can be stored on a disc but be easily transferable to a page, I feel, will begin the true transition from paper to ebooks.

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price vs. cost, and screen vs page
[info]mariongropen
2007-01-02 09:34 pm UTC (link)
Taking one of your last points first, I suspect that the speed/retention/comprehension differences are partly due to the differences in layout, font, and resolution. Some may also be due to the angle and distance at which the two are viewed.

All of these issues will need to be resolved before a viable reader can be brought to market. More, the solution will need to be inexpensive enough to avoid pricing the solution out of the market. There may still be some difference, but it will be interesting to see what that amount will be. Especially so, when the population that is not "native fluent in computers" ages out of the target market.

As for the pricing, many publishers are pricing up for ebooks to allow for the effects of piracy. In most cases, I suspect that this has unintended consequences, but I can't begin to prove it. In other words, they assume that the costs will be spread over many fewer copies of the e-material than of the analogous printed materials, so they use a higher mark-up.

Thanks for bringing your experience to the discussion.

(Reply to this)(Parent)(Thread)
Re: price vs. cost, and screen vs page
[info]bccreations
2007-01-02 10:11 pm UTC (link)
As for the pricing, many publishers are pricing up for ebooks to allow for the effects of piracy.

That excuse will be rendered obsolete relatively soon (not that it will prevent companies from using it, of course). The technology already exists to allow a file to exist an a predefined number of machines. This is seen as rather inconvenient to the user, but I think is an adequate guard against policy. So you purchase the next George RR Martin book. The PDF file(s) that you download could be preprogrammed with permission to exist on only three machines after purchase. The next step, of course, is keeping such technology from getting hacked.

Which leads to an argument for higher prices that I did not consider before, one that the pharm companies use all the time. Higher profit margins allow for investment in future development. I think this is used too often to justify exorbitant prices, but at it's core, it's true. I reviewed a $37,000 price estimate today for a resource that will generate no money. Thus, that money has to come from some other source (but in my original example, I did specifically state that the amount of savings in development don't need to directly correspond to the savings given to the purchaser).

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Re: price vs. cost, and screen vs page
(Anonymous)
2007-01-03 12:09 pm UTC (link)
You can't stop it being 'hacked' though, whether it is 20 minutes manually with a screen grabber, or a few minutes with a program, and then an ocr program, or scanning the paper version directly.

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Re: price vs. cost, and screen vs page
[info]bccreations
2007-01-03 12:27 pm UTC (link)
I don't think any company can (or at least should) have the mindset that they can "stop" pirating, but if you can develop your software to bring it within a margin of acceptable loss, that's a different matter. Very few people are willing to spend the time to scan page-by-page the entirety of a book and it would be wasteful for a company to spend resources in an attempt to somehow prevent those ten people from doing so. Likewise, a lot of digital theft are crimes of opportunity as much as they are intent. Making piracy particularly difficult requiring a certain level of proficiency will cut down on theft significantly.

(Reply to this)(Parent)
Re: price vs. cost, and screen vs page
[info]mariongropen
2007-01-03 05:03 pm UTC (link)
That is one type of DRM. And yes, DRM will undoubtedly cut down on the casual passing of copies from one purchaser to all of his or her friends.

Unfortunately, there are people on the web who truly loathe DRM, and if one of them purchases your material, it is not unlikely that he or she will crack the DRM just because it's there, and then post it on a sharing site. This happens now, or so anecdotal evidence suggests.

For most of the books published, with content of value, but not a value of hundreds of dollars per copy, the cost of truly effective DRM is probably unjustified.

I'm hoping that we can change the zeitgeist so that the bulk of books won't need DRM, and a small amount of vigilance will be adequate to screen out the worst of the piracy.

(Reply to this)(Parent)

(Anonymous)
2007-01-02 07:49 pm UTC (link)
I'm not a publishing "company," although I suppose I should start thinking of myself as one. I'm just a small web site owner who has decided to bypass the New York publishing scene and go directly to readers.

To boost traffic to my site (http://www.inspiration-for-singles.com), I gave away my first ebook, a 73-page novel titled Mary's Christmas Gift. In November and December of 2006, I had over 3,600 downloads, and to my surprise, people are still downloading it in January.

However, I'm working on a nonfiction ebook for single folks which I'll sell on the site. How much should I charge? Pricing articles will tell you that ebooks can sell higher because of high perceived value. Folks who say that often write hype-infested sales pages claiming that their latest ebook will do everything you've ever hoped for, including regrow that long-departed hair.

My book will probably sell for $29.97, when bundled with four or five other ebooks (free bonuses). That may seem high for a nonfiction book, but when you consider they'll actually get SIX books, it seems reasonable.

No, I don't have printing, binding, shipping, warehousing or other publishing overhead costs, but I do have heating, electricity, water, insurance, property taxes and a host of other expenses for my home office. Not to mention that I'm doing this for profit, not because I'm just a swell guy. After all, my site has 170 pages of free information.

If I were positive I could sell 100,000 copies, I could lower the price. As it is, I think that price is fair. We tend to value things based on what we pay for them.

Several years ago John Grisham broke the "$6.99 ceiling" in mass market paperbacks and they've been going up ever since. If we can compete with that, then yes, ebooks will eventually replace paperbacks. If big bookstore chains install Xerox DocuColors and other digital "presses" to print out ebooks, then look out New York!

Was there an answer in there anywhere? I'm not sure. The market will eventually set the price, but if the material is in high enough demand, then the author/publisher will set it.

Jack Zavada
Streator, IL

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[info]mariongropen
2007-01-02 09:50 pm UTC (link)
Theoretically, pricing models look for the highest total contribution to overhead and profit from a given product. This means determining how many more copies you will sell for each drop in price, and how your costs will change at that volume. (I don't want to get long-winded on the topic now, but I have an essay on this topic on my website, www.GropenAssoc.com, as well as having addressed it more thoroughly in many of the seminars I give.)

Personally, I am dubious about the effect of the on-site print and bind. The price per copy and the quality will both be worse than the current POD printing. It will require huge changes in the systems currently in place (if you think ONIX is a pain to implement, just wait!), and large fixed expenses. Still it's an interesting side light on the discussion, and thank you for bringing it up.

(Reply to this)(Parent)

[info]bccreations
2007-01-02 10:01 pm UTC (link)
John Grisham broke the "$6.99 ceiling"


I never thought I'd be sticking up for The Man, but with the rise in paper costs, it's understandable that a paperback can't continue at the same price that it did a decade ago. Four years ago, I could place an order for 166 tons of paper, send it to the wrong printer, and get a replacement shipment within a week. Two years later, I had to order paper 6-12 months in advance just to make sure the book would publish on time.

With the growing demand of commodities in China, resources are strained here in the US and as such, costs reflects that.

(Reply to this)(Parent)
Reasonable prices for eBooks
(Anonymous)
2007-01-03 05:52 pm UTC (link)
If we start with the idea that eBooks are products, rather than promotion, it's possible to get an idea of reasonable pricing. I set my pricing to be "affordable" and lower than the typical paper book because:
1. eBooks avoid the costs of printing
2. eBooks don't have to eat the cost of returns, which are a huge cost for traditional paper publishers
3. eBook shipping costs are trivial
4. eBooks are still a new development and we need to set a price that will encourage customers to give them a try.

That said, there are reasons why eBooks should be priced higher than paper books:
1. eBooks offer an ease of delivery that can't be beat. Rather than buy from Amazon and wait, eBook customers can get their eBook in the middle of the night
2. eBooks can be read with the lights off (a nice feature when our significant other is grumbling about the lights on while we try to read one more chapter
3. eBooks can be carried conveniently on a PDA or phone, without the weight of a dozen or so pounds of paper to lug around.

Bottom line, for right now, I think we need to set affordable prices because that's the best way to grow our market. People need to be weaned of paper.

Rob Preece
Publisher, www.BooksForABuck.com
Your source for affordable electronic fiction

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Re: Reasonable prices for eBooks
[info]mariongropen
2007-01-03 05:55 pm UTC (link)
I agree wholeheartedly.

Thanks for chiming in.

(Reply to this)(Parent)

(Anonymous)
2007-01-03 06:26 pm UTC (link)



The real problem, in my opinion, is that we book-people haven't decided what we want the ebook to do. Is it a promotional item? Or is it to be a new revenue-generating format for our "content"?


As a new publisher I'm still testing the market myself, and I've priced our e-books about half the "dicounted" price of our print versions. I looked at comparable e-books as a guideline. The trouble is, nobody is buying the e-book versions!
I'd thought about trying the "giveaway" method this year, using some of them as a promotional tool to drive people to the print version. The trouble is, I've read the articles about people successfully doing this, but haven't found an outlet to make it happen. Where are people posting their "free" books? On their websites, or by putting links on their blog pages?
I feel a bit lost in the vast World Wide Web...

Linda
http://lldreamspell.blogspot.com

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[info]prest0
2007-01-03 10:12 pm UTC (link)
Other than some POD work (inconsequential in terms of sales), we don't offer print versions of our titles. So we have to recoup all our expenses strictly from the e-book sales themselves. We set a sales volume target based on previous performance in our niche and amoritize our expenses. Our prices are somewhere between 1/3 and 1/2 of what a comperable soft-cover print book would cost.

Unfortunately, we've seen sales volume for new releases DECLINE in our niche over the last three years as competition (in the form of self-publishers) comes on the scene faster than new customers willing to try e-books. This means we have to set our sales goals lower and raise prices accordingly. Meanwhile, our e-book retailers claim that their overall sales keep going up every month. Thus we have a situation in which the pie is growing while simultaneously it's getting sliced into smaller pieces. I've been wondering lately if the RPG market is a case study for the e-book market as a whole, or if the general market is heading in its own direction.

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what is your primary goal?
[info]bigbadlinux
2007-01-05 06:13 pm UTC (link)
I tend to agree with your assessment "whatever the market will bear."

However, you need to rephrase your question: "If your primary goal is to maximize revenues, how much should your ebook cost?"

Writers may want to make money, but that isn't the only motivation. Most of the time they settle on a price that balances their desire to be accessible with their desire to reap some sort of return on investment. For me, publishing a book enhances my reputation and makes me more employable, so I don't need to maximize revenues from my ebook alone.

I personally think the FREE + TIPJARS is a viable method to make money if done the right way. If your price is going to be less than $2 anyway and if it is cumbersome to make a micropayment, I'd go for that.

But I have to say it depends on the book's content and the method to produce.

For an example of a content service (music) that is using tipjars successfully, see jamembo .

Robert Nagle

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Re: what is your primary goal?
[info]mariongropen
2007-01-05 10:34 pm UTC (link)
I think this is only good for as long as ebooks remain a very minor format.

Most of the books sold are put out by publishers that aren't authors. If ebooks are to become a major part of the publishing matrix, then we need to be able to have a model by which the bestsellers, and mid-list, can make money from them, in my opinion.

Tipjars may work fine for the book equivalent of the garage band. They won't be as satisfactory for the guys who fill stadia/live on the NYT list.

And, I'm not advocating charging as much as the market will bear, but figuring out where the market IS, and finding a way to work within that reality to our own best advantage. Often you can make a higher profit by dropping your price and selling more for less. This is even more likely to be so if you can remove some of the incentive for piracy by dropping the price far enough.

But thank you, too for chiming in.

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