Demand Pricing for Ebooks

17 Responses to “Demand Pricing for Ebooks”

1. 
   Dan Holloway
   on Jul 20th, 2009
   @ 3:51 am: 

   I’ve come across this topic a lot in the past week. It seems that whilst the e-book is in its relative infancy we have a chance to get things sorted out properly so as to avoid falling into the endless problems that beset paper book pricing. Of course, there’s a problem, because “sort out” will instantly smack of cartels and price-fixing like the ludicrously protectionist Net Book Agreement. In fact, therefore, the only thing that can really sort the issue out is the market.

   And what that means is that we have to debate lots, and try lots, and see what readers respond to. Thsi is the one thing that’s missing in this whole debate – a real focus on readers – on what they want and how they behave. I think the people who really engage with readers in the bottom-up market of e-culture are the ones who will succeed quicker.

   To throw my opinion in as a writer – I give e-books of my novels away for free, and I always will. I am thoroughly committed to the 1,000 true fans model, and am also committed to my readers. I want as many people as possible to read my work. And I genuinely believe that if they read it and like it, enough will buy the paper book to help me earn a living – eventually. And if they don’t like it enough to buy the paperbook – at least I gave them the chance to find out before they spent their cash on something they really do want – which has to be good for them (and as a writer, my first thought is always for my readers), and for me, because I haven’t hacked someone of by getting them to shell out for something they then don’t enjoy. Win-win.

   There is currently a lot of fear in the industry about e-books being free. I am at a loss to think of any reason other than the good old protectionism at which the industry is so good (always done in the name of the author, ironically – listen up, I don’t WANT someone fighting my battles; I’m gnarly enough to stand up for myself, thank you). If free books are no good, people won’t come back – so established authors have nothing to fear. If they are better than the works of establihed authors, then those authors don’t deserve their slice of the pie.

   Thank you, Evan, for another very informative contribution to such an important debate. My blog on the matter is at: http://agnieszkasshoes.blogspot.com/2009/07/free-is-not-four-letter-word.html I will watch the discussion here with interest.

   Very best
   Dan
   http://www.danholloway.wordpress.com

   [Reply]

2. 
   Aaron Pressman
   on Jul 20th, 2009
   @ 4:58 am: 

   Evan, very interesting post but I’m a little confused by your conclusion. In the pre-e-book world, the bigger and hotter the best seller the more likely it was to be discounted heavily by retailers. And only the super-sellers are sold at the biggest discounters like WalMart and Costco.

   I’m not saying I understand this logic or that it fits very well with basic economic theories about pricing but it was/is the reality for print books. So it seems to fly in the face of the notion that ebooks should start out at higher prices to capture peak demand. What am I missing?

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3. 
   Karen Syed @ Echelon Press
   on Jul 20th, 2009
   @ 6:00 am: 

   The solution here is to understand that each business works on its own model and there will never be a solution to the problem that fits every publisher or retailer.

   Amazon can work on a loss with their eBooks because it makes up it’s lost revenue in big ticket items like computers, cameras, other electronics, etc. They don’t bottom line those items, because they are tangible.

   There is no middle ground when you have different publishing houses with different needs and requirements.

   The eBooks I sell at http://echelonpress.com average $6.00 and they are every bit as good as the best sellers, in some case, I think better. That price works for us and we make money. But we don’t have the overhead that a much larger publisher might have.

   It is difficult for anyone who does run a business to understand a businesses needs.

   As for the demand. People also need to realize that there is a 90% chance that if a reader buys an eBook they never intended to buy the hardback so there is actually an increase in revenue, not a loss.

   Karen Syed
   http://klsyed.com

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4. 
   trav
   on Jul 20th, 2009
   @ 6:29 am: 

   Good post. You make a good case for demand pricing. I’m intrigued by the way you connect marketing/publicity in helping push eBooks and for eBook readers to be considered when plans are being made and specials being offered. It seems that eBooks are often just an after thought in a publishers strategy.

   I’m hoping, maybe in a soon-to-be-penned post you can follow up on your idea of
   ““ebook co-op” program that effectively swaps in-store marketing for added discount.”
   This, to me, seems to be a key concept that would help many consumers and even some slow-to-rise pubs fully accept, demand pricing and eBooks as a whole.

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5. 
   Phil
   on Jul 20th, 2009
   @ 8:48 am: 

   You’re reading your Amazon/Kindle publisher contract incorrectly, Evan. They are paying publishers on net, not list. The contract I’ve seen is 35% of net, or $3.50/sale. Even though the publisher is not incurring PPB, inventory and warehousing costs, none can survive on $3.50/Kindle copy sold.

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6. 
   Evan
   on Jul 20th, 2009
   @ 9:11 am: 

   Just to be clear – I am not reading anyone’s contract – I am stating what is the most common trading terms between a publisher and a retailer such as Amazon. Every publisher deal will be slightly different, but I can assure you that the majority of major publishers will have terms similar if not identical to what I described.

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7. 
   Aaron Pressman
   on Jul 20th, 2009
   @ 10:21 am: 

   Phil – that’s the self-publishing term sheet. Major publishers are not selling to Amazon on those terms. They are collecting a fixed percentage of the retail list price they themselves set, and it’s been reported that it varies but is usually around 50% of the retail list price. That means on many $9.99 Kindle ebooks, Amazon is paying out more to publishers than it collects from the customer.

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8. 
   jc
   on Jul 20th, 2009
   @ 12:19 pm: 

   Great post. I’m curious though: If the book industry should be careful not to disenfranchise ebook readers by releasing titles in hardcover first, why doesn’t this apply to the movie industry where they release to theaters long before DVD/Netflix/iTunes? Or could you argue that we’re we getting to a point where that applies to them as well?

   Much of the concern we’re seeing now surrounds consumer conditioning. If ebook buyers get used to purchasing books for $9.99, then that’s what they’ll expect forever more. If they become used to having the ebook available at the time of the hardcover, then they’ll expect that, too. In many ways, we’re already too late to do anything about ebook pricing or release schedule. Amazon made up our minds for us.

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9. 
   Jussi K
   on Jul 20th, 2009
   @ 12:20 pm: 

   This is a bit of a waste of time, isn’t it? Everyone with an eye to the future understands that all e-books will be pirated and distributed for zero dollars. Even if you set the price to 99 cents or whatever you are WISHING for.

   Meanwhile, all the 5-to-10 dollar pricing strategies are just a marketing opportunity for the not-big and not-published writers and/or publishers to have their share of the limelight.

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10. 
    Barnes & Noble eBook Store Great News For Consumers | Gravitational Pull
    on Jul 20th, 2009
    @ 6:50 pm: 

    [...] questions in the comments of posts by publishing consultant Mike Shatzkin’s ruminations and Evan Schnittman, who works for Oxford University Press. I wonder what impact Barnes & Noble’s $9.99 [...]

11. 
    The Sourcebooks experiment with Bran Hambric: publishers in the early “establishment” stage of ebook adoption - The Shatzkin Files
    on Jul 20th, 2009
    @ 7:57 pm: 

    [...] Evan Schnittman makes the point that holding back the ebook has consequences. It dilutes the impact of the publisher’s marketing efforts. It could encourage piracy. Evan’s solution is an introductory promotional price that is raised when initial demand has ebbed and he has a notion (which I don’t quite understand) of how publishers can get retailers to collaborate on that. I don’t think that’s the answer. First of all: it strikes me as backwards. The ebook price should be a dollar more than the print book for the 3 weeks or so before the print book comes out when an ebook could be available. Then it should be the same as the print book for the first couple of months so that it doesn’t disturb the bestseller list possibilities. Then it should drop sharply to reflect the lower cost (to publisher and retailer) of providing ebooks. [...]

12. 
    Cathy Macleod
    on Jul 21st, 2009
    @ 1:40 am: 

    When I feel a hardback price is too high I wait a few months for the paperback edition, and I’m prepared to do the same for the ebook version. The market will eventually sort itself out. Meanwhile, interesting challengers on the pricing front are the Secondhand Booksellers. I was ready to pay $16 for an ebook novel, then bought it paperback instead at Abebooks for $1 plus $8 postage, condition as-new.

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13. 
    Dear Author: Romance Novel Reviews, Industry News, and Commentary » Blog Archive » Link Round Up Tuesday
    on Jul 21st, 2009
    @ 7:57 am: 

    [...] Schnittman of Oxford University Press disagrees with the delayed [...]

14. 
    Dave Creek
    on Jul 22nd, 2009
    @ 5:10 am: 

    Seems to me that since you’re not publishing a physical book, that e-books should be less than the hardcover or the paperback price, and even less than $10.00. If I’m paying, say, $8.00 for the paperback and receiving a physical object that had to be manufactured and shipped somewhere, why do I have to pay more for just the words?

    The price for an e-book should be a dollar or two less than the (eventual) paperback, and the money should be split 50-50 between the publisher and the writer. Talking about the hardcover bringing in more money makes no sense if the expense of making the hardcover eats up much or most of that money.

    Dave Creek

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15. 
    Evan
    on Jul 22nd, 2009
    @ 7:29 am: 

    The basic problem with your suggestion is that you assume manufacturing costs are the majority of the cost of creating a book. The “words” as you say, are generally the greatest expense – if you are talking about general trade books. So if the value of the “words” are needed to recoup the costs, then it stands to reason that all versions should be priced to extract the maximum return on investment. Furthermore, ebooks are sold on consignment, where as print titles are bought in advance in bulk. The cash that generates is by definition more valuable to a business than the trickle of income that ebooks bring in. See the first posting on this blog, Why Ebooks Must Fail to get an understanding of trade book economics.

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16. 
    The Daily Square – Ako Edition | Booksquare
    on Jul 22nd, 2009
    @ 4:30 pm: 

    [...] Demand Pricing for EbooksEvan Schnittman makes an argument for demand pricing for ebooks — and smarter pricing strategies by publishers. [...]

17. 
    Creating experiences out of content | Digital Business
    on Jan 5th, 2010
    @ 3:11 pm: 

    [...] being generated in the publishing sector continues to build when it comes to the pricing of ebooks (Evan Schnittman’s post in July) and digital rights management (DRM) where the publishing sector is seeking to [...]