The dollar store: what price is the right price?

Mike Shatzkin published an interesting blog post on April 25th about the pricing of ebooks and how it differs between self published books and those published by an established publishing house. In it, he brings up an interesting point; self-publishers can set their book prices at any level they want. As an independent, they have fewer overheads and can therefore get away with lower prices.  Add to that that these books are now being printed digitally, and the cost of paper, printing and binding need not be accounted for, the price can be even lower. How do traditional publishing houses compete?

Shatzkin uses the case of self-publishing author John Locke who sells his books on Amazon for $0.99 as an example. He makes a compelling and highly accurate point when he says that Locke doesn’t have to justify his books to match his prices, it is the publishing houses that have to justify their prices and convince people that their books are ten times better than Locke’s, and are therefore worth the $9.99 price (for example). Locke’s books are extremely popular and are considered to be quality products. Can that be said for the majority of self-plublished ebooks? Are they as good as or comparable to those published by a traditional publishing house? Does it matter if people are buying them? Shatzkin then also makes the counter point that the publishing house need only sell 1/10th of the amount of books to reach the same amount of revenue as Locke, which is a true enough statement. I would argue that the high prices (those higher than $9.99) make publishing houses look greedy. They need to recoup their costs somewhere, but 10+ dollars for an electronic file you can’t even hold in your hand seems a bit much.

The aspect that interests me the most about the article is impulse buying, especially from a low-income perspective. If you have a credit card, and most people of age do, it has become incredibly simple to purchase almost any and everything online. A click here, a click there, fill out a form or create an account (and then no more forms, just a username and password) and you’ll be seeing an amount on your credit statement next month. With a lower price range, it increases the propensity for impulse buying. I would be far more likely to purchase something for one dollar than for ten. One dollar, or even three, won’t likely hurt your pocket book. Ten might not either, but you’d think about that purchase longer. When I walk into a dollar store, I usually walk out with more things than I intended because the price is so right. Clicking on that $0.99 book is rather harmless. Unless you are like Sophie Kinsella’s Becky Bloomwood, you probably wouldn’t click with the same abandon on higher priced books from traditional publishing houses.

As an experiment, I went to click on Mr. Locke’s book to purchase but found myself hesitating. Even though Shatzkin claims Locke’s stories are enjoyable, I wondered if something so low in price was going to be cheap and not worth the money. I was having difficulty letting go of that dollar. Have we been trained to think that things that are more expensive are worth more, are of better quality? This penny pincher thinks so. So maybe traditional publishing houses won’t have it so bad after all.

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The Price Is Wrong: Will A Lower Price Get Your Ebook Read?

Robin Spano’s blog on goodreads.com conducted an interesting experiment with ECW Press to try to determine if a significantly lower price would increase the sale of ebooks. She used the novel Dead Politician Society from her Clare Vengel series and for one week the sale price was lowered to $1.99. Spano, an author who believes that standard ebook prices are too high, was quite game and not at all surprised at the results that they found. Though there was no change in Kobo sales, there was a huge change in Kindle sales and a significant change in iBook sales as well. On average, she saw a change of 18.33 times more books sold each day of the extended week (nine days) her book was on sale and averaged 3.3 times the regular weekly revenue. Pretty good numbers.

So what does this mean? Well, for one, Spano, who believes that ebooks should be priced around $4.99 instead of the standard $9.99, is not a self-publisher. ECW Press publishes her books and this experiment was conducted with their consent. Once it was over, she claims they were very happy to go back to the regularly scheduled price. ECW Press alleges that the promotion of the experiment was the predominant catalyst behind the sales, not the lower price. That may be true, as when Dead Politician Society was recommended by the CBC Mystery Panel, sales spiked again, for both print and ebook, garnering 5 times the regular sales and revenue, more than during the experiment. Would Spano have gotten the same kind of promotion if she was self-published? Possibly not, but she probably would have undoubtedly gotten a higher royalty rate (Spano did not specify how much she actually received herself in revenue from the experiment), not that that seems to matter to her.

Spano makes a good point when she brings up readership. Some authors aren’t concerned with finances and are just happy to have their books read; this is a sentiment that Spano shares. As a new writer, she cares more about readership than sales, though she admits that good sales are a bonus. Lowering her price and increasing her sales would theoretically increase her readership, so the results of the experiment would be even better news. However, Spano then follows that sentiment with a statement purporting that statistically books bought for under $5 are less likely to ever be read than books priced over $5, so really you shouldn’t (and can’t) assume readership from sales. Lowering the price can also devalue a book. Measuring it against the $9.99 and up ebooks, the book runs the risk of looking cheap. So is it worth it? Pricing your book at a lower price can increase sales but not necessarily readership, it can make your book more affordable but also look like it is of lower quality. This is arguably something that is accepted of self-published works, but where does this leave traditional publishing houses? If they are game to try experiments like Spano’s from time to time, that would help them compete with the uptrend of self-publishers and their lower priced ebooks. ECW Press is a smaller independent publisher with a bit more freedom for experimentation. What about a larger house? They could afford the sales hit if that’s what the results of an experiment like that came to, but could they afford to change their ebook prices across the board. Spano thinks that the high prices aren’t good for the industry, and wishes that they would follow the mantra of Ghandi, “be the change you wish to see in the world,” and lower them. I would be inclined to agree, but I think that traditional publishers would argue that Ghandi never had these kinds of overheads.