Debbie's World of Books
My book reviews, book news & random rants

eBook Pricing-What Is Fair?

May 21st, 2010 by Debbie's World of Books

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eReaders are popping up everywhere and I absolutely love my Kindle but I was really disappointed when I found out this past Tuesday (May 18, 2010) that Spirit Bound by Richelle Mead wasn’t available in the Kindle format.  I was so excited to read it and was hoping to download it first thing in the morning.  My friend mentioned it was because there was a dispute between Penguin Books and Amazon over pricing of ebooks.  So I had to go look for what was going on.  I found this Fast Company article that when Amazon started selling some of their new hardback books for $9.99 Penguin felt they were undervaluing their brand.  So as of the article’s published date, April 30, 2010, they had not come to an agreement of ebook pricing.  So until they do no Penguin ebooks are available on the Kindle.   Guess they were still working on it as of May 18 since Spirit Bound was not available.

I know in the past there has been controversy over Amazon marking down new hardback best sellers to $9.99 but as a reader what do you think is fair in ebook pricing?  Should you have to pay the same price (sometimes over $30) for an electronic version of a book?  Apparently there is at least a group of readers who think readers shouldn’t have to pay more than $10 for ebooks.  Wired wrote this article in 2009 about how some Kindle owners were tagging ebooks that cost more than $10  with a “9 99 boycott” tag.  I just did a search and there are almost 5000 books with that tag.  Not a huge amount but still noticeable.  Soon this group may have more to complain about.  Amazon recently came to an agreement with Macmillan that let’s Macmillan set their own pricing of their ebooks (See this BusinessWeek article for more details).  It’s speculated this could cause a rise in pricing by as much as 50%.

I really don’t understand how much profit publishers make on book sales and how selling ebooks at $9.99 hurts (if any) their profit margin.  From a  readers perspective I think ebooks should be priced lower than their hardback or paperback counterparts.  After all, you no longer have a physical copy of the book that you can lend to friends or sell to a used book store so you do lose some of the benefits that come with a physical copy.  You would also think the publisher saves on costs they don’t actually have to print at least as small percentage of physical copies and they don’t have to ship those copies to warehouses across the country/world.

What I would like to see is some sort of bundle pricing where if you order a physical copy of a book you can get the electronic version for just a few dollars more.  For Richelle Mead’s last book, Blood Promise, I ordered a physical copy but also bought a Kindle version so I could get it right away and be able to read it on my train ride.  I had planned on doing the same for Spirit Bound.  I would also do the same for larger books that are too large and heavy to make it convenient to carry the physical copy on my commute.

What are your thoughts on ebook pricing?  Is Amazon wrong to sell best sellers at $9.99?  Should ebooks cost less or even more than their physical counterparts?

Posted in Books

11 Responses

  1. MrsVanquish

    I cannot agree with you more. I love my Kindle but this price war between Penguin and Amazon sucks so much and pisses me off!

    I also would say, not more than 9,99 for a eBook, since you don’t own a copy you can give to friends. It’s not a physical copy so I think It should be less than the Paperback!

  2. thefishie

    While I love the $9.99 price point, I’d probably pay about $14 for an electronic book max, unless it was a limited “print” book. That’s about the price of a paperback (not a mass market paperback) that I might pick up at Borders, and more than fair in my opinion. I despise hardcovers that are not academic texts or library books, and almost never buy them. Thus, I was very tempted to purchase Spirit Bound or Dead in the Family for the BN e-reader on my iphone where I think they are $12.99 (a reasonable price). I then changed my mind and decided to support Amazon’s battle by ordering the hard copy from Amazon where I think they’re both about $9.99. That way I stay loyal to the Kindle format and hopefully have my books all in the same place one day.

  3. Jill

    This topic really interests me now since I just bought a Nook. I’m still up in the air about pricing. I see both sides of the issue. I’m sure I’ll have more of an opinion once I’ve owned it for awhile. But I do agree with you that I’d LOVE to see where you can get a bundle for ebook and paper version. I’d love to have them in both versions without having to pay full price for both. Maybe some publishers will hear our plea and try it!

  4. Pam

    The problem is this way of thinking. When a Publisher puts out a book there is more cost than the paper and the cover. They have to be able to pay the author, the editor, the printing company, the paper company, the publicist and many more people that are involved in making the book. So as electronic readers become the norm, and Amazon is hell bent on having the Kindle format the day the book is out in hardback and charging less. Which do you think customers are going to go for? So how will the publisher pay all these people and not take a loss? Then we will see a trend of no more debut authors, less books coming out because they can’t afford to take a chance. It will be a sad situation and Amazon is completely in the wrong. Do I think they should be $25 bucks, absolutely not but I think it is fair to ask me for $15.

  5. Mark

    Keep in mind at least with MacMillian, they wanted to set up a sliding price scale where the price of the ebook started at one price and slide as the book had been out for a while. So if you wanted the book the day it came out, you would pay more, but if you were willing to wait six months, the price would drop.

    I don’t have an e-reader, so I don’t have a huge dog in the fight. However, Amazon’s tactics in the price war with MacMillian (pulling all versions of MacMillian’s books from their shelves) left a very bad taste in my mouth. Like most new things, this will take a while to sort out. It will be a painful process for a while, but in a couple of years, I’m sure things will pretty much be standard.

  6. MrsVanquish

    Actually I would be fine with 15$ when the paperback is not released. I just hate this war the two big shots Penguin and amazon are fighting, in the end it’s the customer ( namely us ) that suffer from it.

    However, I can’t agree with a eBook price that is more than a paperback and I’ve seen that a few times lately.

  7. Patty

    I love love love my Kindle but I will not ever pay more than $9.99 for any book…I have owned my Kindle long enough to know that all ebooks come down in price…I can wait a few weeks to read something new…Amazon had the right idea…I support the boycotters…what in the world are we paying for…virtually nothing…a book that cannot be shared touched or given to anyone!!!

  8. Lisa Richards

    As of yet, I haven’t given in to the urge to get a kindle and as long as the ebooks are as high or higher than a paperback, I won’t. I love being able to share a book that I loved and as long as they have them in print, I probably won’t indulge

  9. dsuzuki

    I think $15 is fair. I wish I knew more about the breakdown in where the dollars you pay go because as far as I’ve heard a very, very small percentage actually goes to the author. I don’t know how much goes towards printing, shipping, etc.

    The sliding scale also makes sense to me. I don’t like when they charge more for an ebook version though. That just doesn’t make sense to me. I agree that in the end it’s the customers that end up getting hurt as they duke things out.

  10. Joe

    The numbers vary wildly, but from what I’ve seen of “reputable” numbers, this is where your $25 hardcover goes:

    $12 – retailer (they get between a 45% and 52% “discount”, meaning if the book cost $25 they pay between 0.48*25 and 0.55*25)
    $13 – not retailer
    $4 – physical elements (paper, binding, shipping)
    $2 – author
    $7 – publisher
    – editing
    – copyediting
    – proofing
    – illustrations
    – marketing
    – profit

    That last breakdown is the most volatile; nearly all of them are sunk costs that don’t vary per-book. The author payment also is not necessarily accurate; authors get advances that may never be made back by their royalties. I set it at $2 for that reason – it’s probably more like 5% ($1.25) for authors who do sell a decent number of copies. Even the ‘physical’ costs still vary quite a bit when you try to break them down to per-book costs, because a book that has a high return rate (ie, that sells many fewer copies than are printed) has a higher per-book physical elements cost.

    Anyhow, if you take your $25 HC then, you have around $9 in truly non-paper costs, plus retailer markup, plus whatever cost is present in formatting the e-book (this is NOT zero, although it’s certainly not $4). So a $10 ebook is theoretically possible, but it involves the retailer giving up nearly all of its markup (more than Amazon’s willing to give up in general). And regardless, the cannibalization of HC sales is always going to be a problem so long as HC sales are the primary way a publisher makes money.

    I think the NYT has a similar breakdown in an article from a few years ago, although my numbers are a bit different because I don’t think they’re quite on with a few of theirs – but in general they’re pretty close. These numbers are for “major mass market” hardcovers, also; ie, something published by Penguin or Tor or one of the big guns and shipped to all major bookstores. There were also some interesting blog posts from some major authors during the MacMillan/Amazon fiasco; Charles Stross had a couple of pretty informative ones, for one.

    My general feelings on the pricing issue – pay what you want to for the book, whatever format it is in; if it’s available for that price, buy it, if it’s not, don’t. That’s how the free market works. If Penguin wants to charge $25 for its ebooks, that’s up to them; buy it or not. The fact that you are getting a physical book versus an e-book should not matter (unless it does matter to you – in which case price that element, accordingly, ie, for the ability/inability to share); I consider ebooks more useful than hardcovers, so I’d pay more for an e-book than for a hardcover. The actual cost of production is irrelevant; it affects the potential prices we might see (ie, they won’t sell at a loss) but it shouldn’t affect what we’re willing to pay. I don’t ask myself how much that risotto cost the chef in the back to prepare after all (well, unless I am going to make it myself!); why should that be relevant with books? The illusion that “fairness” is a relevant term in market economics is just that, an illusion.

  11. dsuzuki

    Thanks for the breakdown Joe! It is sad that the author gets so little. My preference is actually for paperbacks, ebooks and then rarely do I buy hardback books.

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