Thursday, March 24, 2011

E-BOOK PRICING Part 1: The List Price

By “list price” I mean the price that a book is listed for sale, not a time-limited promotional price, or a subsequently discounted price - IOW, the price an author (or their publisher) initially puts on their work. I’m limiting this discussion to US list prices, as the US genre fiction market is the most mature, and the non-US markets at the moment are a largely random mess of prices, for various reasons that have nothing to do with authors or readers.
One of the few things I feel reasonably certain of is that ultimately genre fiction readers as a whole, our audience en masse, will define the price of genre fiction e-books, just as audiences always have and always will with all entertainment products based on a value-to-them-for-$-paid-and-time-invested judgment.
Consequently, the approach I’m taking to e-book pricing is to ask one simple question:  What are our readers willing to pay for genre fiction e-books?
Let’s start with now, today.
Check the Kindle and Nook stores, look at the majority of books on the genre fiction bestselling lists, look at the majority of genre fiction books selling overall throughout the stores. Look at the USA-Today list.
The vast majority of genre fiction e-books are selling at either the paperback equivalent price, or higher when it’s the e-book of a genre fiction hardcover release - e.g. Lisa Gardner @ 12.99, many others @ 9.99.
The genre fiction audience en masse appear to have accepted the genre fiction paperback pricing range (and it is a range, with influencing factors including length, author, publisher among others) for genre fiction e-books. On the issue of price, our audience as a whole and at this point in time doesn’t appear to distinguish between e-books and paperbacks.
Yes, I know a lot of commentators want to insist that e-books should be cheaper, for this reason or that, but again, go and look at the stores - our audience as a whole doesn’t care. 
To reiterate from last week: For any piece of entertainment, it’s the experience the audience pays for, not the ticket that gets them into the show. Words on a page are words on a page, whether it’s a digital or a paper page - to the genre fiction audience the end result, the end value, is the same. And they are demonstrating that that’s how they see it.
But there are other reasons to vary the list pricing of e-books - namely to optimize audience and commercial return. Those two parameters are of paramount importance to any storyteller, and also to their audience, and the digital format finally - finally - allows these to be optimized, in a way that could never be done with print.
I am, of course, speaking about authors experimenting with pricing to find what has been termed the “sweet spot price” - the one at which audience and commercial return are maximized.
At this moment in time, my prediction is that at some time during our (r)evolution, all authors/publishers are going to want to establish the sweet spot price for each individual author. Individually. Because to our audience en masse we, the storytellers, are individuals, and the digital world finally allows for that.
Once authors move to digital (either only or dominantly) there is no logical reason that broad-based, albeit audience-defined price ranges of any sort need continue to apply.
To my established author colleagues, does this picture scare you - the one where you are standing before your audience and essentially saying: you know me, you know my stories - how much are you, my audience en masse, willing to pay for my works?
The truth is we’ve been doing this all along, but have been constrained by the limitations of print pricing and the industry that necessarily surrounds print publishing.
In the digital world, we are no longer so constrained. We are free to deal openly with our audience, and I would hope that ultimately both storytellers and audience will be the better off for that.
Currently my only reservation about experimenting to define the sweet spot price is this: Doing such an experiment before the majority of an established author’s already established audience has shifted to digital is very likely to give skewed results.
To me, with a very large proportion (>90%) of my already established paying audience still buying in print (yes, right now), that’s a big reason to wait. Even though I don’t want to.
Yes, of course I’d love to be jumping in and playing in this new pool ala Konrath, Wesley-Smith, Eisler et al., but I’m a numbers person, and for me the numbers currrently say: No. 
Actually, that’s not true - they say No!
But that’s me.
I believe that in our digitally-dominated ecosystem, for each author’s works, the audience as a whole will make the value-to-them-for-$-paid-and-time-invested judgment that they always have, but in moving to digital the range of prices over which storyteller and audience can negotiate currently runs from 0.99 to 20.00.
Where any author lands sweet-spot-price-wise will be defined by the audience-en-masse’s perception of the value to them of that author’s works.
So how to define what a new author’s digital works should be priced at?
To me, this is the next (r)evolutionary invention required - we need some clever person to define a list of steps a new author can follow to approach what I view as a negotiation with the digital genre fiction-buying public.
That said, so far I’ve seen 3 different approaches and outcomes:
1) list low to reach a wide potential audience seems the way most have opted to go. An entirely legitimate strategy, which has been successful for some but not for others, but one that doesn’t solve the pricing issue - what of their next work? And the next? What is their sweet spot price and when and exactly how are they going to determine it? And (the potential worm in the apple) will starting out at 0.99 with a body of works impact on an experiment run later? I’ve no idea - I’m just asking the questions.
2) there have been several instances reported (on KB) of new genre fiction authors who have not succeeded at 0.99, raising their prices to something more in keeping with paperback prices for similar works and actually selling significantly better. Is this a case of sweet spot pricing in action with a different audience-generated twist?
3) others have from the first priced their works in line with the current paperback price range, and are gradually building decent numbers as they add works - very much akin to a print-publishing build over a succession of releases. I suspect this is sweet-spot pricing starting at a different point on the curve - trying to predict the sweet-spot before setting the initial price. Arguably the smartest move.
That said, I’m not advocating any particular stategy - there are pros and cons to all, and what works for one may not for another. To me the target should be getting the price right for the audience that wants to buy and actually read your work - and then come back for more.
For established authors, once they reach the point where they are comfortable doing the experiment, they can move up and down, and then decide which way to head. And yes, for some, the way might be up. For established authors already selling sufficiently well to get by, there’s no need to go in big leaps - a small but definite step using one title will point the way, and can then be followed with further steps, further titles, as appropriate. For established authors with lots of works, I see no reason to rush this process.
But for all authors, the mammoth in the corner is the huge overhang of genre fiction readers still reading in print who will eventually transition to digital. You can argue % until the cows come home, but it won’t alter the fact that there are a lot of such readers out there - enough to swamp the current digital genre fiction-buying audience and then some. And for many, perhaps most, of those yet to switch, their perceptions of value are already entrenched. Of course, perceptions can change, but I doubt anyone can at this point guess where the balance of value-to-them-for-$-paid-and-time-invested price perceptions for the audience as a whole will lie once the transition is closer to complete.
Nevertheless, for list pricing of digital works in a digitally-dominated future, my prediction would be that the pricing ladder will have a lot more rungs in it than at present, and each author’s position on that ladder will be based on the audience-en-masse’s perception of the storytelling value attached to each author’s name.
And that position might change over an author’s career, in either or even both directions.
From where I sit, the switch to digital is underscoring and emphasizing that every storytelling author - their body of works, their audience, their career paths, every aspect of being such an author - is individual. And that’s by no means a bad thing.
I’ve restricted today’s discussion to the list price of e-books - next week, in what will be my last post, we’ll look at the thorny issues of permanently lowering the price of backlist and e-only specials, and also temporary promotional pricing and the differences between e- and p- in that regard.
Next topic: will be posted on Sunday in the comments.
Next blog post: will be posted next Friday
CAVEAT: Nothing posted on this blog, or in its comments, should involve commercially sensitive information. Contracted authors please exercise due diligence in your comments.
All blog posts by the author should be viewed as personal opinion and postulation. Said opinions will alter to reflect changing facts.


  1. You have a massive point! And can I just say how much I dig the science-mathematical nature of your post as well?

    I honestly have no idea how best to proceed, and until someone has a definitive guidebook, I guess we'll have to keep doing the trial and error method.

    But please keep up the good work! You are MAGNIFICENT! And as someone who is both a fan of Dinosaurs and flowers, please know that I love your blog.

  2. Glad you like the blog. I'm increasingly wondering if the transition period might end up being much more protracted than anyone currently expects. I keep looking at the large numbers of genre fiction readers still reading print, primarily although not solely through wholesale outlets, and I keep asking myself, what's it going to take to convert them into e-book-buyers. And the answer isn't cheaper - or even free - e-readers. Many of these readers seem truly wedded to print and not interested in e-books, period. Many seem uninterested in digital anything more than they already have to cope with.

    I keep thinking of a comment from Gin a few posts ago, about how we assume others - those readers for instance - must be as excited about e-books as we are, but either haven't had time, or need cheaper devices or whatever - and if they just get that, then they'll jump into e-books right along with the rest of us. Of course. Hmm.

    Until now, I've been comparing the transition of genre fiction from physical to digital to the other great inventions of recent decades - the internet, and cellphones. Both took a total of 20 years to be widely and pervasively used. Digital books started in the late 1990s - say 2000. So we're half way there, and so far the trajectory of change has largely followed the trajectory of uptake of the internet and cellphones - only early adopters, and then at about the 10 year mark, things start to expand significantly into the wider population.

    But there's a serious difference between e-books, and the internet and cellphones. Neither the internet nor cellphones were replacing anything already there. They were de novo inventions/products. E-books aren't - they are merely a new format of an existing product. And it might well be that there will be resistance from a significant segment of users who prefer the physical version and simply do not want the digital.

    Interesting time ahead, for sure.

  3. Next Friday's post:

    E-BOOK PRICING Part 2: Promotional Pricing - Or Here Be Dragons.

  4. I fought buying an ereader for quite a while, now i don't think I will ever really go back to strictly paperback books because I like the convience of having 100 books at my fingertips at all times (I am a really fast reader) without having to lug them around with me. The downside is that the prices that ebookstores initially offered have gone up drastically in just the 1 1/2 years that I have had the ereader - yet we don't have the priveledge (at least with Sony) of passing the book on when we are done, the feel of a book, the smell of a book, or even just having a tangible book, yet they want the same prices (or more if you consider discounts at major bookstores/superstores). So until ebooks come in line with their prices to account for what a reader loses on buying e-versions, I don't think people will change over.