Home » Amazon, Big Publishing, Smashwords » Do E-Books Earn More Money at Lower Prices?

Do E-Books Earn More Money at Lower Prices?

16 September 2015

From Brady Dale at The Observer

. . .

With e-books rising and print’s share declining, there’s a fierce debate about what e-books should cost. The publishers recently won the right to raise their prices on Amazon at will, but signs suggest it’s not paying off. At least, if you measure the payoff in dollars. Evidence suggests higher prices may not be the best way to make more money in the digital literature market, but publishers may have other reasons for jacking up costs.

. . .

If any books were necessary, one would think it would be the books from major publishers. Those are the books you are most likely to get quizzed about at cocktail parties or that your boss is most likely to say that you should read. Yet even for these stickier titles, higher prices lower sales. In fact, lowering sales so much that the publishers are making less money than they made before.

Meanwhile, all told, more writers are producing more books and making more money than ever before. A lot of that increase has occurred outside major publishers, though.

This is a point that Amazon has made in the past. Last summer, it gave the public a peek into its data around prices and e-book sales. The Amazon Books Team posted on the Kindle Forum, writing:

For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000.

Smashwords, the online retail giant’s little baby brother, made a similar point on its blog. It wrote that, in its experience, lower prices modestly increase total income while majorly boosting readership, which the company contends better insures a writer’s future.

. . .

This question of perception may explain what’s going on with the major publishers. Booksellers still account for most of the publisher’s money and relationships. They no doubt fear that low e-book prices undercuts the sales of physical books in the storefronts of their old friends. Fair enough, but the world is changing.

. . .

Publishers, it seems, are making less, as well. Of course, they have the right to do whatever they want, but the move doesn’t seem to be helping anyone but—perhaps—booksellers. So, why are the big guys still raising e-book prices?

Link to the rest at The Observer

This post provided as part of a package of perpetual participation during PG’s vacation by Bridget McKenna

Amazon, Big Publishing, Smashwords

12 Comments to “Do E-Books Earn More Money at Lower Prices?”

  1. And it can be even greater if the price is lowered still more (than the $9.99 — which was as low as this blog ever thought of going.) For a ‘new/unknown’ a better price might even be $2.99 — a ‘What the heck — if it’s a bomb I’m not really out anything’ price.

    Amazon answered this question a while ago, it seems some people still don’t want to think it might actually be true …

    • This has been my behaviour for the last year:

      A (trad-pubbed) author I want to read has ebooks available for $9.99 or higher. I refuse to buy them, but instead spend $15 on a trade paperback from my local indie bookstore, and complain bitterly about it.

      I see a book I might be interested in, but it’s priced above $5.99. I skip over the book, and I’m not motivated enough to by anything from this author.

      I see an interesting ebook at $2.99 from an unknown author and I jump on it. What the heck; it’s worth it to discover someone new. If I like them, I’m willing to spend up to $5.99 on subsequent titles.

  2. Not noticeably, no. I dropped my 80K word indie title’s price from $3.99 to $0.99 as an experiment, hoping for better sales. They didn’t budge. I think different variables are at work here, and price as a single determinant is a non-starter.

    • I didn’t 100% spell this out in the story, but I sort of say it. I think the underlying assumption is “a book that’s selling.” If an author doesn’t have an audience and there’s no buzz, it probably won’t move things.

      The reason the big publisher thing is powerful, tho, is that it shows that price elasticity still applies, in a very real way, for sticky books.

      Yes, it’s not the only factor, but it appears that if there is demand for a book it will earn more at lower prices, up to an optimal point.

      I do kind of have a feeling that .99 is TOO low, as I also sort of say. it sends a bad signal.

    • I agree. Just lowering the price to $0.99 won’t make a book a best-seller.

      Making it free won’t do it either.

      However, having the majority of trade published e-books priced over $9.99 has definitely given my books a big boost.

      Thanks Big Publishing!

      • I don’t think anyone is suggesting that there isn’t a point where dropping prices stops helping. But certainly with high priced books traditionally published books it would help. I’m usually ready to jump on a new author at up to 3, most authors I’ve read before I’ll buy at up to $5. There are a handful of favorite authors I will buy at up to 8 or 9 dollars and precisely one series I am hooked on enough to pay 12 or 13 for.

        • I’ll occasionally buy something over $4.99. Not often.

          When I got started in this business, $0.99 was the magic number. That was 2009, a lot has changed since then.

          I’ve got some free short stories and my series starter is $0.99 on Amazon. Otherwise, I stick to $3.99 for novels and $0.99 for short stories.

          I stay out of KDP Select and Unlimited because Amazon is not my best market.

  3. If any books were necessary, one would think it would be the books from major publishers. Those are the books you are most likely to get quizzed about at cocktail parties or that your boss is most likely to say that you should read.

    “Hey, Lenny, what do you think of Goldfinch?”

    “Goldfinch? Is that the kid the Jets drafted out of Clemson on the sixth round?”

  4. “If any books were necessary, one would think it would be the books from major publishers. Those are the books you are most likely to get quizzed about at cocktail parties or that your boss is most likely to say that you should read.”

    Honestly, these things never happen to me, though I do discuss books with people quite often. Perhaps the notion of “necessary books” is simply passe, at least for those of us who don’t have assigned reading from educational institutions.

  5. Here’s some anecdata from my latest promo effort. I lowered the first book in my sf trilogy to .99 for a group mutual blog-post promotion. I set the price ahead of time to make sure it would take in time for the scheduled dates.

    I was surprised to see a bump in sales *before* anybody announced the promotion on their blogs, and a bit of searching and google-fu resulted in finding a “free and .99” book listing website had somehow scanned and picked it up. Then the cross-posting promo hit, and that was even better.

    I do *not* recall this happening on my previous price-drop promotions. Maybe someone is getting more clever with the Amazon searches? The only constant is change in this industry 😀 Yes, lowering the price can help but you have to let people know somehow that the price is lower, especially if it hasn’t been selling that well before.

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