This post was originally on my previous blog September 2013.
Amazon.com and the big publishers may never see this post, but I feel compelled to speak my mind nonetheless.
In case you haven’t heard about the ebook pricing battle between Amazon and the big six publishers, basically Steve Jobs of Apple and the big six publishers forced Amazon to stop offering ebooks at deeply discounted prices. The US Justice Dept. began an investigation in 12/2011 to determine whether this constituted collusion to fix prices.
As a result of the efforts of the big six publishers, Amazon has no control over the pricing of ebooks from the big publishers Hachette, HarperCollins, Macmillan, Penguin Group, Random House, and Simon & Schuster. Instead, these publishers dictate to Amazon what the ebook prices will be.
As a consumer, I certainly would love to be able to get really cheap ebook copies of the top selling novels. However, I can also appreciate that publishers spend a lot of money to cultivate new authors, edit their writing and promote their books. Publishers say that they have the best chance of making back the money invested in a book through the hardback book sales.
So just as we all learned to get along with others in Kindergarten, ebook pricing also comes down to a simple matter of compromise between Amazon and the publishers.
My proposal is that during an agreed upon initial hardback sales period of about three to six months, Amazon could discount the ebook version of a book no more than 40% off the print list price. That would mean that a book selling for $25 in hardback would sell for $15 in ebook. This pricing would prevent the ebook from being priced so low that it’s sales cut into the hardback sales, and yet prices ebook version at an amount that takes into consideration it’s lower cost to manufacture and distribute. Three to six months is typically the time period during which the book has the longest wait time for availability at the public library, so making the ebook available at a moderate discount also increases the book sales in this format at a time when it’s difficult to acquire through the library.
After the initial sale period, Amazon and other resellers could discount ebooks without limitation. The $9.99 Boycott indicates that many ebook readers feel that $9.99 or less is an appropriate ebook price and this point in a book’s life would be a good time for that price.
This arrangement actually has an advantage to publishers in that it allows resellers to price ebooks competitively with used books and paperback copies and thereby increase book sales. Ebooks are much less expensive to produce and distribute than print copies and therefore, have the potential to generate a higher profit per sale.
In the case of used book sales, publishers make nothing each time a used book is sold. However a publisher makes money every time that an ebook is sold since it cannot currently be sold secondhand, so competitive pricing of ebooks in the later phase of sales actually benefits publishers.
An ebook should continue to be discounted throughout it’s life approximately a dollar a year. Once it has been out five to ten years, the ebook should be priced at $5 or less. This pricing allows an older ebook to be competitive with the pricing of the used print copies.
For more information on Kindles and ebook pricing, see my Kindle Notes page.