There’s a very interesting discussion at the official kindle forum about the latest book by Michael Connelly being priced at $14.99.
Susan talks about how, despite being an avid follower of Michael Connelly, she’s boycotting him and his books -
I am an avid follower of MC and have watched his books go from $9.99 to $12.99 to $14.99 ( a mere $0.12 under the hardcover price). I’ve written to the publisher, Hachette Group, and received no response.
I am REFUSING to buy the book on the October 5th release date. His one year old release, 9 Dragons, is still selling for $14.99. Help!
There are lots of interesting perspectives. Personally, I applaud Susan for writing about it and for boycotting an author who’s pricing books at $14.99.
This post will attempt to look at all the pluses and minuses of pricing the ebook at $14.99 when the hardcover is $15.11.
The Advantages of Outrageous eBook Pricing
Well, there are quite a few, though mostly for the Publisher and Author -
- They earn more money from their devoted fans.
- They test the devotion of people who buy their books and get them further committed i.e. if they bought the ebook for $14.99 it must mean they really value the author.
- They avoid cutting into hardcover sales since there is little price difference.
- They cater more to people who don’t care about $9.99 vs $14.99 - it’s a way to focus on more profitable customers. They exclude trouble-makers who expect ebooks to sell for less.
- They get the most value when there is the most demand i.e. right at the launch.
- They make the most of the release day sales rank bump (due to all the pre-orders).
- They stick to a price that they (Publishers) feel is more sustainable and lets them avoid making difficult changes. Authors get more money than they would on $9.99 books.
- They set themselves apart as a premium publisher/author – people are willing to pay $14.99 for their books.
Let’s be very clear that $14.99 is a win for authors and publishers when they can pull if off. No rational human being would sell his product/service for $9.99 if he can get more profits selling it for $14.99 without losing too much volume.
Before we look at the disadvantages of pricing ebooks at $14.99 let’s take a detour into Levels of Intelligence.
Different Levels of Intelligence
Look across the various cultures and you’ll find a lot of the same fundamental tenets – treat others the way you would like them to treat you, don’t kill others, don’t steal, help others, treat your parents and children well. It’s basically a very high level of intelligence - generations and generations of experience and wisdom resulted in people realizing that it’s much better to co-operate and prosper together than to just cut each other down.
However, sometimes the more tempting option is to take advantage of others – In fact, if you don’t factor in future consequences exploiting others can often seem an intelligent move.
In the author, publisher, reader relationship we see an interesting sequence of events -
- Publishers and Authors find out that they can sell ebooks and now instead of 50% or more they have to give distributors and stores just 30%. They also figure out they can cut down on other costs like ink and paper and returns. Finally, and perhaps most importantly, they now get a lot of data on early winners, early losers, and sales trends and can use that to reduce the probability and cost of failure.
- They then exercise a rather inferior sort of intelligence – We could keep selling books for the same price and get a lot more money for ourselves.
- It’s inferior because it doesn’t account for a few critical things – readers know costs have gone down, competitors can offer cheaper books, higher prices hide inefficiencies in the system that Publishers need to get rid of to survive.
- Perhaps the biggest reason this sort of intelligence is just sophisticated, short-sighted stupidity is that readers feel mistreated and with valid cause. Consider the kindle forum thread from Susan – She’s a self-described ‘avid follower of Michael Connelly’ and now she’s advocating a boycott.
- A lot of this is invisible to Publishers because the lure of the $14.99 price and their distance from readers makes them oblivious to what’s really going on. They don’t even realize they’re whittling away their core customer base.
The short-sighted pretend-intelligent Publishers and Authors are so happy with their semi-intelligent trickery – a larger share of the same book price – that they aren’t realizing that their sales volume is going down, competitors are rising, and their devoted readers are getting more and more upset.
Authors will probably complain about being clubbed together with Publishers – Well, they are taking a share of the money so they bear a share of the responsibility.
Authors can no longer pretend pricing is outside their control
We’re really beyond the point where authors can pretend they have no say – They’re getting 25% or more from Publishers (and passing on 70% from Amazon) so if the price of the book is too high they are as responsible as Publishers.
If authors really are too blind to realize they are angering their devoted fans and laying the foundation for their competitors to destroy them then they deserve what’s coming.
Which brings us to the net result of all this pretend-intelligence and short-sighted strategizing by Publishers.
The Disadvantages of Outrageous eBook Pricing
Here’s what $14.99 prices do ($12.99 prices do this too – just to a lesser extent) -
- They punish your most loyal customers. People who love your work now have to pay a premium to read it early on.
- They alienate your customers – There’s nothing that breaks bonds as quickly as readers feeling you’re taking advantage of them.
- You lose out on word of mouth. Customers who don’t buy a $14.99 book are obvious losses. So are customers who begrudgingly pay $14.99 for a book – They will almost certainly recommend your book less and recommend it with less enthusiasm.
- Instead of talking about how good your book is some of your most devoted fans will start boycotts and complain and cause you to lose sales. It takes a particular brand of genius to get a ‘devoted follower’ to start a boycott thread. Someone like Susan was probably handing out 5 star reviews and gushing about Michael Connelly’s books to her friends - now she’s caused at least 1 person to decide not to buy any Michael Connelly books.
- They highlight the author’s ’us vs them, let’s take advantage of them’ attitude. Susan mentions another Connelly book is $14.99 after a year – That’s really pushing it. Instead of co-operation you’re encouraging conflict.
- They give upcoming authors and smart competitors a relative advantage. The indie author with the $1 book and the author with the $9.99 book will get more customers.
- You get fat and lazy. Instead of optimizing and taking advantage of all the efficiencies ebooks provide Publishers are getting complacent. All $14.99 is going to do is guarantee they won’t be able to cope when the competition gets tougher.
Let’s take a quick look at an Economics 101 comment from Colin MacQueen.
It’s no longer Economics 101
Here’s a typical comment justifying the $14.99 price -
Economics 101 – cost and price are unrelated.
Price is determined by what customers are prepared to pay. DVD’s are far cheaper to produce than VHS tapes were but customers happily paid more for the improved functionality. In the vast majority of Kindle titles you’re not being asked to pay more than the paper version, just more than you’d like to pay. If so, don’t buy.
The mistake is that all of these comments assume customers are stupid. Customers are no longer stupid. They know exactly what every product costs to make.
Customers don’t mind paying well for a good product and they certainly don’t mind if the company and the author/creator make a good profit. However, they certainly mind being treated like idiots. The old rules don’t apply because now everyone is smart. We’re dealing with people who read a lot. It’s not TV where people will smile at you and nod if you tell them converting a book into ebook format costs as much as printing physical books.
You can’t use the old model of hardcover first and paperback later
One of the big defences of premium pricing is that it’s copying the hardcover and paperback model.
That’s just extreme short-sightedness. We’re close to a level playing field where any publisher, no matter how small, and any author, published or unpublished, can reach customers. Hardcovers could be sold for so much more because Publishers had control over distribution and financing. That control let them get control over most of the best books and thus they could create this artificial hardcover concept and make money from it.
It was an artificial scarcity. Hardcovers were a very profitable figment of Publishers’ imagination.
Look at the signs of change around you – hundreds of thousands of independent authors, Amazon winning exclusives, Andrew Wylie temporarily upending Publishers, 15 free books a week, backlist books for $3 to $5, millions of public domain books for free, independent authors selling their books for $1.
We are in a very different world - the things that allowed Publishers to pull off the Hardcover trick just don’t exist.
Hardcovers cost 1 to 2 dollars more to produce but sell for 7 to 8 dollars more. At least that’s my understanding – Publishers and pro-Publisher entities will argue against it and claim hardcovers cost $10 more to make. We can’t really know because Publishers don’t reveal any hard facts – they just make vague claims. If their aim is true all they have to do is show us the real figures – What are they trying to hide?
The ‘Expensive Hardcovers/eBooks for the first 6 Months’ dream is quickly fading.
You can’t sustain it when you no longer have power and customers are far more intelligent than ever before.
All these authors are angering their most loyal customers and losing readers at the very time when they should be doing the most to keep readers happy. It’s amusing – Publishers and published authors are now an endangered species but instead of working well with readers they are trying to make even more money and are fleecing their customers even more.
It’ll be fun to see the destruction when readers finally realize how much power rests in their hands.