Leaving money on the table

Posted by @ 6:21 pm on December 21st, 2011

If you’re related to me, don’t read the rest of this sentence: I got most of the people in my family books this year for Christmas. I don’t usually do that, actually. For a writer, it seems rather hazardous. Because, for one thing, though I love my family and I want them to be happy, I’m not going to intentionally purchase things that I consider truly shitty on their behalf. But on the other hand I’m not going to go out and buy them, say, the FC2 catalogue just because I happen to like it; that would be a Real Dick Move. But even once I’ve negotiated that mess and found the place where my tastes and those of a given family member overlap, there’s still the risk that you’re essentially giving someone homework for Christmas. The fact that I want to read a book someday has nothing at all to do with whether or not I want to read it now. By giving someone a book, you either rob them of that decision or, more likely, give them something that they’re going to feel guilty about for several months (or even years) but likely never actually read. But this post isn’t about giving books for Christmas, really. It’s about ebook pricing.

Because here is the thing: I was reminded by my Christmas shopping that, among major publishers, it is still common practice to charge more for ebooks than for paperback copies. You don’t have to know the particulars of their business models, of their distribution networks and royalty schemes, to understand that this is some bullshit. Whatever it costs to typeset the book and design its cover, to truck it out to Amazon, to give Amazon their cut, that has got to be more than making the ebook (something most publishers are still too cheap to do properly) and uploading it to the Internet, still giving Amazon a cut but keeping the lion’s share.

This is the thing about selling ebooks: every single sale, past those few needed to pay for the ebook’s creation, is basically free money for the publisher. Consumers know that 11.99 is too much to pay for an ebook, especially when the paperback is available for less, and so for the most part we don’t pay these prices. My family actually prefers their Kindles, by and large, to print books (a position I share in some cases, actually), but I went the print route anyway, partly because you can wrap them up like proper gifts and partly because the thought of paying more for something that cost much, much less to produce was simply too much for me to accept. The publishers know that I and many others feel this way, that we won’t actually buy their products at punitive prices. And, weirdly, that’s the point. They’ve actually said as much.

It all goes back to hardcover books. Hardcover books are, of course, hilariously overpriced themselves (as you can work out by observing the way that chain retailers will cheerfully discount the new, say, hardback Harry Potter by 33% or more, laughing all the way to the bank) but major publishing houses have been able to make them a major profit center. Now personally I almost never buy hardback anymore — I find them physically less user friendly, sometimes in the extreme, and their fancy slipcovers just get in my way. (I usually remove them for use as bulky bookmarks until I’m done.) But apparently other people still dig them. Publishers fear that ebook sales will cannibalize their hardback sales, and so they fight against every other stakeholder (Amazon included) to keep prices artificially high. The downward pressure on prices will, I am confident, eventually push them to a more reasonable place. The fact that ebooks have grown so quickly in spite of ridiculous paranoia about piracy and attempts to depress interest through punitive pricing only demonstrates the resilience of the digital revolution in publishing. Under the circumstances, you have to wonder how much money these publishers could make if they actually tried to sell their ebooks.

Small presses seem to have the opposite problem. Observing that the bestsellers on Amazon are often priced between .99 and 2.99, they price their digital offerings too low. I think this reflects a fundamental misunderstanding of how the 99-cent books on Amazon become big sellers: by and large, these are not especially good books. They are usually exceedingly dull, predictable genre exercises (formulaic thrillers, often written by the same people you’ve been ignoring on Wal-Mart’s bargain book rack for a decade, and “urban fantasy” featuring sexy lycanthropic vampires). They’re priced at 99 cents because they’re designed to sell to people who buy indiscriminately from a given genre. There are exceptions, of course, but as a generalization this seems to hold. You price your book at .99 because you want people to buy it more or less by accident, on a whim. There’s nothing wrong with that! For a lot of books, this is an excellent strategy, and many writers benefit from a strategy where their books are temporarily 99 cents (or even free), or where they sell small works at very low prices and large ones at normal prices. But the problem most good small presses have isn’t, in spite of what many seem to believe, convincing people that their products are worth dropping twelve dollars on. The problem they (we) have is that practically no one knows they exist.

Think about it this way: when was the last time you really wanted a small press book but decided not to buy it, not because you didn’t have any money but because the book itself was just too damn expensive? It’s not uncommon to be too broke for a book, but it’s rare indeed to be just broke enough that you’ll pay seven bucks, but not ten, for a book you actually want. Once a person has decided that he or she wants a given book, it’s in the publisher’s interest (and the author’s) to charge as much as possible for the book without turning the buyer off. Unless you think your book is really bad, you have to figure that the magic number is higher than $2.99. Most of us rightly value the time it will take us to read a book more than we value the money we spend on that book — and most purchased books are never actually finished. The 99-cent book is priced the way it is to stop the buyer from even thinking about how much time is going to be wasted on the book: if, after spending just one buck, the reader decides not to actually read the book, then there will be no guilt in wasting the money. Essentially nothing’s been wasted. Simultaneously, the 99-cent book is priced the way it is because most of the people who read those books don’t really value their own time, in a sense. They read the books they do to get outside of time — to absorb themselves in something that allows them to stop worrying about time’s passage. The 99-cent price point communicates to readers that the publisher has an appropriate disrespect for their time, that they will waste it just as the reader wants them to.

I don’t mean that to sound scornful. Sometimes I want my time wasted too, though I mostly go to bad television for that service. What I’m trying to argue here is that most publishers seem to have bad ebook pricing strategies. You want to go cheap enough that the consumer doesn’t feel bad about buying something that, on the margin, cost you literally nothing to produce. But you want to charge enough to signal to consumers that you have confidence in your product, that it is actually worth their time and (to a lesser extent) money. There’s a sweet spot where the very real risk that the ebook will never be read is not enough to keep them from making a maybe-impulsive purchase anyway, and that’s where I think you want to be. (I think that sweet spot is probably somewhere between $5 and $7 for most full-length books, if you’re wondering.) Dzanc, which has been more forward-looking on ebooks than most of the other players in publishing combined, seems to get the balance about right: they’re not afraid to charge you 8.79 for a long, excellent ebook. And the publishers who have decided to focus on producing more beautiful hardbacks more than on intentionally gimping their own ebooks in order to maintain hardback sales are thinking in the right way too. But I think that as a whole, by pricing our ebooks poorly and otherwise resisting these changes, we’re leaving money on the table and pointlessly slowing what will ultimately be a very beneficial process for reading and writing.

I had some related thoughts about royalty rates for authors, but I think I’ll save those for another post. For now, a question: what ebook pricing strategies do you see working right now? If you’re a publisher or a writer, how do you sell your ebooks?

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