Comments on: Kindle Book Cost Analysis

By: Enygmatic

Enygmatic — Thu, 10 Sep 2009 19:57:58 +0000

Interesting analysis of how much a Kindle book should cost. I’d agree with most of the points made here, except maybe a few.
I noticed that you had considered marketing costs for even backlist books. I would think that backlist books wouldn’t really be promoted as they generally sell on word of mouth and by author reputation. In my opinion therefore, the marketing costs for backlist books ought to be greatly reduced.
My major gripe, is with your argument in favour of DRM. Here is what I think:
1. Yes, I agree that quality writing would not survive below a certain price point. I just dont think that $9.99 is that price point for e-books.
2. Rights management does not exist for any physical product or a book, magazine, music or movies to the best of my knowledge. Does this mean that if it exists in a physical form it is ok to let people use it any form they want? After all what would prevent a buyer from making copies, sharing a single copy of a book bought from a store? If publishers can trust buyers of physical copies to do the right thing, I see no reason why the digital consumer should be treated differently. In fact, the whole ‘people will behave perfectly if treated well’ hypothesis is in action every time you buy a book at a bookstore. The publishers use no other tool other than the copyright notice to protect their rights at the level of the book. So my argument is why should it be any different for electronic books? Because I believe that at the end of the day if you have spent you own money to buy a book, you are as likely to distribute it freely as you are to allow anyone off the street to take a joy ride in you new Porsche.
DRM in e-books, according to me borders on being farcical. First you are expected to buy an expensive device to take part in the ebook market (or strain your eyes reading off a computer screen). Then next you are sold products that are clearly not fairly priced (remember amazon sold ebooks for quite some time above $10, and quite a few stores still do). Then you are told that you cannot transfer your book out of your device, basically you are given a book chained to the bookstore (which as amazon showed with 1984, can be even be snatched away when you are still reading). Given this scenario, once the initial fascination with e-ink devices wears off, which self respecting person is going to stick with ebooks and continue to be taken for a ride by the publishers? I think in the long run, in its current form, DRM will spell doom for the industry.

By: switch11

switch11 — Sat, 18 Jul 2009 19:05:36 +0000

for your 1st point: you are correct. my job is to provide data so that people understand that $9.99 is a very reasonable price. The internet allows people to inform other people and thus remove the advantage retailers have always had.

for your 2nd point: yes, i could put in variables and ranges and then there would be no point to the article.
it’s to come up with something tangible. a guideline, rather than a solution.

By: Rags Srinivasan

Rags Srinivasan — Sat, 18 Jul 2009 18:40:34 +0000

Hello
Two things I would like to point out:
1. Cost does not matter to pricing. You want to price a book or any widget based on economic value to customers. But, most of the time you fail to capture the value because of customer reference price – price they used to pay for similar items brings your price down. That is why you see similar pricing for all best sellers and very high price for textbooks. So it does not matter what the cost difference in between Kindle book and paper book. Kindle format provides certain value (ease of carrying, sharing, ease of purchase, etc ). In any case Kindle books are 1-2% of total sales so it should be priced higher to capture value from these 1-2% with higher willingness to pay.

2. In your cost analysis you are doing fixed allocation per book. This is not correct. Except for royalty, retailer margin, and publisher margin the rest are fixed costs. We could argue that cost to produce the book (materials and labor) are marginal costs, but you never make a decision to print one single book. You print 10,000, 25,000 or a million books. In this case it is not correct to allocate unit cost. The marketing costs are also fixed and not done on a unit basis.

Just my thoughts.

By: David

David — Mon, 08 Jun 2009 05:08:25 +0000

I love the smell of books. I love the feel of books.
I love their appearance on my bookshelf. I like lending them to my friends.

By: Pilgrim_m

Pilgrim_m — Sun, 07 Jun 2009 17:32:06 +0000

Thoughtful article, and I would be happy to pay the proposed $9.99 *if* I actually owned the resulting eBook and could view it on other hardware than the Kindle. If it were DRM free, I would buy

By: The great > $9.99 boycott « Kindle 2 Review – Kindle DX Review, Books

Sat, 30 May 2009 08:16:10 +0000

[...] are my posts explaining what book costs are, and what kindle edition books ought to cost - these clearly show $9.99 is a sustainable price point. No publisher is every going to release [...]

By: Steven

Steven — Wed, 27 May 2009 18:36:44 +0000

There’s an easy way to backcheck his figures for plausibility.

Mass-market paperback originals already sell for $7.99 typically. There’s no way publishers are selling those at a consistent loss. And there is no way that publishers have higher costs for an ebook than for a paperback original, except possibly royalty rates.

If we assume ebooks cost fully as much as paperback originals except that the author’s payment is increased from an absolute bottom-of-market eight cents (1%-of-the-$7.99 paperback price) to a comfortable $3.75 (15%-of-$24.95 hardcover price), we add $3.67 to the cost of a paperback original to find the ebook original price that makes the publisher and the retailer at least as much money as they did on the paperback. $7.99+$3.67 = $11.66.

By: Jeannette

Jeannette — Wed, 27 May 2009 10:23:23 +0000

I agree, I don’t know how far the book model can be applied to magazines. But something doesn’t add up!

By: switch11

switch11 — Tue, 26 May 2009 18:45:13 +0000

you’re welcome Jeannette. It doesn’t feel like enough because it seems like there ought to be other efficiencies magazines should be able to incorporate like not printing lots and lots of extra copies, paying (as a larger cut of the price) retail stores for shelf space, and so forth.

To be fair though, I don’t know much about the magazine business – perhaps there really isn’t much room to cut prices.

By: Jeannette

Jeannette — Tue, 26 May 2009 13:05:08 +0000

Thanks for an enlightening post. I was originally looking for information on digital editions of newspapers or magazines, having recently received an offer for £24/year for print version, £19 for digital edition (which incidentally is not designed to be downloaded into an e-reader, but to only read on-line). Overall the offer is not very attractive — only £5 per year for something I have to read on the internet. But it got me thinking. According to your figures here (if I can apply them to the magazien market), the £5 *is* about 20% of the standard print version price (say, 10% for production/manufacturing and 10% for distribution). So why does it feel like not enough of a difference in the price I’m being asked to pay for the digital version?