Pricing

Is Agency Ebook Pricing Suppressing Sales? Hard to Say

30 April 2015

From Digital Book World:

The latest monthly data from the Association of American Publishers (AAP), for January 2015, show ebook sales in slump.

Comprising just 20% of trade sales, digital formats clocked in at $100.3 million, down more than 10% to what Publishers Lunch notes is the lowest monthly sales figure since April 2012, when the AAP reported digital sales at $99.5 million.

Some suspect the progressive restoration of agency ebook pricing that began late last year is a likely culprit for the decline.

While that may turn out to be the case, the fact is it’s very difficult to tell.

Publishers Lunch, which tracks and analyzes the AAP figures each month, has noticed considerable variation in what participating publishers report month-to-month, as each successive report includes revised data from the corresponding month twelve months prior.

Which is just one of several reasons why the latest snapshot, as Michael Cader commented yesterday, “shows how far we still have to go in obtaining reliable, consistent basic statistical measures of what’s happening in even a portion of our marketplace.”

Link to the rest at Digital Book World

Higher prices reduce sales? Amazon knows more about pricing ebooks than Big Publishing? Impossible!

The Definitive Guide to Pricing Your Book

20 April 2015

From Wise Ink:

Just like the actual writing of a book, pricing is part art and part science. There is an uncountable multitude of influences that go into finding the perfect price for your book, but we’ve compiled seven of the most important factors here for you.

1. Figure out your goals

Some authors see their books as businesses. These “authorpreneurs,” as we like to call them, put an investment into their work, and they want to get the biggest return on investment possible. They should price their books like any other profit-driven business would price an item.

Some authors just want as many people to read and love their books as possible. These authors are fine with not making any money—or even losing money—as long as they get to tell their stories.These authors will give their books away for a pittance or for free.

Most of us authors are somewhere between the two. If we wanted a good investment, we’d throw our money at Google. But we’d also like to skirt bankruptcy, if at all possible. Where you fall on this spectrum is one of the most important factors in pricing your book.

2. Charm Pricing

Charm pricing—also known as psychological pricing—is a strategy based on the theory that certain prices have a psychological impact.

The most common example of charm pricing is ending a price 99 cents. There’s a mildly interesting scientific explanation for why it works, but you just need to know that the number nine is extremely powerful in pricing. Studies indicate that, counterintuitively, you can sell more of the same item for $39 dollars than for $34. Not that you should be selling a book for anywhere near that amount of money—unless you’re J.K. Rowling, of course.

In the case that you’re enneaphobic—afraid of the number nine—fear not. Setting a strange price, like $3.43 or $15.27, can make consumers think you’re selling your product for as cheap as possible. This strategy was used on Water For Elephants, which topped the ebook charts at $4.13, and at the time of this writing is a $9.12 ebook and $9.60 paperback.

. . . .

7. Think Less About Production Costs

 It’s tempting to price your book from the bottom up. Ideally, you’d predict how many books you’re going to sell, and then figure out how to break even on production while paying yourself a minimum wage for the time you’ve put into it. However, consumers don’t know or care how much it costs to produce a product, only how much the product is worth to them. That could be more—but is probably less—than you think it should be, but c’est la vie.

Link to the rest at Wise Ink and thanks to Scath for the tip.

Can you really make a living by selling used books on Amazon for a penny?

15 April 2015

From The Guardian:

Sometime in early 2013, in Dallas, Texas, a generous reader donated his impeccable first-edition copy of Philip Roth’s Our Gang to the local Goodwill store, its royal blue dust jacket gleaming as brilliantly as it did in 1971.

There it sat on a shelf, priced at $1, until a semi-trailer from Books Squared whisked it away among 3,000 other leftovers. At the Books Squared warehouse in south-west Dallas, Our Gang was checked and processed by receivers and a scrupulous quality-control team, who deemed the book “like new” before scanning it into their computer system to be sold online.

Dynamic pricing software cross-referenced every active listing of a used, like-new, hardcover copy of Our Gang across online marketplaces like Amazon and Abebooks, then matched the lowest price. Last March, four months after it was listed, I bought the book for a penny, and Books Squared shipped it to my apartment in Toronto. This handsome volume is sitting proudly on my desk right now.

. . . .

Online, such literary treasures are in ample supply. But deals this good raise an obvious question. It clearly took a lot of time to usher Our Gang from the backrooms of Goodwill to Canada, where I live. So how does anyone make money selling a book for a cent?

. . . .

The only trouble is the low quality of that yield. Mike Ward, owner of Thrift Books – the largest of the used book sellers in the US and parent company to a number of subsidiaries, including Books Squared – likens the book collection process to “a very large salvage operation”. His network of warehouses is bringing in, on average, 15 semi-trailer trucks full of used books every day, but less than 20% of those books arrive in saleable condition.

The first thing Ward’s handlers must deal with is the garbage: “three-ring binders, Bibles, old Reader’s Digests, books that aren’t even books, books that are totally destroyed”.

From there the stock moves on to the receivers, who inspect each book’s condition and determine, by computer, its likely demand. “At that point they’re throwing away about 65% of what they touch,” Ward says – in part for the poor state many of them arrive in, of course, and in part as a consequence of supply and demand.

“There’s a limit to how many copies of Jurassic Park I can sell,” he explains. “If I already have a thousand in inventory and I think I’m only going to sell 500 in the next three months, I don’t want any more.”

. . . .

Root through enough charity shops and library discard piles, and you’re bound to come across a few valuables. In such cases the used book seller becomes a sort of antique dealer: with a few keystrokes they can put a true rarity online where those most interested can find it. Perhaps that’s why Mike Ward says Thrift Books is in the business of “matching people up with the treasures they want”.

. . . .

Penny books, of course, don’t seem quite so lucrative as a $45 volume on cattle. “If you talked to me 10 years ago and said that you’d be selling books for a cent on the internet, I’d have said that’s impossible,” Roberts says. But there’s some money to be made for those who are, as he puts it, “extremely efficient”.

The price point is partly a result of the market’s downward pressure: at a certain level of supply and demand the race to the lowest price swiftly plummets to the bottom. What remains inflexible is the $3.99 fee Amazon charges the buyer for shipping. From that $4, Amazon takes what they call a “variable closing fee” of $1.35. They also charge the seller 15% of the item’s price – which in the case of a penny book is zero. That leaves $2.64 to cover postage, acquisition cost and overhead.

“All told,” Mike Ward concedes, “we only make a few cents on a penny book sale like that.” Now that hardly seems like much, true. “But keep in mind,” he adds, “that last year we sold 11.5m books.”

Link to the rest at The Guardian and thanks to Dave and several others for the tip.

Does Agency Pricing Hurt Reading Consumers?

10 April 2015

From GoodEreader:

Mark Coker, CEO of Smashwords and a long-time supporter of the agency model, spoke to Good e-Reader about why this model is good for authors and publishers–the two stakeholders who must secure a profit in order to continue providing books–and good for smaller retailers who otherwise couldn’t compete with a corporate behemoth in terms of pricing. More importantly, Coke addressed one often overlooked concern:does the agency pricing model hurt consumers?

. . . .

“If an author or publisher is trying to screw them over with a price that is just outrageous, readers can say no. And publishers will hear that. Authors will hear that. Readers can put pressure on authors…if a reader feels like an author’s book is priced too high by the publisher, you can bet that all they have to do is tweet at that author about the book being priced too high, and the publisher’s going to be hearing that customers are angry. The marketplace has a lot of power. If readers can accept that it’s important that authors and publishers profit from the sale of a book since it’s their profit that allows them to continue this great service of providing books, then everyone can be happy. If readers think everything should be free, that’s obviously an attitude that is not sustainable.”

Link to the rest at GoodEreader

PG says price competition is a fundamental fact of life for most consumer products in most of the prosperous nations of the world.

The argument that books are special and shouldn’t be exposed to the horribleness of price competition is designed to protect traditional publishers and physical bookstores. PG doesn’t see that authors as a group have received great benefits from publisher-enforced pricing for books.

And why would anyone believe that Big Publishing knows enough to set the optimum prices for books? The last retail store owned by a publisher closed decades ago. Tradpub’s lame direct sales attempts are a joke.

For all of its attractions, New York is a fiendishly expensive place to live and the concentration of publishing headquarters in that metro area means publishing executives have no experience with how the rest of the country responds to pricing.

OTOH, from the viewpoint of indie authors, PG says choosing legacy publishing prices on the forty-first floor will mean more readers buy indie books and indie authors make more money.

 

U.S. Announces First Antitrust E-Commerce Prosecution

7 April 2015

From re/code:

The U.S. Department of Justice’s antitrust division on Monday announced its first prosecution specifically targeting Internet commerce, saying a man has agreed to plead guilty to conspiring to illegally fix the prices of posters he sold online.

David Topkins was accused of conspiring with other poster sellers to manipulate prices on Amazon.com’s Amazon Marketplace, a website for third-party sellers, from September 2013 to January 2014, according to papers filed in San Francisco federal court.

The Justice Department said Topkins also agreed to pay a $20,000 criminal fine and cooperate with its probe. His plea agreement requires court approval.

. . . .

Topkins was accused of conspiring with other poster sellers to use algorithms, for which he wrote computer code, to coordinate price changes, and then share information about poster prices and sales.

The Justice Department said this activity violated the Sherman Act, a federal antitrust law, by causing posters to be sold at “collusive, non-competitive” prices.

. . . .

Amazon was not charged in the case against Topkins.

Link to the rest at re/code and thanks to Joshua for the tip.

Hachette Livre’s Nourry discusses Amazon and e-books

3 April 2015

From The Bookseller:

For a year, while you were negotiating with Amazon in the United States, you did not speak in public. Was this very tough conflict worthwhile? 

It took up most of my time during that period. I did not express myself in public in order not to exacerbate the situation. Yes, it was worthwhile, as always when essential questions are involved. In this case, the question was whether the publisher or the retailer should fix selling prices for electronic books, and take account of the fact that many decisions taken in the United States have an impact elsewhere. I regret that this discussion took the form of a conflict, and I am delighted that we have resolved it. But if it were to be done again, I would do it again. All media industries that have not maintained control over their production in the electronic sphere are in great difficulty. If e-books were sold for $5 a copy, it would only take a few years for everything to change, creating a market without booksellers and a general public accustomed to paying almost nothing. Through huge mergers, the music business is now centred on three major world players. Diversity has been hard hit. Innovation in the sound sector is nothing like what it was 30 years ago. We do not have to the right to let this happen to books, which is the medium for creation, education, culture and democracy.
Your agreement with Amazon calls for improved sales conditions when you reduce your prices: have you reduced them?

No, or at least only when we have wanted to. The principle is not to keep the same prices all the time. So, we reduce them, raise them, test them. This is a marketing technique, and has nothing to do with relations with any distributor.
The conflict revealed  an unexpected desire for price regulation in the United States. With its experience of fixed prices in France, how does Hachette Livre explain the fact that it was at the front of Amazon’s firing line? 

Hachette Livre has played a special role since 2009-2010, when the agency contract was introduced. But I have no answer to the question as to why Amazon opened sales negotiations with us first. In fact, I hear more and more American publishers and booksellers point out the merits of the (French fixed price) Lang Law. But thinking it might be possible to replicate it over there is another thing ! It is not at all in the American culture.
What lessons do you draw from this conflict for your relations with Amazon and the world’s other major digital operators?

First of all, these large companies contribute to the market for books. We must forget the moments of conflict and realize that these companies enable us to reach different customers. Amazon has been a driving force. The same goes for Apple and Google. We must not throw the baby out with the bathwater. Secondly, in terms of relations, even if they are infinitely larger than we are, our creative capacity through our authors gives us a symbolic strength and consequently bargaining power. Last year, I was impressed by the number of authors who mobilized to push us to resolve the conflict. The situation is the same in France when we negotiate with a partner, which makes me confident and optimistic for the future of this (publishing) profession. But we must be able to control prices. If not, holding exclusive rights of our authors’ work will do nothing for us.

Link to the rest at The Bookseller

What Readers Say About Ebook Prices

19 March 2015

From The Fussy Librarian:

Let’s look at the one area that every author agonizes over — pricing. Also known as: Are ebook readers cheap moochers who don’t care if I eat ramen noodles for the rest of my life or are they willing to pay a reasonable price for this book that consumed two years and caused my children to resent me?

Question: What do you think is a fair price for a full novel in ebook format, that pays an author well, but remains affordable?

All ebooks should be free: 6 percent
99 cents: 8.7 percent
$1.99: 11.8 percent
$2.99: 16.5 percent
$3.99:  20.6 percent
$4.99: 18 percent
$5.99: 11.6 percent
More than $5.99: 6.4 percent

Now, I think it’s a mistake to look at this data and conclude, “Great, there are people willing to pay $4.99 and $5.99 for my book.” You’ve written off 64% of readers if you do that. And that’s not counting people who are turned off by the book synopsis or the cover … or maybe they see one of the “also-boughts” on your book’s page and buy that book instead. (It happens. I see it every day.)

Link to the rest at The Fussy Librarian and thanks to Vala for the tip.

So What’s Up (and Down) with Ebooks?

10 March 2015

From Dear Author:

So now that Hachette and Amazon have settled their epic feud, and we’re seeing the results of publisher negotiations with the retailer, we seem to be witnessing the revenge of traditional publishers when it comes to digital book pricing.

Last week I enthusiastically searched at Amazon for two books I could not wait to buy – so much that I was willing to pre-order them almost six months in advance of their release. The two books were Lisa Kleypas’s long-awaited Travis Family finale, Brown-Eyed Girl, and Daniel O’Malley’s Stiletto, the sequel to his highly entertaining and unique debut, The Rook. Kleypas’s book is published by Macmillan, O’Malley’s by Hachette. And both were $12.99 in Kindle format. Cue the sound of screeching brakes and a substantial thud as my enthusiasm crashed right against that pre-order button and skidded right off of it.

$12.99. For a pre-order. For a digital book.

The Kleypas I can almost understand, given the anticipation for the completion of her contemporary series. But the O’Malley? That one was more of a head-scratcher for me.

Sure, publishers say, digital books have costs built in, just like print books. And I agree. But, publishers say, we should value the intellectual property completely aside from the format. And I agree. Still, publishers say, creative content providers should be valued for their work. And I agree.

But I still think $12.99 for a digital work of commercial fiction is ridiculous. And baffling, especially in a market where for some traditional publishers sales are consistently down. And where you can get high quality, well-written, professionally produced books from small, digital only, and indie publishers and authors for $3, $4, or $5.

. . . .

For every author who seems to be doing really well in this new marketplace there’s another who is lamenting diminished sales. We hear that Kindle Unlimited is serving some authors really well, others not so much. And still more authors are entering the marketplace.

So what’s going on here? Is there any rhyme or reason, or is it just every author or publisher for themselves and whatever a reader is willing to pay is what they will pay?

. . . .

So that makes me wonder how other readers are engaging with books – and with other, competing forms of entertaining – these days. Are you buying more print books; are you using the library more; are you turning to Netflix or Scribd or Kindle Unlimited instead of buying every book you read individually. How much are you willing to spend on a book, and are you buying more or less right now, and from where.

. . . .

I am the kind of reader who will routinely purchase anywhere from three to five books at a time. I have no problem spending my hard-earned money on books. Lower-priced books have resulted in more book purchases from me, especially spontaneous purchased. Anything below $4 or even $5 requires very little internal debate.

And yes, I have a Hulu account and am considering a Netflix account. I belong to Amazon Prime, but I haven’t sacrificed my book budget for video streaming or movies. And actually I’m buying way more audiobooks now that I have an Audible subscription and a substantial commute to work, so if anything I’m spending more on books overall.

I love my Kindle and even have a membership to Kindle Unlimited, but I still buy the vast, vast majority of my books. And I buy a lot of books. I don’t even seek out ARCs anymore; if I want to read a book, I buy it. What’s most frustrating to me is that there are SO MANY backlist titles I wish I could buy in digital that I have to buy used in print, while there are digital books that I find so ridiculously overpriced that I will buy them used in print, even though I’d way rather have them in digital.

Link to the rest at Dear Author and thanks to Shelly for the tip.

Beyond $0.99: New tips on ebook price promotions

10 February 2015

From Gigaom:

The days when a single Kindle Daily Deal could catapult an unknown book up the New York Times bestseller list are probably behind us now. And big publishers are experimenting more and more with price promotions, so that a super-low price on a self-published ebook isn’t enough to help it stand apart. So as more and more and more ebooks are published, how have the mechanics of price promotions changed?

. . . .

It’s all about the shopping cart

The “cart” is an obvious feature of online shopping — but hasn’t always been a huge part of shopping for ebooks. If you’re reading on an e-reader, for example, you might be buying books one at a time. But Kobo learned the value of the cart at the end of the last year, when it added the ability for customers to buy several books simultaneously. In December the company ran a 3-for-2 ebook promotion for the first time, with great success.

“It was a price promotion, but it was really interesting because of what people were buying,” Nathan Maharaj, head of bookselling at Kobo, told me. “People were loading up on full-price ebooks, then often taking one that was already promotionally priced and dropping that in their basket, and that was the one they got free” — for example, buying a $14.99 ebook, a $15.99 ebook and a $2.99 ebook, with the $2.99 free. It wasn’t a “fight over how low can you go. This was completely different.” The promotion seemed to appeal to a different kind of customer — those who “haven’t been playing the cheap game very much.”

. . . .

Nonfiction is hard, but keep trying

Ebook price promotions are largely geared toward readers of fiction. “We’ve had some miserable luck with nonfiction” price promotions, Maharaj said. “My hunch is the nonfiction reader is differently oriented toward their reading material. Price is less interesting to them than, ‘Is this information I need now? Is this how I rule the dinner party? Do I need to master these concepts?’ … There’s a shift in emphasis in how the customer values it, but that’s a wild guess.”

At the same time, ebook price promotions are also less common for nonfiction. “If that’s your preferred area, it’s not a really good investment of your time to pay attention to things like daily deals and price promotions [because] the good stuff tends not to come up too frequently,” Maharaj noted.

Link to the rest at Gigaom and thanks to Dave for the tip.

Is this why Kindle Unlimited affects sales?

5 February 2015

From author and TPV regular Diana Kimpton:

Several months after the introduction of Kindle Unlimited, several indie authors have blogged about the way their sales have dropped while they were in the system and have picked up again after they left.

I’ve noticed the same. In fact, while it’s been in Kindle Unlimited, the ebook of There Must Be Horses has often sold slower than the print edition – a situation that is not usually the case.

It’s easy to assume that the drop in sales was due to readers borrowing the book instead of buying it. If that were true, I’d expect the number of borrows to be roughly equivalent to the drop in ebook sales, but it’s not. It’s much lower.

. . . .

It was only the other day that I noticed something significant about books in the KU library: they are listed on search results with a price of zero for Kindle Unlimited. The real price does show below it, but you naturally read the zero first and may not even notice the other number.

Amazon is probably hoping that this will lure people into joining Kindle Unlimited. However, it could also be having several less desirable effects.

  1. People who see the zero and think the book is free will be disappointed when they find it isn’t. As a result, they may neither join the library nor buy the book.
  2. The real price automatically looks expensive when compared with the zero offer.
  3. The zero may put off potential readers who equate free with poor quality.

. . . .

[T]he current way of listing prices for books in Kindle Unlimited my be restricting the effectiveness of our pricing strategies because the real price is less obvious.

Link to the rest at Horses and Dragons

Here’s a link to Diana Kimpton’s books

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