Sunday, April 3, 2011

The $0.99 and $2.99 ebook.

In my previous blog post I ran a little informal survey of the Amazon's top 100 kindle ebooks.  One of the things I noted was that 41 of the books on the list were priced at $3.00 or less.

It also lines up with what I've been seeing with my own purchase history for my Nook.  I do have a tendency to buy a lot of books priced at $2.99 or less.

A writer friend pointed me in the direction of JA Konrath's blog, where he goes into extraordinary detail about pricing and publishing and royalty rates etc.  One of the points he makes is royalty rates.  The average royalty ebook rate from a publisher is 25% of net.  So on a $12.99 ebook, the retailer will take 30% or roughly $3.90, leaving a net of $9.09 to the publisher.  The author then makes 25% of that or $2.27.  The agent then takes a 15% cut from that, leaving just $1.93 for the author.  (All numbers are from Konrath.  Well except the retailer 30%, that's public knowledge on the whole agency model.)  On Amazon, a self-published author makes 35% if the book is less than $2.99 or 70% if it's priced at $2.99 higher.  On Barnes and Noble, an author makes slightly less, just 65% at the $2.99 price point up to $9.99, and 40% if it's higher or lower than that.  So basically at a $2.99 price point, an author will net $2.09 from the sale.

Which brings us to the staggering conclusion, an author will make more from the sale of a self-published book priced at $2.99 than they will from a publishing house that prices an ebook at $12.99.

What does that mean for me as a reader? Not much.  Most of my book recommendations come from book blogs, goodreads users, friends and family.  I actually find the math interesting, but I mainly peruse Konrath's blog because there's a lot of self-published authors on there and it gives me ideas about new books.

I'm a 36 year old male.  My shelves are mostly full of science books, science fiction, fantasy and urban fantasy books with a healthy dose of classics and the occasional literary fiction book club-type book.  I do have a large amount of science fiction and fantasy books on my nook.  In the $2.99 category, I do have B.V. Larson and Jon  Merz.  The interesting thing is, I also have 3 Amanda Hocking books, 2 JA Konrath books and 1 John Locke book.  Why is that interesting?  When I go to Barnes and Noble, I don't give a second glance to the young adult section, let alone young adult paranormal romances.  I've also seen Konrath's print books and passed them by.  I usually don't read too many thrillers either.  (Sorry Joe if you ever read this).

So what makes the $2.99 price tag special?  It's a complete impulse buy.  It costs more in gas to go to the library to check out a book.  It costs more to drive to the bookstore to browse.  It costs the same amount to have Amazon ship a book to me.  It's significantly less than the price of a value meal at your favorite fast food chain.

I've seen a lot about Amanda Hocking signing a seven figure deal with a major publisher.  I've also read about Barry Eisler turning down a $500,000 deal to self publish.  What does this mean to me as a reader?  Will I be one of the people that goes out and buys Amanda Hocking's books in print at $10 or more? Nope.  Will I buy her ebooks at $7.99, $9.99 or $12.99? Nope.  She was never my primary genre to begin with.  I will probably work my way through her backlist of self-published items at that magical prices of $0.99 and $2.99.  I haven't read Konrath's yet (it's next on my TBR list).  As long as I don't think he's awful, I'll probably work my way through his backlist of cheap titles as well.

So what does this mean for the rest of my book buying habits?  Well I only have a finite amount of money to spend on books.  If the ebook costs as much (or nearly as much) as print, it goes on my to-buy list from the bookstore or Amazon.  The problem is, there's a lot of books on that list now.  I'm more selective about what I buy in print.  But, if I'm bored and browsing titles on my nook, and that $2.99 book catches my eye, it'll probably still get bought.


  1. Good points, and great commentary from a reader's perspective.

    My question: what's the highest you'll pay for the first book of an unknown author's? $2.99? $3.99? $4.49?

    Let's say the cover and description catch your eye.

    My sweet spot is around $4.49. Not $4.99, mind you - I don't want to pay five bucks to sample an unknown author.

  2. I guess that depends on how you define "unknown"? Assuming I've never seen or heard of the author before, know nothing of them from blogs, and there are no reviews on amazon to really go off of, $2.99 max. It's a completely unknown quantity. Maybe slightly more if the cover were really well done as well as the description.

    If we go towards the opposite end of the spectrum, I might have heard of the author before, but know nothing of them. Maybe read a blog post, maybe a number of really well thought out reviews on Amazon/B&N, but still no personal knowledge of the author, nor do I know anyone that has read it, I would be willing to go up to $5 (and even a lot more for those that get a LOT of buzz and/or number of positive reviews reaches the hundreds) for an ebook.

    The other thing to keep in mind is that the higher the price, the more the book better deliver. If I spend $8-12 on a book it needs to be good, not just mediocore, or the author will never get a second chance. At $2.99, it just has to be decent, and even then might get a second chance. At $0.99 I just have to be mildly amused by the book and will give the author a second chance even if the book is bad.

    The main point of the post was barrier to buying. At 0.99, I just click buy. Period. At 2.99, I might hesitate for a bit. At $5 I have to think about it. At $12 I think about it a lot. The more you think about the purchase before you buy the less likely the purchase.

  3. Hi. Nice points you have posted.

    At the end of the day, it all comes to the budget each one of us have to spend on books.
    I'm an avid reader, I'm past 3000 books by now.

    The thing is that I don't agree with the prices some books have, no matter how good it is or how famous and good the writer is. No matter how much I like an author, I won't spend 15-20$ on their books, with some exceptions on non-fiction expertise books.
    And I consider the prices on e-books by large publishing houses to be extremely high. Why to buy an e-book with the same or almost same price of the paperbook? The e-book should be in the range of 40-60% of the paperback price.

    I get infuriated when movies dvds, audio cds and pc games are in the range of 30-50$, no wonder piracy thrives. Same goes with books, they should be at affordable prices for everyone.
    Art should be available to most people, not only the ones who can afford it, and the recession period we're going through has limited a lot the budget for books. If one can get 5 good books for 15$, he/she will take them over just one book, because the reading pleasure will last longer.
    Regards :)

  4. "At 0.99, I just click buy. Period. At 2.99, I might hesitate for a bit. At $5 I have to think about it. At $12 I think about it a lot. The more you think about the purchase before you buy the less likely the purchase."

    Likewise, except that I distinguish between fiction and non-fiction. Apart from the occasional freebie or promotion, I expect to pay more than $10 for new non-fiction. The Agency Model's principal affect on me has been to sharply reduce the number of non-fiction books I buy: I wait until I can buy the paperback used at the Amazon Marketplace.

    With fiction, if it's more than $2.99 it had better be a book I'm looking forward to, otherwise no sale. There are just too many fun reads at $2.99 or even $.99 to justify spending more. Sure, I'll spend whatever it costs to get the sequel to "The Passage" when it comes out or Margaret Atwood's next novel, but that's about it. The Agency 6 ended up changing reader's perception of value just not in the way they expected.

  5. Interesting points about the fiction versus non-fiction. Certain non-fiction books I am willing to pay more for. I think that would also depend on the non-fiction book. If the non-fiction books is read purely for entertainment purposes, I would treat it the same as a fiction author in terms of what I'm willing to pay for.

    I have yet to pay more than $9.99 for an ebook (it's rare I pay more than that for a print book in this recession), and rarely pay more than $5. That isn't to say I never would, but it would be very rare. I'd be surprised if I buy 2 books that way in the next 12 months. I'm still not opposed to paper, so if I can get a cheap copy at Half Price Books, or used from Amazon or one of the other local used bookstores I happen into, I'll pick it up there.

    I still think A-list authors can sell ebooks at $12.99 for new releases. I don't think that price is sustainable for more than 6-12 months depending on how well that book does though. At those prices, though I think that leaves their mid-list authors hanging in the wind in terms of sales.

    I'm also not thrilled with the recent trend to further increase the price of mass market paperbacks and their corresponding ebooks to $9.99. I recently went to the bookstore to pick up a Jim Butcher book. Number 4 in the Dresden series. That book came out 9 years ago. The price was raised to $9.99 for both ebook and print and was resized so it no longer fits on my shelves with other paperbacks. I ended up borrowing that book instead. Lost sale.

    I'm not sure big publishing realizes we're living in a recession. Yes, with increased prices they'll make more money per book, but they'll have much fewer sales. Books are ultimately entertainment for most people. When you're running short in your budget, it's entertainment that gets cut first in terms of what you can spend.

    With the insistence on a $10-15 price model for ebooks, they're creating a marketplace where $3-6 indie/self-pubbed books can thrive, further reducing their marketshare (and subsequent relevance).

  6. "I recently went to the bookstore to pick up a Jim Butcher book. Number 4 in the Dresden series. That book came out 9 years ago. The price was raised to $9.99 for both ebook and print and was resized so it no longer fits on my shelves with other paperbacks. I ended up borrowing that book instead. Lost sale."

    This is analogous to the self-inflicted injury of the record industry. I would go into Borders and there was the fourth re-issue of some John Coltrane album priced at $18.98! Coltrane had been dead for more than thirty years and they were still charging top dollar.

    This doesn't justify violating copyright laws but it makes the behavior easy to understand. Eventually, their whole business model imploded.