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eBook Fair Pricing?

eBook Fair Pricing?

Last week removal from Amazon’s shelves of Independent Publishers Group (IPG) 5000 books is a direct result of the ongoing dispute of what is a fair price for ebooks.

For self-publishers, it seems a fair price for ebooks revolves around $2.99 for unknown writers, reserving the $0.99 price tag for promotion blitz campaigns meant mainly to rise higher in Amazon’s search algorithms and gain in visibility, hence increasing the chances of selling the book at $2.99 or more.

For publishers, however, $2.99 books mean losing money. Of course, the overhead for producing an e-book are lower than those for producing a print book, as they remove the costs linked to printing, print layout and storage, as well as those linked with physically bringing the book to the various selling outlets, but all the other overheads remain.

Though the terms required by Amazon that caused IPG to remove its digital catalog from Amazon are undisclosed, IPG president Marc Mark Suchomel made it clear that the battle was over preserving their margins: in other words, a battle over pricing. Apparently, that battle over pricing does not include the print books, since IPG’s print books are still available on Amazon. So their margins on print books are not overly affected by Amazons requirements, or so it seems.

This clearly points to a divergence of opinion over what constitutes a reasonable margin for ebooks.

So here comes an interesting question. If both print and digital versions of a book are available, what are the costs of producing these?

Both print and digital books require editing and formatting as well as book cover and blurb and all marketing costs. Only print books require all the costs mentioned earlier. So, when evaluating the overhead of a digital book to be produced in addition to a print book, does one count the cost of editing twice for example? Though of course, it would only have to be edited onceā€¦

Similarly, what about the costs linked to the book cover creation? Does one create an entirely new book cover for the digital version or simply adapt the print cover to digital requirements?

Should marketing costs be tabulated once or twice?

All these questions are essential in determining what is a fair price for an ebook? A price that will enable authors and publishers to make a decent living from their work yet enable readers to benefit from the reduced costs of digital books vs. print books.

In order to fairly answer that question, one needs to consider the long term future of the book market as well. Though at the present, it seems exaggerated to count the non-paper associated costs twice when establishing the pride of a digital book, it might be based on the growing market share of e-books compared to print books.

Selling ebooks at a price based on costs excluding editing, book cover and marketing as those costs are already included in the price for the print book would end up in getting the readers used to buy a product for far less than its real value.

As ebooks gradually replace print books, publishers will have no alternative but to include all these costs in the price of ebooks. So even if the current prices charged by publishers are deem to high compared to the cost, it is essential to keep in mind that the current low cost of producing a digital version of a print book is misleading.

Furthermore, additional costs for the book industry to protect digital books from piracy are likely to grow and so are the losses incurred through sales of pirated books.

So defining what is a fair price for a digital book is anything but simple.

Filed under: The ePublishing market · Tags: ,

4 Responses to "eBook Fair Pricing?"

  1. Lea Schizas says:

    What isn’t mentioned, however, is that not all ebooks go into print with a publishing house. Therefore, suggesting to lower the price of an ebook since the cost of the editing, cover art work has already been done for print isn’t correct.

    So if we are discussing ONLY ebooks then we need to factor in the editing costs, the cover art costs, the formatting costs, and any other costs and add that small profit margin to survive…and a price of $5.95 for a full length novel of 60k words and over isn’t expensive.

  2. Rick G says:

    Personally I think the efforts to curb piracy are a waste of time and money. As a gamer, I’m well aware that people are willing to scan every individual page of the latest Monster Manual or some such. If they’re willing to go through that kind of trouble for a manual copy, then protecting ebooks will do nothing more than stop a lay person (who probably wasn’t going to upload it to the Pirate Bay to begin with). Bottom line, if it can be read on a screen, it can be stolen even if it’s one screen shot at a time. I have no problem with mild DRM to keep me from emailing my kindle book to all my Nook buddies, but beyond that is really just passing on needless costs to the consumer.

    Costs aside, there is also perceived value. When someone like me prices a book at $2.99, I doubt it does much to sway the market. However, when people like JA Konrath, who sell a lot of books, do so it definitely has an effect. More and more I’m hearing in the various discussion forums dissent about paying over $5 for an ebook. The publishers margins may be what they are, but I they’re putting out a product that’s higher than people are beginning to perceive its value then they shall lose in the end.

  3. William Spark says:

    This does not explain why some ebooks are more expensive than their print version…

  4. To suggest that ebook pricing should not include an allowance for editing, book covers etc is ludicrous. this is akin to stating the first copy of the print book should bear ALL the costs of these items and the prices of the second and subsequent copies can be reduced because the first copy has already paid for them.

    In reality, this is not how pricing is done. What really happens is we work out our total costs, we estimate how many units we will sell, we divide it out to get a per unit cost and then add on a margin. For ebooks and print books I imagine this process would (or should) look like this:

    calculate costs common to both formats (this includes rent, salaries and utilities), estimate total sales (ebook + print) divide costs by total sales. Now you have a base cost price for ebooks. Add on a margin (whatever that is) and you have ebook price.

    For print books, calculate the total additional costs of printing the books (e.g. formatting, print, delivery etc.). Estimate total print sales, and divide total cost by total print sales. Add this number to the base ebook cost and you now have a base print book cost. Add a margin, and you have the price of the print book.

    If that’s NOT how it’s done it’s certainly how it should be done from an accounting perspective!

    It’s not ‘double-counting’ to include editing and book covers in ebook pricing when cost is calculated this way. The exception may be books that were written, printed, price and sold without ever anticipating sales as ebooks, because then the entire cost base would have been included in the print book price.

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