E-book pricing is one of the pillars of Digital Book Discovery and below you will find a thought-provoking, but not very helpful to the average indie author (in my opinion), article from Digital Book World about how publishers and authors should think about pricing their e-books. Back when I was in business school, we learned about the concept of price elasticity – which means how far can you stretch a product’s price before the customers refuse to pay anymore for it. Now let’s look at e-books with this concept in mind. It has already been proven that readers will pay more for a known author’s book than for an unknown’s. Stephen King has more brand awareness, brand equity, and pricing elasticity than Qwantu Amaru (unfortunately lol).
And if my career as a marketer in the pharmaceutical industry has taught me anything, it has shown me that once you have supplied the available demand, you need to continually and gradually increase your average price over time to maximize the value of your asset (books). So what does all this marketing-speak mean to you? Well, as and indie author, you have to first create a brand before you can extract the maximum value from it and author brands are created one happy reader at a time. Therefore, the most effective pricing strategy for indie authors is to capture as many readers as possible (by offering a very attractive price point) with a high-quality/well-reviewed product, keep producing books that are of equal or better quality (better reviews), capture even more readers, and keep moving the prices for all your books up as your brand equity goes up. The more provocative question is how many books or happy readers does an indie author have to publish and gain before they can command J.K. Rowling prices? That, my friends, remains to be seen…
Enjoy the article, and let me know what you think in the comments!
Is there room for new thinking on ebook pricing strategies? The medium is still new, so customer expectations have not been set in stone. Now’s the time for publishers and authors to think strategically about the cost of e-books.
I’ve looked at ways businesses in other fields charge for their services and come up with some “outside the box” ideas about the value of ebooks. The result is a list of 7 must-consider strategies for determining the price of your ebook.
Which strategy will work best for your title? Publishers and independent ebook authors should consider them all before pricing the book they worked so hard to create.
Ebook Pricing Strategy #1: Charge extra for convenience
Though ebooks cost less to print, ship, and stock than paper books, they’re much more convenient for readers. So why not charge extra for that convenience? With this strategy, the price of an ebook would be higher than its equivalent in paper—isn’t immediate access worth something to consumers?
Consumers save the cost of transportation to the book store and retain the “value” of the time they save. Think about it. Online ticketsellers have been getting away with convenience surcharges for years. They add a buck or two (or more) over the top of an event’s ticket price, just for ordering online—and consumers don’t walk away.
Ebook Pricing Strategy #2: Link ebook prices to their ”value proposition”
People pay more for a Mercedes than a Yugo, right? So why not price ebooks this way—charge more for ebooks by premium authors. Sometimes paper books command higher dollar amounts for titles by highly influential writers, but In the realm of paper books, a thicker title from an unknown author is generally more expensive than a thinner book from a well-respected one. The price of books has traditionally been linked more to the cost of the paper and ink than the value of the “brand” it comes from.
Publishers never really jumped on the “premium pricing for premium brands” model that other industries embraced—think auto industry, fashion industry, computer industry. Granted, developing a higher price-point brand requires sustained marketing, a shift in consumer attitudes, and doesn’t happen over night, but it can happen.
Ebook Pricing Strategy #3: Factor in the author’s time
A bigger bridge costs more to construct than a smaller bridge. Why? It takes more time. A handmade quilt costs more than a manufactured one. Why? It takes more time. Using that logic, shouldn’t an ebooks’ price correlate to the author’s effort?
The price of a book frequently does not have much correlation to the amount of time or effort put into it. A novelist may toil for years on a story that doesn’t cost more than a hastily imagined one. A historian may put a whole career’s worth of research into a book that may have the same price tag as one quickly compiled from existing sources. Why not proudly charge more for ebooks that took more time to build? People pay for quality if the resulting experience lives up to its promise.
Ebook Pricing Strategy #4: Make ‘em free…to help gain market share
The “free ebook” strategy is being embraced by thousands of new ebook authors. They’re hoping to gain a share of the reading market with these free books, so they can eventually charge more for their works once their name is well known.
Some believe this strategy is counterproductive because the freebie authors are devaluing their own work—and, by bringing down the whole market, they’re devaluing the work of other authors, too. Authors deserve to be paid for their work.
Authors who choose to offer their work for free, however, do have one concept right—success in publishing is fundamentally about gaining a share of the reading market. Popularity leads to publishing success. And offering your work free is one way to gain attention. To grow an audience, free can be one way to start.
Ebook Pricing Strategy #5: Price newer titles higher than old ones
The idea that a new book is more valuable than an older book is ingrained in the book business. I really only have this strategy in this list because I’ve observed it in practice today—though I believe it’s a strategy that does not benefit publishers or authors.
Like bread that’s more valuable when it’s fresh, brand new books have historically cost more than books that have been around a long time. It’s part of the logic behind hardbacks and paperbacks… eager readers spring for the higher price hardback, less enthusiastic readers wait for the cheaper softbound edition.
This “newer equals more valuable” reasoning is also what’s behind the concept of the public domain. Old books—you know, Shakespeare and Emily Dickinson and such—have been determined to have no monetary value. In the public domain, they’re free, right?
Personally, I believe that when it comes to ebooks, pricing a title by its age seems illogical. I’d rather pay for a Dickens classic written in 1861 than a snoozer written last month. But the newer-costs-more pricing strategy is in line with many current pricing plans as well as our copyright policies.
Ebook Pricing Strategy #6: Tie an ebook’s price to the cost of other formats
Today, the prices of many ebooks seem to be determined by placing ebooks on a production-cost spectrum with hardbacks, paperbacks, and audio books. Because the cost-of-goods-sold is lower for ebooks, they come out as the “discount” option.
Here’s some perspective. A large format, colorful coffee table book about Leonardo Da Vinci would cost more than a copy of the The Da Vinci Code by Dan Brown (the novel is smaller than the art book, uses lighter paper, and requires less ink). A hardcover version of The Da Vinci Code would cost more than a mass-market paperback of the same title (the paperback is smaller, lighter—even less expensive to produce than a hardback).
When ebooks are added to this spectrum, they would logically be priced lower because the production costs are lower. Certainly many readers expect an ebook to be cheaper than a paperback. “An ebook is just bits and bytes—I should pay less for that!” many consumers think.
But if publishers keep using this strategy without seriously thinking about other pricing models, they could be leaving dollars on the table. Ebooks don’t necessarily have to be priced lower than paper books just because they’re not paper and theoretically cost less to produce. Look at audio books. Many audiobooks cost more than paperback or hardback versions of the same title—and audiobook fans seem to be willing to shell out the extra money.
Ebook Pricing Strategy #7: Let the readers decide
Could a publisher let readers name their own price for an ebook? That’s preposterous—or is it? With the pricing flexibility built into online bookstores, ebook publishers are free to experiment—charge one price this month, a different price the next, or even one price on one store, a different one on another—for as long as it takes to find the “sweet spot” price that feels right to the author, publisher, and the reader.
Ebook publishers would be wise to spend some time and effort in testing out various prices for their titles and ultimately “let the reader decide.” Consumer product manufacturers have been experimenting with pricing for years. Independent ebook publishers and self-published authors have been doing it as well (see strategy #4, above). Perhaps it’s time for all ebook publishers to take a more active role adjusting their prices as market trends change.