Price Wars/ E-Book Cost

[geneaber]

In light of the announcement of the Nook, I started wondering -- how much does Amazon or B & N typically pay for an e-book? If they sell it for $9.99 how much do they pay to the publisher?

[weedfreak]

I think it was recently reported that they pay $1.50, which is why they are reportedly making $31 million this year just from ebooks, It is also why I am not buying anything from them, I do not support parasites but prefer to buy direct from authors and publishers who can get a better deal by selling cheaper direct to readers.

[pdurrant]

Amazon pays small publishers and self-publishers 35% of the list price of the ebook. Amazon probably pays large publishers 50% of the list price of the ebook.

Smashwords, on the other hand, pays publishers 85% of the list price. Of course, this means that at Smashwords, the list price is the price customers pay, while at Amazon ebooks are often discounted by 20%, 40% or more.

Originally Posted by geneaber

In light of the announcement of the Nook, I started wondering -- how much does Amazon or B & N typically pay for an e-book? If they sell it for $9.99 how much do they pay to the publisher?

[geneaber]

Wide discrepancy in answer ($1.50 vs. 35%-50% of list). Anyone know which is correct?

The next question becomes -- is the list price for an ebook the same as that for a hardcover?

[Direct Ebooks]

Amazon does pay publishers the quoted percentage. The 1.50 is nonsense.

Other distributors generally pay the publishers a little more. Publishers can set the srp and typicall take 50%+ of this figure, irrespective of whether the retailer applies any discounts.

[geneaber]

Originally Posted by Direct Ebooks

Amazon does pay publishers the quoted percentage. The 1.50 is nonsense.

Other distributors generally pay the publishers a little more. Publishers can set the srp and typicall take 50%+ of this figure, irrespective of whether the retailer applies any discounts.

So is the list price for an ebook the same as for a Hardcover?

[AnemicOak]

Originally Posted by geneaber

So is the list price for an ebook the same as for a Hardcover?

Often times the list price is the same as the latest paper release. So if it's just out in HC then it has a HC list, if it's out as a Mass Market PB then that's the list, if it's re-issued as a trade PB then sometimes the ebooks list goes up to match that. This isn't of course true for all publishers, but it is for most of the biggies. In the UK I've noticed sometimes the list is higher than the HC.

[pdurrant]

The list price for an ebook is whatever the publisher says it is.

Some publishers price an ebook at the same price as the cheapest paper edition - so the same as the hardcover until the paperback appears.

Some publishers price an ebooks at a higher price than the paperback - sometimes twice as much.

Some publishers price ebooks at less than the cheapest paper edition.

Originally Posted by geneaber

So is the list price for an ebook the same as for a Hardcover?

[Kali Yuga]

The $1.50 price is wrong, at least for new titles.

I may be wrong but my understanding is it's not based on a percentage. The publisher sets a wholesale price, and the retailer goes from there. For brand-new books (what would normally be a hardcover) the wholesale price is $10 or more; so ebook retailers occasionally lose money on the $9.99 ebook.

IIRC someone at Amazon (possibly Bezos) stated that some ebooks are loss leaders, but so are some of the big hardcovers, especially with the current price war.

[Hellmark]

Originally Posted by weedfreak

I think it was recently reported that they pay $1.50, which is why they are reportedly making $31 million this year just from ebooks, It is also why I am not buying anything from them, I do not support parasites but prefer to buy direct from authors and publishers who can get a better deal by selling cheaper direct to readers.

That figure is how much they pay on average. Some they pay more for, namely best sellers.

[calvin-c]

Originally Posted by Kali Yuga

The $1.50 price is wrong, at least for new titles.

I may be wrong but my understanding is it's not based on a percentage. The publisher sets a wholesale price, and the retailer goes from there. For brand-new books (what would normally be a hardcover) the wholesale price is $10 or more; so ebook retailers occasionally lose money on the $9.99 ebook.

IIRC someone at Amazon (possibly Bezos) stated that some ebooks are loss leaders, but so are some of the big hardcovers, especially with the current price war.

I think you misunderstood where the percentage is applied. You're right-Amazon doesn't pay a percentage, they pay whatever the publisher demands. But if I understand what was said about the percentage correctly, the publisher sets their wholesale price-what Amazon pays-at a percentage of their suggested retail price. And (according to earlier statements in this thread) that percentage is 35-50%. But it's of the publisher's srp-not of what Amazon actually sells the book for. (And, just as Amazon will offer loss-leaders, so might publishers. I don't really know about that. These days it would make sense that even wholesalers would pay attention to marketing-but so many publishers seem to live so far back in the past that I won't count on that.)

[Kali Yuga]

Originally Posted by calvin-c

I think you misunderstood where the percentage is applied. You're right-Amazon doesn't pay a percentage, they pay whatever the publisher demands.

I think that makes me right, then.

It's possible the publisher does have a formula that is related to the list price, which in turn bears little relation to what the retailer actually charges. They may also lower the wholesale price for back catalog items without changing the list price, I'm not really sure. Pricing is hardly an exact science though. I guess someone in the industry will have to spill the beans.

Originally Posted by calvin-c

These days it would make sense that even wholesalers would pay attention to marketing-but so many publishers seem to live so far back in the past that I won't count on that.)

I know that's a popular view, but I disagree that the publishers are backwards -- no more or less than artists or consumers who refuse to go digital. The main issue is that they don't want to see their margins erode and their products devalued. But I think a lot of the industry believes that digital will overtake print in 10 years or less, most major publishers are putting out ebooks faster than they do paperbacks (which are in the same price range as the ebooks), and many are on board with things like POD, so I don't think they're quite as backwards as most people think.

[fugazied]

Originally Posted by pdurrant

The list price for an ebook is whatever the publisher says it is.

And that is why all of the conjecture about price is a bit baseless. However if they sell ebooks in similar ways to paperbacks, the $9.99 titles probably don't have as much markup but obtain profit via sheer volume (eg. $9.99 on popular titles form large publishers).

I think given the sheer practicalities of storing and shipping an ebook and often skipping a middle man wholesaler/retailer they would HAVE to be more profitable than traditional paperbacks (perhaps not as much as hardcovers which have an often ludicrous markup).

[pdurrant]

By skipping most middle-men, Baen Books sell their ebooks for $6, and make more than from a paperback, but a bit less than from a hardback. (Well, the actual info I had was that the author royalty on an ebook is more than from a paperback and less than from a hardback, but I think it's safe to assume that the same applies to the publisher's cut.)

Originally Posted by fugazied

I think given the sheer practicalities of storing and shipping an ebook and often skipping a middle man wholesaler/retailer they would HAVE to be more profitable than traditional paperbacks (perhaps not as much as hardcovers which have an often ludicrous markup).