About the Publishers
Open Letter Books
The Harvard Common Press
How to Price Your E-book and Survive in the Amazon
Three industry experts dispel our most common e-book selling fears.
By now we’ve all heard about mystery-thriller writer John Locke’s ascension into the ranks of the Kindle million-seller club. While the other seven men and women who are a part of this illustrious group are selling their books at typical e-book prices, Locke has gained his membership by selling his books for only 99 cents. What does this mean for us, the independent publishers and small presses of the world? Will the 99-cent model catch on and force, as described in the LA Times, “a downward price pressure on Kindle e-books”? Are writers going to cut out the middleman and publish straight to e-books without our help? How can we charge our consumers appropriately?
I talked with some of the industry’s most innovative publishing leaders including Chad W. Post of Open Letter, John Oakes of OR Books and Adam Salomone of The Harvard Common Press. Both Oakes and Salomone were featured panelists in Digital Book World’s “E-book Distribution for Small Publishers” webcast on June 21, 2011, which touched on many of the issues independent presses are facing in today’s e-book market. With the help of Post, Oakes and Salomone, we got to the bottom of the e-book pricing hype and are here to tell you it’s all going to be okay.
Pricing Your E-book
Whether you are using a retailer or your own site (or both), pricing your e-book can be tricky. While big houses can pay 15 employees to research the market, track sales data and find the magic selling number for their e-book, independent publishers might not have the manpower to invest in such an endeavor. How should we tackle pricing – do we need a formula or model or can we get creative?
“One of the interesting opportunities afforded by e-books is the possibility of flexible pricing,” Post says. “Right now, we print 3,000 copies of a paperback with a price stamped on it. For all intents and purposes, that's the price until all those copies are sold. Which, as most B-school pricing professors would tell you, is pretty ridiculous. In the e-book world, it's completely possible to discount titles to generate interest, or when an author is appearing on a radio show, etc. One of our ideas is to price the e-book at $7.99 for the month prior to its print release. This would be a way of creating a bit of buzz, and providing a bit of an incentive to buy the book in advance.”
Post and Open Letter also decided to try a new tactic with the launch of their e-books. For the month of June, they sold all of their e-books for $4.99. “It was primarily a promotional launch price,” he tells us. “If we were to put these books out there at $9.99 (which will be the price come July 1st), we wouldn't have gotten nearly as much attention for these books as we did.”
Will Open Letter continue with this pricing? “We don't have all the data yet, but from what we do know, sales for these titles have far exceeded expectations. I suspect we'll do something like this again in the future.”
Salomone is on board with Open Letter’s adaptable pricing. “I would certainly recommend experimentation,” he says. “One thing I think remains true to this day: it’s easier to lower prices than raise them. If you have the ability to do so, try to set your prices at a healthy margin, just as a way to test the market and then price downward if needed. This may be difficult for some because of the traditional retail model, where many of those outlets that sell our books either dictate the price at which we sell or don’t let publishers change those prices over time. But if you have an outlet through which to do it, you should.”
Different Rules for Different E-books
Of course, there are a variety of different types of e-books that call for changes in pricing. Before you can even think about selling your book online, conversion to an e-book format is necessary. You then have to choose between what Salomone calls “vanilla e-books” – the barebones basic format – and an enhanced book that may have interactive links, photos, etc.
“The vanilla e-book is really just the complete text reproduction with any photos, tables, charts, etc that one might find in the printed book,” Salomone explains. “For the most part, we would price these in conjunction with industry standards, which might be $9.99-$12.99, or in some cases a bit less depending on the subject and size of the book. There is usually enough historical data out there, even in the past 2-3 years of the growth of the e-book market to justify a specific price for the vanilla e-book as publishers continue to sell into that market.
“With an enhanced e-book, the pricing becomes complicated because of a variety of factors. One would assume that the price should be greater than the vanilla e-book because of all the extra functionality (which could include video, audio, links to resources, slideshows, social sharing features, etc). But we also have to think comparatively about the pricing issue. If you have a $9.99 vanilla e-book, a $12.99 enhanced e-book, a $24.99 printed hardcopy, and a $2.99 app, all for the same book, is the consumer going to understand what they are getting at each price point? I would say they likely won’t. The biggest thing to keep in mind is that pricing cannot happen in a vacuum, and what you charge for each edition may well depend on what you’re charging for other editions that are already out there.”
Discount Pricing: Proceed with Caution
Now say you’re ready to lower the price of your book, whether it be for a promotion, sale or just to see if you can create more interest. If you’re selling your e-book on Amazon, pricing between $2.99 and $9.99 will earn you a 70% royalty rate, but if you’re selling for more or less your earnings won’t be quite as high – only about 35%. As a result, Salomone says that a low price model will not work out in the long run.
“I can’t help but think back to an anecdote that a publishing colleague told to me not too long ago: the idea of publisher returns, which in many ways has hobbled our industry indefinitely, was started as a way for one publisher to sell more books to retailers. It was a simple solution then, just as pricing our e-books at $0.99 is now, but eventually it becomes an impossible reality to change. We’re at a tipping point and pricing is a huge issue, but we have to be careful to not set our future in stone at a price point that’s unsustainable.”
It’s not just Amazon that is creating this lower price trend: it’s the consumers. “I suspect that reader demand will have a huge impact on the e-book price fallout,” Post predicts. “It's already become clear that there is a group of readers who spend the majority of their book buying money on $.99 e-books. Sure, Amazon allows for the $.99 e-book to exist, but this is a cultural situation. And as with any other media, when there's a near infinite amount of material – and 3 million+ books published in one year is basically infinite in my mind – the price will fall to zero.”
Working with Big-Name Retailers
Many of us worry about the influence that all-powerful middlemen can have when they are selling our books. Is Amazon a curse or a blessing for smaller companies? All three publishers assured me that the fears of a “Great Depression” of e-book sales are far from being realized.
“I see Amazon as a sort of ally,” says Post. “There are probably only 250-300 physical bookstores carrying our books in the U.S., which would severely limit our potential readers if it weren't for an online retailer like Amazon. In terms of distribution and reaching as large an audience as possible, online retailers are fantastic for small presses.”
Oakes isn’t quite sold on Amazon’s integral position in the online book market. “For us, Amazon is an occasionally necessary evil,” he admits. “We started out not selling on Amazon, but we realized that a lot of people, after they read or hear about a book, go straight to Amazon. We are trying to slowly erode that mentality; it is just as easy to look up a book on a publisher’s site as it is to look it up on Amazon.”
With authors like John Locke utilizing Amazon to the fullest, we also have authors and publishers doing their own thing. Case in point: superstar J.K. Rowling recently decided to sell her e-books on her own. “She didn’t ask my opinion,” Oakes jokes, “but Rowling and I are thinking the same thing. She’s found that she doesn’t need Amazon to sell books and neither do other publishers.”
Oakes maintains that breaking consumers of the Amazon-addiction will allow publishers to have direct contact with their readers. “It is an incredibly exciting time to be a publisher and to get in touch with your consumers. It is also a frustrating time because consumers don’t understand they don’t need to go through intermediaries to buy books.”
Does Price Indicate Quality?
Another hot-button topic when it comes to e-book pricing is the correlation between price and quality. A sloppy, unedited manuscript can be sold at a dollar alongside a New York Times Best Seller for the same price. How do we, as publishers, price competitively to stay distinct from lower quality works and how do we give consumers confidence in our products?
“It's not exactly that price equals quality,” Post explains, “I'm sure some cheaper books are incredibly entertaining, and generate very loyal fans. My concern is that this huge group of readers is starting to evaluate books on the basis of affordability and not on writing quality. This makes me sound like a dinosaur or an elitist, but I think it's important for culture and society for people to cultivate a sense of taste. By trying to capitalize on price points and the way bestseller lists work, it seems to me that this devalues literature and emphasizes the idea of books as simply a commodity.”
Salomone also finds fault in using price to gauge quality. “Unfortunately, while price and quality should correlate, I don’t know that they do in all cases,” he admits. “Especially where mainstream publishers are pricing into pretty uniform models in the $9.99-$12.99 price range, it’s hard to use that to judge what content to buy. And, when you take into account the growing self-publishing market, where authors are putting out content at a variety of price points, it makes it even more difficult to draw a line in the sand and say ‘At $0.99 or less, you shouldn’t buy this.’ So while pricing should correlate to quality, I feel there are too many players out there using different price points to say whether or not it truly is a marker for quality.”
Oakes takes a different look at the price vs. quality debate. “This is where the worth of a publisher is proven,” he says. According to Oakes, publishers need not worry that all authors are going to choose to self-publish instead of working with an established press. “A publisher may be offering a $5 e-book but because you know what kinds of books he has published you will know that this work is quality. Now is where you have to trust the name. This relationship makes publishers highly relevant in today’s world and we won’t be superannuated unless we refuse to change.”
The Bottom Line
As we all know so well, ignoring e-books isn’t going to make them go away. Embracing the digital world (and all of its faults) sooner rather than later is the best plan of action.
“E-books are integral to what we’re all about,” Oakes says of OR Books. “We start with the premise that our job as publisher is to present readers with what is called ‘platform agnostic’ format. Readers ought to be able to get their book in any format that is commonly available whether it is paperback, HTML, EPUB or something different. We don’t regard the e-book as something tacked on.” In this industry and the e-book market in particular, creativity is key. “What’s great about this new world of electronic publishing is that you can be as flexible as you want to be,” Oakes says. “Although it’s always a matter of opinion when it comes to pricing, I want to encourage consumers to buy the e-book so I price e-books well under my printed copy.”
Oakes strategy is simple and successful and certainly allows for changes and tweaks. Finding the perfect price for your e-book may still require a bit of trial and error, but as independent publishers we have the freedom to charge what we feel is right. We are, after all, independent.
Jillian Bergsma is a writer and contributing editor for Independent Publisher. She graduated from the University of Michigan with a degree in English. She welcomes any questions or comments on her articles at jbergsma (at) bookpublishing.com.