Pricing An Ebook - How High Is Too High?

Today on the Consumerist, there is an article detailing that 30% of books sold for the Kindle are now more than $9.99.

As a Kindle owner, I must say, that chaps my hide. I remember clearly that part of the sales tactics (though not guaranteed as a contract between me as the buyer and the company as the supplier, which is an important point) was the repeated statement that hardbacks were $9.99.

The article is scathing, and I can well understand why people are pissed off. Chris Walters mentions that publishers are the ones setting their own price points on ebooks, and many are attempting to do so between the price of the paperback and the price of the hardback.

Bullshit, I say. Bull. Shit.

As Jane pointed out in her most excellent article about epublishing, many users, myself included, would be in favor of paying more for ebook files that came with exclusive content and additional features. If an ebook is going to priced between paperback and hardback, yes, it should come with special double good bonus features, and a batch of chocolate fudge brownies besides.

But my question is this: what is the actual savings of ebook publication? More specifically, what’s the actual cost vs. paper? The Consumerist article lists the standard set of elements that are eliminated by ebook transmission, and Oprah herself advocated the sale of the Kindle based on lifetime usage savings because ebooks were, at the time, consistently less expensive.

While I certainly see the argument for savings in terms of gas, paper, transit, and storage and indirect costs of the bookseller/publisher industry, I also know that publishing, like every other industry in this economy except for those who manufacture piggy banks, is hurting and hurting bad.

Layoffs are everywhere, and folks fear for their jobs. So when Amazon and publishing houses are criticized because of the creeping cost of Kindle books way, way past the $9.99 range, I have to ask: has anyone quantified the actual savings of creating an ebook vs. creating a paper book?

The same individuals still work on the product: the writer, the editor, the editorial assistant, the copy editor, the production department folks, the art department. Is there a substantial savings over creating an ebook? Or is it similar in end cost before you enter in paper production costs simply because salaries and benefits are expensive, more expensive than gas, paper, and glue combined? Should paperback and ebook be similarly priced for that reason?

Without so much as a spreadsheet before me, I’m of the opinion that the price of books should be recalculated so that the cost of adequately compensating the individuals responsible for literary content production is the base cost, and then the addition costs of three-dimensional production should determine the cost of hardback, paperback or ebook. I’m guessing, with my vast years of experience in the book production industry (snrk), that the ebook copy would remain the lowest in price—but I could be wrong. Feel free to correct me on that one.

So I ask you: How much should an ebook version of a hardcover be in your opinion as a consumer? And if you’re in publishing or in the industry in one form or another, what’s your price point?

[Thanks to BEC for the link.]

Comments are Closed

  1. 1
    ev says:

    hmmm. they are raising their prices. What a shock. NOT.

    I mentioned this to hubby when Oprah had the Kindle on her show- that now she has made it so popular, watch the prices go up.

    They sold out of Kindles. Now people can buy the new titles that they want to read, or not.  Are people willing to pay the higher price? Or would the price go back down again if owners stopped buying the ebooks- much like gas usage has gone down due to the cost? How far are the publishers willing to go before someone cries Uncle?

  2. 2
    Alisha Rai says:

    Or is it similar in end cost before you enter in paper production costs simply because salaries and benefits are expensive, more expensive than gas, paper, and glue combined?

    I totally understand padding your costs to cover labor, but wouldn’t the labor for producing an e-book and a paper book be the same? I mean, it’s not like you have more people working on an e-book.

    As for price point, I don’t mind so much paying close to the same for paperback e and print books (a lot of times, there’s no choice, since the e comes out first), but I rarely buy e-book hardcovers anymore, since they are getting too expensive. I’m more likely to wait until the paperback or get it from the library. I feel bad, because I totally would plunk down a little extra cash to get the book sooner in e-book form, but hardcover prices for something I won’t get to really loan out or put on my shelf or resell? Meh.

    Meanwhile, the delay between print and e is so irritating. Lora Leigh’s Only Pleasure STILL is not out in e-book form, and it’s been three weeks. I’ve got curious kids running around my house, and I can’t keep overly explicit books all over the place :).

  3. 3
    P.N. Elrod says:

    I’m pretty danged P.O.‘d about the high prices, as they absolutely contribute to e-book piracy.

    I believe that most readers are honest and willing to pay for their e-books, but the publishers and venues like Kindle are only shooting themselves in the foot.

    One of my titles in e-book format, and if bought from my publisher’s wbesite costs 24.95—the same as the hardcover!  That is absolutely ridiculous!

    This same book is 8.99 on a Kindle.  Still too high when you can get a used PB version for three bucks and a little patience.

    I think a e-book—which doesn’t need to be physically shipped, which doesn’t need paper—should cost considerably less than a paperback.

    Once the file is uploaded to a website, the work is over and the seller can sit back and total up the sales.

    So what if the profit margin is smaller, they’re making sales with the overhead costs spread out and supported by thousands of titles!

    I’m a great believer in making fast quarters over slow dollars!

    Volume sales, not gouging!

  4. 4
    Lissa says:

    Like you, I would assume that the cost to publicize an ebook would be considerably cheaper than the cost to print a paperback or hard back book.  Up to a point, the production cost would be the same, but once it came time to print or digitize, the cost for one ends while the other doesn’t.

    I have no issue paying a price similar to a paperback for an ebook.  The writer, the editor, the editorial assistant, the copy editor, the production department folks, the art department, and whomever transcribes and formats the ebook all still need to be paid – I understand that and have no issue with that.  I also understand that the publishing house is looking to make a profit, I don’t really have any issue with that either; it is after all their business.  My issue is when they start gouging my pocketbook for no reason that I can see.  Charge me a reasonable fee for your product and I will purchase it.  I love ebooks for the convience.  I live in a very rural area with no readily available bookstores.  I love that I can download a book whenever I want – no shipping charges, no waiting for it to arrive, in other words, instant gratification.  Which I am willing to pay for – to a point.

    Treat me fairly, charge me a fair price for your product and I will be a loyal customer.  Start overcharging me for something I can get cheaper elsewhere? In this economy, I will go elsewhere – or not purchase it at all.

  5. 5
    Alpha Lyra says:

    The weird thing about e-book “hardcovers” is there is no extra value (that I’m aware of). If you buy a real hardcover vs. a real paperback, you’re getting an obviously superior product. It’s bigger, it’s made of nicer materials, the print is usually larger and easier on the eyes. But when it comes to e-books, “hardcover” just means you are getting the material a year or so earlier than if you waited for “paperback.” Imagine a world where e-books were all that existed—no paper books at all. Would the publishing industry still price new books higher than books that have been out for a couple of years? I doubt it.

    I honestly don’t feel that any e-book is worth more than $4 or $5.
    While e-books remain (in my opinion) overpriced, I’ll continue to buy paper books. I don’t buy hardcovers anyway, unless they are deeply discounted (or YA, which is more reasonably priced). When I see a hardcover I want, I put it in my amazon wish list as a reminder to myself to buy it when it comes out in paperback. I don’t mind waiting a year or two. There are so many great books out there that, even limiting myself to paperback, I always have tons of reading material.

  6. 6
    darlynne says:

    I know little about publishing and nothing about ebooks. In an economy where sales are substantially down and falling, however, raising prices is not going to improve revenues. The publishers are taking the “make money by selling fewer for more” approach, rather than increasing their turns, i.e., selling more widgets for less.

    What’s worse, IMO, is that they’re doing this when ebooks are not yet the preferred format for the majority of the reading public. Raising prices on ebooks would make sense only if we all read ebooks; doing so on a still-emerging or fledgling technology may further halt or cripple those sales as well. Leaving out the green argument for now, with this price increase, what incentive do I have to buy either ebooks or a reader?

  7. 7
    JoanneL says:

    I’d love to see the spreadsheet. I’d truly like to know the end cost difference for publishing ebooks vs paper books. Will we ever know that for sure? Dunno… but my fear is that publishers don’t know either.

    I always love it when an ebook price is lower then the paper copy but I accept it when it’s the same. More then paper? nah, not buying. 

    Hardcovers are an entirely different matter. Some authors (not many) I have to have in hardcover but others I will wait until the ebook price is the same as mmp or the mmp is available.

  8. 8
    KristenMary says:

    As a cost accountant in RL I have to say you are right on the money. E-books, hardcover, and paperback all have the same background work done. The editors, proofreaders, artists, and author will all cost the company the same. Its when the “production” of the final item that will be sold to customers that something changes, digitizing for e-books, printing for the other two versions.

    Not being a cost accountant for a publisher I’m not sure of all the ins and outs, but if it were me, the agent, editor, proofreader, artist and author would all be part of my overhead. The true labor and materials would be how it was made, so the paper costs, the ink costs, the labor to bind the books etc. Not being in the publishing field, I assume that each book is digitized, each book is loaded to a server, whether its going to a print copy or not. How else would they print the books? Then from there if its an e-book it stays on the server and something happens so they can protect it and give access to folks. If its a print book, it goes on to the big production schedule and gets printed in whatever form. So that’s your cost difference. Does it cost the same amount to give people access to the e-book as it does to use paper and ink? I’m guessing not and I think most people see that same thing. And as others stated above, in this day and age, raising your price is not going to win you any fans.

  9. 9

    I’m not a Kindle fan-I don’t like the look of it, among a number of other things that I’m not going into detail about.

    But I knew the 9.99 deal was just a gimmick.  A lady at the YMCA saw me with my Sony and asked if it was the Kindle and I told her no, it was the Sony.  We started talking about them and she said something like, “but aren’t all the books for the Kindle 9.99 or less?”

    I told her, “It’s a gimmick-trust me, those prices won’t stay.”

    Oddly enough…*G*  this happened last night, and then today I click over here and this is the blog topic.  ;)

  10. 10
    Sandia says:

    I agree with all the comments so far.  I think that publishers and also Amazon is really hurting their own case – especially among early adopters of the technology.  I’ve already paid a large amount for my e-reader, now I don’t get any benefit or true discount on the price of the books.  Why should I continue to buy books via this method rather than buying used?  The more they release new books at the higher price points (on the Kindle, I really dont’ think they should release any new hardcovers higher than $9.99 – heck, Amazon’s who trained me to this pricing strategy) – the less I’ll want to buy from them.  I hope this is a hiccup rather than a new trend in ebook pricing.

  11. 11
    Carin says:

    I don’t have any idea of costs, but the one addition you have in an electronic format is some sort of security or DRM, right?  You have to have someone(s) to do that.  I’m guessing ebooks are still cheaper than printed ones, but that is another factor to consider on your spreadsheet.

    I don’t have a kindle or a sony reader (but I lust for them).  I think bonus material would be really cool.  Of course I don’t think I’d be willing to pay more for bonuses unless I already know I like it.  For example, when I had to replace my family’s VHS tape of “A Christmas Story” with DVD, I absolutely shelled out a few bucks more to get the version with commentary.  Normally I wouldn’t do that.  I think books would be the same for me.  Of course right now when I want bonus material I just go to the author’s website…

  12. 12
    Teddypig says:

    Right but read the forum on Amazon….

    Here is one persons search of their entire inventory…

    Percentage of books over $9.99 (rounded off)

    Fiction 2%
    Mystery/Thrillers 3%
    Romance 1%
    Literary Fiction 2%

    Nonfiction 50%
    Biography 15%
    Computer/Internet 80%

    Text book and computer/software manuals have been a mess with pricing for years so this does not surprise me at all. I am a system admin so I get my company to buy these expensive books.

  13. 13
    Kel says:

    For the people who ask if there are additional costs associated with producing an ebook version of a paperback, the answer is “yes”. Granted, you only have to produce it once, but you need a technically-minded human for formatting and programs for conversion. The same people who produce a paper copy of the book have to reformat the ecopy in order to produce the proprietary (or standardized) formats the individual ereader devices understand. Images have to be converted and scaled, and the new format tested.

    Then there are server costs for distributing the book. Yes, it’s cheaper to host a website than to open a bookstore, but there’s still a cost associated. There’s also the bandwidth costs and security monitoring costs for taking direct sales. I don’t know the exact costs involved, but it’s not a matter of posting a text file on a web page… and even that costs money.

  14. 14
    Teddypig says:

    OK, using Jungle Search to check out the Amazon Kindle Books listings for Romance here are my findings.

    12,111 hits for Kindle Romance Books below $9.99
    944 hits for Kindle Romance Books above $9.99

  15. 15
    J.C. Wilder says:

    I have a Kindle and I love it. That said, I’m also very happy that it will read PRC files so I don’t have to buy the overpriced books from Amazon. ;)

  16. 16
    Teddypig says:

    Oops looks like 806 hits for Kindle Romance Books above $9.99 and I a lot of these seem to be bundled books.

  17. 17
    sugarless says:

    Hell, I was shopping for paperbacks online and several of them are now $11. Are you sure book prices in general aren’t going up, e-books along with them?

  18. 18
    Becky says:

    One thing I never see mentioned in these discussions, and maybe it’s changed, but the authors’ percentage used to be significantly smaller for ebooks than print books.  (That’s for traditional publishers.  For epublishers it’s the opposite.)  So, they want to pay the author less, there are no printing/binding/shipping costs, I have to buy an expensive unit that will be obsolete in a few years, and you want to charge list or near list for (sometimes more than list- Jennifer Crusie’s Faking It is $7.99 paperback and $9.99 Kindle) “paperbacks”?  Um, yeah, I don’t think so. 

    For the handful of authors I really love who are published in hardback, the Kindle pricing is, or maybe I should say was, very attractive.  For two bucks over paperback prices I could have my very own copy a year faster.  And I’m occasionally semi-shut in because of my health, so the convenience of the Kindle is tempting.  But the cost of the unit, and my annoyance at what I see as inflated book prices, has allowed me to resist.

  19. 19
    Suze says:

    Funklord said in the comments of the article:

    Having worked for a publisher, the costs for paper, printing, binding and shipping of the books we put out were usually around 10% of the total cost of producing the book. Most of the costs were paying quality editors, doing good design, etc., and those costs don’t go away when you do an electronic version. Printing costs are a much smaller part of the overall expense of a book than most seem to think.

    To which I can only say that e-books should then cost around 10% less than paper books, because I just can’t see electronic security and servers costing as much as paper, ink, printing presses, people to run them, transportation, storage, reporting-as-destroyed wastage, more people, etc.

    A lightning-fast yet exhaustive survey at eharlequin.com reveals that a Harlequin Presents costs $4.75 in paper and $4.25 in electrons (before discounts and sales kick in), which is a 10% difference.  Harlequin gets it right again.

  20. 20
    Jessica G. says:

    I bought my Sony Reader knowing that most of the books I bought would be 5-10% off the pbook price (since I read mostly paperbacks), and I was happy with it. I was pretty happy with the hardcover prices too (usually for the first month or two at about $12-$15). I think amazon is getting into a tight spot, since they take a loss on those $9.99 books. I don’t mind paying the extra two bucks if it means they get paid and keep everyone happy. I have seen a few mass markets priced at $9.99 at Sony’s store, but it seems to be a publisher issue and they aren’t new releases (maybe an extra cost to get it into ebook form? I’m not sure).

    I’m still extremely happy with my purchase.

  21. 21
    Anya says:

    I’m guessing, but I figure the costs of producing a mass market paperback in paper and an e-book version is the same.  Servers, hosting, websites, development software, security, shopping cart management, and the programmers and system administrators you need to create, run and troubleshoot all that (b/c there are always problems and people scream instantly when there is a problem) costs a lot.  Therefore, I have no problem paying the same price for an ebook that I would a paperback.  I’ve never bought a hardcover, they have always cost too much for me when I know in a year I can get it under $10.

    I’m bummed that the Kindle book price is going up, as I’ve been considering buying one lately.  And unfortunately, as ebook prices get higher I’m afraid it will lead to more piracy.  However, I do want book prices to accurately reflect their true price because I want the author, editor, etc. to get paid well.

  22. 22
    Lynn M says:

    Speaking as someone who used to work in the printing industry, printing anything is expensive. The cost of paper is always going up, the time to set up and run large presses, not to mention the bindery and subsequent shipping, is a huge expense. I have to believe in the total cost of producing a book, a big part of it is in the physical production. Look at it this way – the cost to write/edit/market a book is the same whether or not you print 1 book or 1,000,000 of them. The first book is really pricey, but after that it’s all production cost.

    With e-books, the trick is to find the sweet spot – the price where after you’ve sold X number of books, you’ve covered your writing/editing/marketing costs and the rest of the books sold are all profit. Regardless, the savings of not having to print actually books should be reflected in a reduced e-book price. If you have to fork over the same amount of cash as you would for a real book, what is the motivation to go with an e-version?

    I am willing to pay for the service of instant gratification if it’s reasonable. And today I was thrilled because Sony has the e-version of “Into the Night” for only $14. If I ordered on Amazon, I’d pay $15.93 plus shipping, plus have to wait a week or so to get it. If I went to my local B&N;, I’d pay more for the book plus the gas and time spent going there. I’m pleasantly surprised because Brockmann’s last book was over $17 for the hardcover e-version, and I wouldn’t pay that because I could get the actual book for less.

  23. 23

    Kel is entirely correct correct.  Some of my dearest friends are epublishers and they spend much time complaining about server costs, formatting costs (eek, ah, ooh – must be done entirely MANUALLY into all those formats!).  To say nothing of the cybersecurity to protect their beloved websites against dreadful pirates who seem to see it as the golden goose.

    And the bandwidth issue?  Well, let me say, there’s apparently nothing like the first day of a much awaited, much promoted Latest Title in a Long Running Series by a Big Name Author to fully test your capacity. 

    Or make your checkbook groan as you write a giganormous check for all the new servers, new bandwidth and hopefully not a new ISP (ah, ah, eek!) you were hoping you wouldn’t need quite yet.  Although you are, of course, extremely flattered you’ve grown big enough to need it now.

    paper78?  Paper printing is frequently outsourced to China, my dears, for the big NY print runs.  That’s what’s called using a slow boat but much more predictable in some ways.  Of course, a magazine editor I once worked for had some bitter complaints about that method, too.

    Que sera sera.

  24. 24
    Lynn M says:

    Oops – I meant “Dark of Night”, Suzanne Brockmann’s newest.

  25. 25
    Kalen Hughes says:

    The weird thing about e-book “hardcovers” is there is no extra value (that I’m aware of). If you buy a real hardcover vs. a real paperback, you’re getting an obviously superior product. It’s bigger, it’s made of nicer materials, the print is usually larger and easier on the eyes. But when it comes to e-books, “hardcover” just means you are getting the material a year or so earlier than if you waited for “paperback.”

    I’m currently fuming about the fact that Balogh’s latest has been out in Mass Market for weeks, but the ebook over on Fictionwise is still the same price as the Hard Back? WTF is up with that? It’s bad enough that they want to charge $20+ for an ebook in the first place, but to not lower the price when the $7 mm comes out?

  26. 26
    megalith says:

    I work in printing, and the costs of ink and paper have gone way up. Is it possible that publishers are generally raising prices across the board to compensate?

    BTW, don’t forget that once you get to printing, you’re looking at involving a whole other industry, with its associated costs. In order to even get to prepress, you have to have a digital file as well. A different digital file for each format. One for ebook, one for paperback, one for hardback. After that, the profits for most printers hover around 3%. So mainly, you’re paying for materials and labor to output the physical product.

    For ebooks it seems that a lot of labor/setup would overlap or be frontloaded: once you set up the computer equipment and code the digital storefront, SSL, order-processing, etc., it must cost less to maintain that and add e-product than it does to purchase and consume physical materials with their resultant fluctuating costs?

  27. 27
    SB Sarah says:

    If I can just sing your collective praises for a minute, I have to say – not that I’m surprised – the Bitchery is awesome. So often I see discussions about the price of eBooks or the necessity that authors, editors, art folks, production folks etc. be paid for their labors degenerate into rants against the evil industry for taking it out on the poor consumer.

    I am learning a ton from the comments in this discussion, and the fact that everyone is approaching the problem of ebook and paper book cost from so many educated angles is just freaking spiffy.

    Ok, I’m done. Someone can tell me I’m going to hell now.

  28. 28
    kittyfischer says:

    From a consumer point of view, the reason you pay so much for a hardcover is either because you really really want that book RIGHT NOW and can’t wait for it to come out in trade or mmp; or because you love hardbacks.  In fact you think hardbacks are the only “real” books.  The former section of the hardcover market would not be attracted to buying e-books at all, I would think.  However, I do think it might make sense to price an e-book based on its potential popularity and “new-ness,” e.g., a brand new Stephen King novel that was definitely going to hit the bestseller list could be priced the same in e-book and hardcover formats and people would still buy it.

  29. 29
    Kalen Hughes says:

    Ur going to hell.

  30. 30
    rebyj says:

    Ereaders aren’t bargain priced so why should ebooks be?
    Publishers probably figure that if you can afford a kindle or sony for 300+ dollars that you can afford to pay whatever they want to charge you for the downloads.

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