Friday, August 17, 2012

Killian McRae on #eBook Price Points: Are we getting fleeced?

Welcome Guest Author
Killian McRae
to the blog today!

I'm please to welcome Killian McRae to the blog today to discuss ebook price points - something both authors and readers care a lot about. Take it away, Killian...

Are we getting fleeced when it comes to ebooks?

On Amazon.com, you can currently pre-order J.K. Rowling’s highly anticipated The Casual Vacancy in hardback for $20.93. Or, if you’re an ebook reader, for your Kindle for $19.99.

Wait, $19.99? That has to be a typo, right? I mean, a Kindle book is electronic. It doesn’t require shipping, paper, shelving, etc., so it should be far less than the hardback, shouldn’t it? *Looks back to Amazon.* Nope, that’s what it is. True, the MSRP on that title in print is set at $35, but when’s the last time Amazon charged full price for a new release of this magnitude? They buy in gross, get a discount, and pass that along to consumers. But still, twenty bucks for an ebook?

As an indie writer who, in large part, is responsible for setting the price for her own books, such considerations as “what everyone else is doing” weigh heavy in my price points. It is for this reason that since moving towards self- and indie-publishing last year, my eyes have been trained on trends in the market in this area.

And the trend, at least where large publishers are concerned, has been upward. You may not have been the only one recently who’s noticed that titles “traditionally” published are favoring Jackson to Lincoln these days. Prices in the $15-$25 range for new release books by prominent authors aren’t uncommon. Even middle list fiction works generally hit $10-$15.  Sometimes the electronic version of a book costs more than the paperback or even hard cover edition.

At first blush, the logic on this is hardly logical. Firstly, the difference in production cost between print and ebooks is huge. As much as 70% of a print title’s cost is just to cover the paper, presses and ponies to get it to your hands. Even for mass market paperbacks (think any romance book you’ve ever seen at the checkout aisle of your local grocery store), that number tends toward one-third. For an ebook, however, the only per-unit production cost for a purchased copy is a nearly insignificant use of bandwidth to perform that transaction. (Assuming one already has the technology to display the book, but that cost is not unique or attributable to a single purchase, therefore I suggest we not factor that in to our consideration for the moment.) It should stand to reason, then, that if those production costs are eliminated, the final product cost should fall as well.

But herein enters the market. According to Reuters, in 2011, ebooks accounted for 30% of all retail sales in the United States, which is more than double its market share from just one year prior. While the majority of sales are, consequently, still print, the fact that a bigger slice of a publisher’s earnings come in this sector has caused a shift. For traditional publishers, there are still many upfront costs born of putting out an ebook in tangent with a print volume. Covers must still be produced; editors must still be hired; for big-brand authors, a marketing campaign must be launched.  Whereas a few years ago, any ebook sales were but a few extra sprinkles of cinnamon sugar on piece of bread, now those very sales are becoming a publisher’s bread and butter. They hedge a heavy price against the hope that die-hard fans will be willing to shell out at a price comparable to what they have historically paid for print, and thereby be able quickly to break even on their investment.  As a business practice, it seems a sound one.

But let me remove my author’s hat here and speak merely as consumer. For disclosure’s sake, let me back up and state this bluntly: I am a libertarian and a full-fledged believer in free markets in almost all cases. I have to remind myself that a house - as with most anything - is worth whatever someone is willing and able to pay for it.  If there was not a significant share of the audience willing and able to pay $19.99 for an ebook, the price would fall. Simple as that. (And over time, as a title ages, its price tends to drop.)

I fear, however, the consequence of this reality. I have become such a firm believer in the ebook that I will not read print books unless fiercely required. No matter how much I want to read it as a fan, I refuse to pay almost twice the price for an ebook as its paperback counterpart costs new, knowing that the profit margin’s increase is the sole reason for the match to be made. If distributors really want us to adapt the technology (and no doubt they do; it’s a win-win-win between them, the consumer, and the author/publishers for so many reasons), why are they allowing publishers – with whom large companies such as Amazon and B&N have great sway – to give us such firm incentive to revert back to print? If you must match, match the lesser expensive of the hard cover or paperback, not the most.

One concluding note: the large publishers’ folly in all this may the indie- and self-publisher’s - and readers - gain. While ebook prices from the big six have been on the rise, most I/SP titles still retail for less than $5. Given the recent instances of self- or indie-published books that have exploded and been picked up by large publishers after having been first rejected by them (i.e. 50 Shades of Grey, Beautiful Disaster, and Slammed, just to name a few) due in part to this more reasonable range, methinks readers might find the density of enjoyment per penny is much higher in this brave and unrestricted world of that surely holds the next “big thing” than anything offered to us at 5th Avenue prices.
Killian McRae is an author of historical romance, science fiction, and fantasy. She’s proud to note that her regency romance, A Love by Any Measure, has never retailed for more than $4.99 in ebook format. 
So, what do you think? Killian would love to receive your comments or questions!

Thanks for reading!
Laura 

14 comments:

S. J. Maylee said...

I completely agree. The big 6 cant slow the ebook boom. They're trying, but they will not be successful. My truth, if the cost is too high, chances are I'll be able to get the book from my library. The only cost to me becomes the wait and I'm fine with that, because of the plethora of fab books that are self/indie published.

emmyneal said...

I think we all tend to forget that paper isn't that expensive! And when you've spent 2 years writing a novel, ebook or paperback, you want to see your hard work priced accordingly.

Honestly, I tend to buy hardcover books when they're that close in price or something I want on my shelves.

I think the price jump of the big 6 is going to be great for indie authors and pubs--maybe they can start giving BN and Amazon some collective competition. (I can dream!)

Stacy said...

Great post. There are a few new books out by BIg 6 authors I want to read, but the ebooks (and print) are $10 plus. Once upon a time, that didn't seem like a high price, but now it just seems like a rip off. I get the pricing strategy and all that, but I don't think the Big 6 will be able to continue it.
Stacy (stacygreenauthor.com)

Heather in FL said...

I absolutely believe we're being fleeced. It makes me mad, but like you I just don't read paper anymore. So I have to decide: will I spend the money on *this* one? Or will I wait until it comes out in paperback, which is usually when the ebook price falls. OR, will I forget about it altogether because there are new books at reasonable prices coming out all the time?? I do have a couple of books preordered, and I'll get slammed on price for those, but for the most part, I'm sticking to the $8 or less price range. And I'm also paying attention to length and format... I love Beth Kery, but I'm not going to pay $2 for installments of her serial book. Just not worth it to me.

Susan W. said...

I'm with Heather in Fl. If there's a book I really want to read and the publisher is putting it out in hardback first I will wait until it comes out in paper and by the ebook because the price of it will be lower too. Problem is, most of the time I've forgotten about the book because I've found so many great I/SP books to read instead. As of now there is only 2 authors with one of the Big 6 publishers that I will pay the ransom for a book as soon as it comes out. I've stopped reading some of my former favorite big 6 published authors because suddenly their books are coming out in hardback when I would rather have ebook/paper and can't afford to pay $20+ for one book. I have bills to pay first.

Killian McRae said...

Another consideration I have is if we've simply had it so good until now, that we don't realize it? I look at the music industry for an example: We rarely crow that a new album tends to circulate between $12 and $16, and most song singles are $1.29. Is this something for us to base our expectation off? i.e. Is $1.29 the appropriate price for a short story, and $12 to $16 the right price for a novel?

But, I would argue, there's so much more real material needed for most music than a novel: instruments, studio space, recording equipment, etc. Writing a book rarely requires more than an author, an editor, inexpensive software and a few computers.

Then again, I get people who complain to me that $1.49 is too much to ask for my 18K word novella, and $.99 too much for my 11K word short story. Some people believe free is the only fair price for anything they don't hold in their hands. I would argue, my novel is free. The service fee for writing it is what I'm asking for.

Christine Frost said...

Full disclosure: I work as a project manager in a publishing office, and am an indie author as well. This topic comes up in my world every day. And I think it's going to be some time before this important issue gets any kind of resolution--waiting on the DOJ suit, etc. But when considering ebook prices, I think archival issues are vital to factor into the equation. If I pay $20 for a printed book, I know it will be on my shelf years from now. What happens to the readability of an ePub or Kindle mobi file in 10 to 15 years? If my Nook tablet breaks in upcoming years, and future e-readers or tablets aren't compatible, then my ebook collection is as useful as a floppy disk. Certainly, there are production costs associated with ebooks, but we're not necessary finding (in my day job) that a price equivalent to a printed book is justified.

Laura Kaye said...

Great discussion, guys! Thanks for all the thoughtful comments!

Rachel at thejeepdiva said...

I am a reader and reviewer and I have also noticed that ebooks have started to go up. My husband bought me an ereader because I love to read but don't have the room for a lot of books and our library doesnt get anything new. I am now finding it difficult to jusify buying a ebook from the big 6 because of the price and they will not allow coupon codes to be used. However if you were to buy the paperback/hardback in the store you would be able to use your coupons.

The other thing I am running into at my job & others is now I've seen some companies banning ereaders/smart phones & tablets because you can steal info from the company in them. So I have come full circle and if I want to read on my lunch I have to get a paper/hardback book. LOL.

Aurian said...

Great post, great discussion. Those prices for JK Rowlings book are pure madness. I don't want to pay more than € 6,00 for a paperback, so I certainly won't pay more for an ebook. There are only a handfull of authors where I will pay more as I have to have their new book asap (Bertrice Small for instance). But if the book is hardcover or expensive trade paperback first, I will wait one or two years for a mass market paperback. I do have enough other books to read in the mean time.

Jennie Coleen561 said...

Well said! I can't bring myself to pay these high prices for ebooks. I've found that I can borrow the ebook for many of these expensive books from my local library.

Because of the expensive ebooks of so many publishers, I have definitely been buying and reading more I/SP ebooks. Although I find typos and grammar/spelling mistakes somewhat irritating, they rarely interfere with my ability to enjoy and understand the story. I guess I've become more tolerant and accepting of less-than-perfect editing! It's really all about the story, isn't it?

Thanks for posting this article!

Chantal said...

It is very frustrating. One of the reasons I bought a kindle was because I believed ebooks would be cheaper, but quite often they are more expensive.

Killian McRae said...

Chantal: I think you hit on important point there. I recently bought my daughter a Kindle because the paperbacks were getting too pricey. Recently she started reading the Dork Diaries series. The books retail in hardback on Amazon for $8-$10, but the ebooks are $10-$13. They drove us back to paper with that one (acknowledging, of course, that the publisher has more to do with the ebook price than Amazon).

Killian McRae said...

And following up on this further, check out the tags on Amazon for JK Rowling's book (important to note, the price is set on this by the publisher, not Amazon and not Ms. Rowling)

http://www.amazon.com/gp/product/tags-on-product/B007THA4FI/ref=tag_dpp_cust_edpp_sa