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Old 09-17-2010, 02:02 PM   #1
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Is Agency Pricing Coming to UK?

The Bookseller has posted that there have been discussions with retailers about instituting agency pricing for UK retailers similar to the US. Evidently, publishers and retailers (except Amazon) are not happy with Amazon's (below?) cost pricing on it's ebooks.

http://www.futurebook.net/content/er...on+the+Web%29#

http://www.thebookseller.com/news/12...on+the+Web%29#
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Old 09-17-2010, 03:11 PM   #2
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(below?) cost pricing on it's ebooks.
I'm confused - what cost?
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Old 09-18-2010, 06:16 AM   #3
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Old 09-18-2010, 06:18 AM   #4
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I'm confused - what cost?
Do you think that it costs no money to publish an eBook?
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Old 09-18-2010, 06:34 AM   #5
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Do you think that it costs no money to publish an eBook?
I think there is fixed cost, but almost no variable cost.
If you sold for $1 but sold enough, you would make a profit.
This is not true with pBooks, where there is a variable cost for creating the single book that is being sold.
So for eBooks there is effectively no price point at which you can say that you are selling below cost.
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Old 09-18-2010, 06:34 AM   #6
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Old 09-18-2010, 06:37 AM   #7
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I think there is fixed cost, but almost no variable cost.
If you sold for $1 but sold enough, you would make a profit.
This is not true with pBooks, where there is a variable cost for creating the single book that is being sold.
So for eBooks there is no price point at which you can say that you are selling below cost.
A publisher, however, will know with a reasonable degree of accuracy how many copies of a book it is likely to sell. Prices have to set to recover all the "up front" costs for the book - editing, publicity, and so on and so forth - and to make a reasonable profit on top of that. Printing is a very, very minor component of the cost of a book (for a paperback novel, at least); the overwhelming majority of the costs of book production apply to an eBook just as they do to a paper book.
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Old 09-18-2010, 07:01 AM   #8
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A publisher, however, will know with a reasonable degree of accuracy how many copies of a book it is likely to sell. Prices have to set to recover all the "up front" costs for the book - editing, publicity, and so on and so forth - and to make a reasonable profit on top of that. Printing is a very, very minor component of the cost of a book (for a paperback novel, at least); the overwhelming majority of the costs of book production apply to an eBook just as they do to a paper book.
a) "A publisher, however, will know with a reasonable degree of accuracy how many copies of a book it is likely to sell" ... at a certain price
At a lower price they will sell more. That is why they print hardback, trade then mass market, to maximise sales at each price.
eBooks are not an essential purchase, they are discretionary. The number of copies you sell depends on the price you charge.
The Stieg Larsson books have sold millions of Kindle copies. The Stieg Larsson books are priced below the 'standard' eBook price. I do not think these two facts are unrelated.
To take an example in a different field, GoodReader is a fantastic app for the iPhone/iPad, and it is a no-brainer purchase for all users. If it were priced at $10 rather than $1, the first would still be true, the second wouldn't. They would sell far fewer copies, and I'm guessing would make far less overall profit.

b) The costs you list are all fixed costs, not variable, they do not increase if you sell more books. The cost per book decreases if you sell more books.

c) I am not saying there is no cost to produce the book. I am saying there is (almost) no fixed 'cost price' that one can sell above or below. This is different to a pBook, where there in an actual cost of printing, shipping and storing the actual copy that gets sold, and those costs impose a floor on the price that can be charged and still make a profit on the sale.
The equivalent for an eBook would be the bandwidth cost (tiny) and the payment processing fees (not tiny), and might create an effective floor at around $1. (This is the minimum that SmashWords will let you charge, for these reasons) As micropayments become more efficient this floor should lower.
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Old 09-18-2010, 07:16 AM   #9
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a) "A publisher, however, will know with a reasonable degree of accuracy how many copies of a book it is likely to sell" ... at a certain price
At a lower price they will sell more. That is why they print hardback, trade then mass market, to maximise sales at each price.
eBooks are not an essential purchase, they are discretionary. The number of copies you sell depends on the price you charge.
But once you reach the "casual purchase" price you probably won't sell more by lowering the price further. That price probably varies with the individual, but for me it's probably about £3-4. I won't give a second thought to paying £3 for a book, and I'd be no more likely to buy it if it cost £1 or even 10p. At that price it's the book description that makes me decide whether or not I want to but it, not the price of the book.
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Old 09-18-2010, 07:31 AM   #10
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But once you reach the "casual purchase" price you probably won't sell more by lowering the price further. That price probably varies with the individual, but for me it's probably about £3-4. I won't give a second thought to paying £3 for a book, and I'd be no more likely to buy it if it cost £1 or even 10p. At that price it's the book description that makes me decide whether or not I want to but it, not the price of the book.
(Assuming Amazon for a moment)
At £3 I'd hit download sample rather than buy.
Below £1 I'd probably just buy if I thought I might be interested, as it saves having to come back later to buy after reading the sample.
I bought all three Stieg Larsson's on impluse, at ~£2.50 each, but they have a lot more name recognition, I wouldn't have done that for an unknown book.
(Now the App store)
If I see a game recommended somewhere, and it is 99c/59p, I'll buy it straight away, above that I'll think about it for a bit. Essentially they have reached a price where I'd rather spend 59p and find out for myself whether I like it that bother hunting up lots of reviews to try and work out whether I would.

Purchasing has become so easy, and instantaneous, that I think the impulse buy is a far more significant portion of sales than it used to be, and again when trading off time/cost, I can simple buy the book and see if I like it, rather than research it.

The figures fit in roughly with my secondhand-bookshop-paperback-browsing, for a genre I like I'd probably buy below £2 without much thought, I'd buy between £2 and £3 if it a was a book in a series I was collecting, and I probably wouldn't buy above £3 unless it was something I'd really been looking for, I'd wait and try to find it cheaper another day. I'm not inclined to pay more for an eBook than I would for a secondhand paperback.

[Edit: Any way you slice it, whatever the 'casual price' barrier is, it is a lot less than the current $10 standard US price for eBooks]

Last edited by murraypaul; 09-18-2010 at 07:35 AM.
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Old 09-18-2010, 07:36 AM   #11
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[Edit: Any way you slice it, whatever the 'casual price' barrier is, it is a lot less than the current $10 standard US price for eBooks]
Yes, I completely agree with you there. I'm very happy with the current typical £3-£5 price that Amazon UK are charging for eBooks. I think that's a fair price for everybody.
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Old 09-18-2010, 11:26 AM   #12
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Do you think that it costs no money to publish an eBook?
I think murraypaul managed to say pretty much everything I would of said in reply. I'd also guess that if a book was already in print then producing an ebook version of it actually would cost next to nothing. If you do have detals of the cost breakdown in producing a book/ebook then that might make interesting reading.
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Old 09-18-2010, 11:36 AM   #13
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I think murraypaul managed to say pretty much everything I would of said in reply. I'd also guess that if a book was already in print then producing an ebook version of it actually would cost next to nothing.
Unfortunately you really can't look at it that way. An eBook sale will generally be instead of a paper book sale, not as well as, so the eBook has to share the same costs that the paper book would have. You can't regard eBook sales as cost-free.
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Old 09-18-2010, 01:06 PM   #14
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Saw this mentioned on Teleread.
According to The Bookseller Hachette UK will start agency pricing on Monday September 20.
http://www.thebookseller.com/news/12...om-monday.html

I hope that Amazon has learned from the situation in the US and will not cave in to the publishers this time. Otherwise probably all the big publishers in the UK will be using the agency model in the near future.

I wonder if this kind of price fixing is something the EU can do something about?

EDIT: I wonder if this is why the new WH Smith store does no longer sell e-books outside the UK. Do they already know that agency pricing is coming? And do the agency publishers not permit selling outside the UK?

Last edited by geertm; 09-18-2010 at 01:13 PM.
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Old 09-18-2010, 01:41 PM   #15
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Unfortunately you really can't look at it that way. An eBook sale will generally be instead of a paper book sale, not as well as, so the eBook has to share the same costs that the paper book would have. You can't regard eBook sales as cost-free.
I'm certain that your knowledge in this area is better than mine but my gut feeling tells me you're wrong. The different price points appeal to different types of reader. Also those with an ereader will also want an ebook rather than a pbook so if there isn't a competitivly priced ebook available then they'll just skip that book. I'm a bit different as I just download my books and then, if I like them, I buy the pbook to go in my library. If the prices are around the £3 mark then I'd feel little issue in paying the ebook price and again, if I like the book, I'd still buy a physical copy. I'd probably like some method of deducting the price of the ebook from the pbook though
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