eBook Price elasticity: Volume=f(price)

[DrNefario]

Originally Posted by Kumabjorn

I have been thinking along this line as well, but my conclusion is that you can get away with this pricing model only once. After that, the market will expect the price to drop to the $3 level and will wait for that to happen.

But surely that is exactly the hardback/paperback model? What you get for the higher price is earlier access.

Even Baen effectively already do that with their eARCs.

[Kumabjorn]

Originally Posted by DrNefario

But surely that is exactly the hardback/paperback model? What you get for the higher price is earlier access.

I think you get more than that.

[andrewburt]

Originally Posted by Kumabjorn

I have been thinking along this line as well, but my conclusion is that you can get away with this pricing model only once. After that, the market will expect the price to drop to the $3 level and will wait for that to happen.

Depends how long you wait to drop the price, I suspect, and the inherent demand for the book. Print publishers know a popular title can start as a pricey hardback then go to paperback a year or more later; same basic idea. But some titles don't have the initial demand, so they start in paperback. So if an ebook is expected to have solid initial demand of people who are hot to read it, starting higher is sensible.

But if you have a lot of titles (i.e. if people can learn your pattern and "predict" what they think your pricing curve will be in the future), you might want to wait a while (a year+?) to drop the price for high-demand titles. (And maybe throw them off by sometimes raising the price too, so there's no pattern of always-going-lower to learn.)

(I'm still not convinced the price matters that much -- i.e., my experiences indicate that the value is inherent in the book, not the price -- in which case, staying higher is better.)

[andrewburt]

Originally Posted by Kumabjorn

I think you get more than that.

Such as?

For me, I always waited for paperback (back when I bought paper, that is), not just because of the price, but because I preferred the smaller, lighter weight edition. Easier to hold in one hand, etc. Most of the hardbacks I got were as gifts. Sometimes I'd be so eager I'd buy a hardback for early access, but rarely.

[crossi]

Originally Posted by andrewburt

Depends how long you wait to drop the price, I suspect, and the inherent demand for the book. Print publishers know a popular title can start as a pricey hardback then go to paperback a year or more later; same basic idea. But some titles don't have the initial demand, so they start in paperback. So if an ebook is expected to have solid initial demand of people who are hot to read it, starting higher is sensible.

But if you have a lot of titles (i.e. if people can learn your pattern and "predict" what they think your pricing curve will be in the future), you might want to wait a while (a year+?) to drop the price for high-demand titles. (And maybe throw them off by sometimes raising the price too, so there's no pattern of always-going-lower to learn.)

(I'm still not convinced the price matters that much -- i.e., my experiences indicate that the value is inherent in the book, not the price -- in which case, staying higher is better.)

Price matters to me. I've only ever bought about a dozen fiction hardbacks in my life. I just kept a notebook with the hardback publication date and started looking for it about a year later. I don't care how good it is. If I go through a book a day one day's entertainment is not worth $25 dollars. One day later I would need a new book anyway and I can't afford $25/day for the entire year so I might as well wait and buy what I can afford.

[andrewburt]

Originally Posted by crossi

Price matters to me. I've only ever bought about a dozen fiction hardbacks in my life. I just kept a notebook with the hardback publication date and started looking for it about a year later. I don't care how good it is. If I go through a book a day one day's entertainment is not worth $25 dollars. One day later I would need a new book anyway and I can't afford $25/day for the entire year so I might as well wait and buy what I can afford.

(Just to clarify, I wasn't suggesting $25 didn't matter compared to $1; I was referring to ebook pricing, where a price of $9.99 and under seems not to have as much impact on sales.)

[fjtorres]

I'd say that price sensitivity is a consumer issue not a publishing issue per se.
Some people are definitely price sensitive and will not buy any book beyond their price range. Some are somewhat sensitive and others are totally insensitive to price. (Duh, right?)

When you look at book sales volume you're looking at an aggregation of all of the above customer types so just picking out one book or one author isn't likely to tell us much about overall market behavior because there are factors other than price that impact sales volume. Even focusing on one publisher alone won't necessarily give an accurate representation of the overall market, even for a single genre.

Anecdotal evidence is of little use as a single author with a strong following would be more likely to see little sales variance with price while a group of newcomers with no track record would be more likely to show significant variance.
Going high and staying high is definitely the right thing for J.K. Rowling, Nora Roberts, and other established writers with a track record. No risk there.
Joe Wannabe with his first book coming out of nowhere, no matter how good his cover, blurb, and sample chapters is going to be running a bigger risk going high, regardless of how good and well-reviewed the product.

But to extract meaningful price data you can use to assess how much extra risk Mr. Wannabe is running, you really need a big enough catalog sampling to get the non-pricing factors (like branding, author reputation, genre expectations) to cancel out.

And that is something only the big retailers can really do.
Smashwords data is useful as far as a trend indicator but it is skewed by their business model and I'd be leery to bet the farm on their sales ratios and sweet spot.

Three other pricing data points I'd keep in mind before betting the farm on $2.99 is that:
1- the aggregate average ebook price at Amazon is $6.87 (and Amazon's own ebooks run $6.99). Of course, that includes the price-fix BPH titles providing a pricing umbrella for their competitors. That average might drop if the BPH titles are allowed to float.

2- BAEN single title price has long been $6 and their bundled price runs $4.50 these days. (At least 4 new titles in each monthly bundle.)

3- Harlequin ebooks generally run $4.99.

My gut feeling is that the safe zone for a new writer lies somewhere in the $2.99-4.99 range depending on genre, rather than $9.99.

[StoryEnthusiast]

Originally Posted by DrNefario

But surely that is exactly the hardback/paperback model? What you get for the higher price is earlier access.

It looks like that is the model for today's world where consumers want instant gratification. I enjoy waiting, and am reward appropriately in terms of getting bargains.