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Probably the most intelligent thing about ebooks is that famous $0.99 selling price

23 April 2011

I recently discovered Claude Forthomme’s blog. She’s followed Passive Guy on Twitter for awhile and jumped into a discussion on Nathan Bransford’s forum I’ve mentioned a couple of times before.

I checked out her blog and discovered she’s a writer, painter, cook and economist who lives in Italy, so this all sounds good.

She also has some serious opinions about ebooks and brings her economist’s sensibilities to bear on the subject. For one thing, she understands how important the 99-cent price option is.

Excerpts:

 

But what about the next stage of the e-book market? No doubt this is a bullish market, growing at exponential rates. E-book sales have already topped paperback sales, suggesting that e-books are likely to replace paperbacks in the not too distant future – particularly considering the exponential speed of growth of the e-book market (at 200% a year, and possibly much more, like tripling or quadrupling over the next couple of years). Actually growth in e-book sales surpasses print sales in all trade categories, fiction and non-fiction. If you consider that e-books on average are cheaper than any form of printed book, then it is probable that the number of book titles sold in digital form is higher than in printed form, although actual figures so far are not available (I haven’t seen any – if you have, please let me know). Since printed book sales are headed down, it would appear that people are shifting from printed books to e-books.

Another important point: driving this e-book growth is the fact that people are re-discovering back titles, classics etc, all sold at generally low prices. Lots of people are stocking up like mad as soon as they acquire an e-reader. One of my friends confessed that she’s bought some 250 titles since she got her Kindle last year! I haven’t, but I suspect that I’m a particularly finicky reader and probably not “in the norm”: I don’t go for “genre” reading and tend to download samples before deciding to buy, and very often, after twenty pages, I just delete the sample.

. . . .

Let me don my economist’s hat for a minute (ugh!) and consider the structure of the e-reading market. First, let’s remember that e-readers are bought by people who can afford them, i.e. people with a “comfortable” income, presumably with a steady job and belonging to the cultured middle classes. Second, judging from the spike of e-reader sales at Christmas, a lot of e-readers – perhaps as many as half – are bought as gifts. Presumably (again, nothing is certain) these are gifts for the family, in particular teen-agers. Since teen-agers have generally limited pocket money, one may assume they are the ones buying e-books at the low end of the price range (from $0.99 to $3.99) and possibly downloading free titles.

And this is where (perhaps) the book-reading market might be expanding: for the first time, adolescents everywhere are in full charge of their book purchases. They don’t have to go to the bookstore with Mum and Dad to buy books and have their choices dictated by adults. They learn for themselves the pleasure of reading, and hopefully that pleasure will remain with them for the rest of their lives. This might help explain the extraordinary success of Amanda Hocking’s paranormal romance titles – clear emulations of Stephanie Meyer’s “Twilight” which, as we all know, is currently all the rage with teen-agers. Amanda Hocking’s e-books became blockbusters last year and turned her into a millionaire in less than 9 months because in the e-book market there is a vast, new Young Adult audience looking for just this kind of book.

You’ll want to read the rest at Claude Nougat – It’s Political, it’s Artsy!

Disruptive Innovation, Ebooks, Pricing

2 Comments to “Probably the most intelligent thing about ebooks is that famous $0.99 selling price”

  1. Arny Handelman

    What is a book? It’s a means of delivering content. An ebook gives you the same content as a printed book. So theoretically the reader is getting the same value. The print book, if ordered online, requires paying for shipping and handling. It also takes a few days or a week or so to get. Ebooks are instant download with no s & h cost. Print books had the advantage of enabling the writing of notes in the margin, dog-earing or putting a sticky flag on a page, etc. But now you can do the same digitally with an ebook. Ebooks really need an e-reader which costs money. But many ebooks can be downloaded as a PDF onto your computer or laptop. When travelling, it’s much lighter and less bulky to take an e-reader, rather than several print books. But essentially the pros and cons balance each other, so choice is a matter of personal preference–and price. That’s the question. Readers know that print books cost money for paper, covers, dustjacket, storage, shipping, etc. So a higher price point is accepted. Readers also know that digital ebooks cost almost zero to deliver. So there has been resistance to paying a high price. 99 cents was a popular price point. It seemed to creep up to $2.99 because of Kindle’s commission policy making that a price point. Now, after considerable whining and pressure from authors, ebook prices have climbed to where $9.99 is mentally acceptable by readers–especially if it’s a non-fiction book that will be helpful, or that hypes the potential to be helpful or profitable. But many non-fiction books are higher. Millionaire Fastlane, promoted by its millionaire author, sells for $22.00 hardcopy on his website, and $22.00 for the ebook. Yet Amazon is discounting the hardcopy substantially, to around $14.00. The author doesn’t seem to mind, and does not cut his ebook price in response. He must know what he’s doing, because he’s a self-made millionaire entrepreneur. I assume he has tested different pricing for the ebook, and found that the optimum price is the same one as for the hardcopy. The message I take from this example, is that if your marketing is good, and you create demand, you can set your ebook price higher than common sense would indicate. Just test to decide.

  2. Arny – Good thoughts.

    We’re still in the very early days of ebook pricing and a lot more shaking-out will happen in this market before people figure out best practices.

    Indie authors are doing most of the shaking on pricing, however. Big Publishing basically price-signals back and forth and doesn’t have a tradition of price competition, so everyone is in the same ballpark in Manhattan. What disrupts that pricing model is that indie writers have climbed way up the Amazon bestseller lists and sold a ton of ebooks using .99 pricing as their tool.

    Additionally, the iTunes .99 pricing for a song has had an effect on pegging a download at a particular price point or at least a price range that is way lower than the standard Big Publishing price for a book of any type.

    Also, I’ve read (I think from Dean Wesley Smith) that book prices have substantially outpaced the CPI since the 1960’s when mass market paperbacks cost 50 or 75 cents.

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