Quote:
Originally Posted by fjtorres
A recent Smashwords post by Mark Coker presents a case arguing that eBook price elasticity is very high and that a 70% cut in price can result in a 500% percent increase in sales volume. (Six times total sales at the lower price than at the higher.)
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Anybody have other (semi-reputable) numbers that refute or support this thesis?
(For that matter, does anybody care?  )
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As a publisher and author, I care.

I've also done a lot of experimenting with pricing. I had also urged Mark Coker to do this analysis of his data (actually, I offered to do it for him if he would provide sanitized data), and am glad he got around to it. So, some thoughts...
While unit sales may vary with price, one key point is that it likely isn't the number of copies that a publisher/author really cares about -- revenue is. (If someone's goal is not to make money but just to get a lot of people to read their work, $0 might be a better price. So let's focus on revenue as the goal, which is probably the most common case.)
Mark didn't publish highly precise data, just some charts, so let's look carefully at them. His "x=1.0" sales benchmark is the "$10 and up" price point, which could include books selling at $50 ea. Let's look instead at the $9.00-$9.99 part of the curve, where it looks like they sell about 1.5x his benchmark point. That compares to the 6.2x for $2-2.99 books, for a ratio closer to 4:1. (I'd rather he had broken out by 25cent intervals, since there's a big difference between $2 and $2.99, but let's assume that data point really holds true for $2.99 sales, and isn't primarily about $2.00 prices.)
So if I sell 10 copies at $9.99, that's $100 of gross in round numbers; if I sell 4x that, 40 copies, at $2.99, that's $120 gross.
Yes, that's ostensibly 20% more revenue,
however that's not really a gigantic change. It may well be lost in the margin of error of his data and analysis: If it's 40 copies at $2.00, that's $80 gross, and a 20% drop in revenue. Or, another way to look at it, if the $3-3.99 data is what really reflects the $2.99 sales more accurately, which is about 3.3x the $9-9.99 data point, then we're looking at 33 copies x $2.99 = $100 gross.
In other words, the relationship between revenue and price appears to be close to constant in his analysis.
His analysis also lumps a LOT of different kinds of work together: short stories in with novel length, fiction with nonfiction, science fiction with romance, etc. etc. etc. Each of those might have a widely different curve.
I've done a lot of experimenting with price myself, for both ebooks I've written and those of professional authors I publish. (e.g., changing the price on the same book. To explain the background of the data I'm talking about, I run ReAnimus Press; we do ebooks of all sorts, though a lot of science fiction from bestselling pro authors, e.g. Ben Bova, Robert Silverberg, etc. So these represent ebooks from both "big names" and unknowns; and we have an assortment of non-SF titles too. I've experimented with price on all kinds of these books.)
What I've found, fairly consistently, is that unit sales don't vary much by price. Books that are popular sell a lot of copies, and about the
same number of copies, whether priced at $2.99 or $9.99 or points in between. Books that aren't popular sell not many copies, and lowering the price doesn't sell many more copies. Now, that means that
revenue is much higher for us at the higher price points. If a title sells 10 copies per time unit at $2.99, for $30 gross, or say 8 copies at $9.99, for $80 gross, that's basically a no-brainer which path I should choose. (And at 99 cents, since Amazon cuts the royalty rate in half, I would have to sell 20X copies as at $9.99. I might sell 5x copies, but that doesn't justify a 99 cent price. At that, if I just plunk the price to 99 cents and don't do any marketing, they sell about 1:1 as at a higher price. It's only if I trumpet to the world that there's a 99 cent price do the sales increase. So, it seems that based on people
looking for a particular title, $9.99 is just as attractive as 99 cents.)
My hunch is that in the under $10 price range, the value is mostly in non-price related aspects: The content of the book, the cover, reviews, etc. (And maybe it's higher than $10, but we small publishers can't really price higher than $10 -- Amazon cuts the royalty in half again, so we earn as much from a $10 as from a $20 sale per copy.)
So a good book will sell a lot, regardless of price (under $10). A book people aren't that keen on will sell few copies, regardless of price. Unit sales, for the titles I publish, seem related to content of the book, not to price.