Interesting article on book pricing and why it might rise

[DMcCunney]

Originally Posted by Fbone

Aren't cigarettes less expensive in New Jersey? I don't smoke but I see ads at gas stations and 7-11s for less than $8 +tax.

Cheaper, but not that much cheaper.

The Onandoga reservation charges no taxes on tobacco. A carton of cigarillos may go for $20. They go for $5 a pack in NYC.

60% off is a compelling difference...
______
Dennis

[Fbone]

Originally Posted by DMcCunney

Cheaper, but not that much cheaper.

The Onandoga reservation charges no taxes on tobacco. A carton of cigarillos may go for $20. They go for $5 a pack in NYC.

60% off is a compelling difference...
______
Dennis

Gas for a 500 mile round trip journey

GWB $8 toll

9 hour drive

... are also compelling factors.

[DMcCunney]

Originally Posted by Fbone

Gas for a 500 mile round trip journey

GWB $8 toll

9 hour drive

... are also compelling factors.

Agreed. That's my point to her.

She just likes to get behind the wheel and drive, and is looking for an excuse.
______
Dennis

[DMcCunney]

Originally Posted by Sil_liS

But since you *can* buy the books, they aren't georestricted to you.

Yes. But note where I have to buy them. To buy the British edition, I must order from the British Amazon operation. It's quite legal for them to take my order and ship to me in the US. It's not legal for Amazon US to sell them to me.

But for the georestriction problem it means: look, but don't touch, or to be more precise: we sell the ebook, but not to you.

Yes. It's a problem. I don't see a quick solution, for reasons already mentioned. It will still be a problem even if the publisher is international in scope. If I sell a book the Macmillan in the US, for example, I might also sell a British edition to Macmillan UK. While both are units of Holtzbrink in Germany, they are separate divisions with separate P&ls, and in projects where both are involved, I'll expect, um "discussion", when it comes time to decide whose budget gets what expenses, revenues, and profits.

Can you please read what you quote? I didn't say that you said that costs are double counted, but that "the publishers effectively count everything twice".

Sorry. Correction accepted. But why do you think they count everything twice? Got an example?

You're imagining things

I imagine six impossible things before breakfast.

But I encounter enough resistance to posts like this on MR that I'm forced to conclude a lot of folks simply don't want to hear anything that disagrees with their notion of how little an ebook ought to cost.

I like to argue in general, and it is very easy to argue with vague statements (I am a physicist, so for me anything that doesn't involve exact values and doesn't go by formulas is vague).

Then I fear just about all of this stuff will be vague. It's not physics.

The situation is different in the case of a new self published author who gives only the ebook version as some of the costs are just not there (the author does the editing and proofreading and cover art). Also, the perspective is different: since the author is also the publisher, the royalties also go to paying for the things that are outsourced, making the profits smaller than they seem. To an individual, doing something in the evening means no cost; to a company it means overtime.

You think the author places no value on her time? But yes, self-publishing is a completely different business model.

But this is all guess work on my part.

Mine too. I just happen to think mine is an informed guess.

Removing costs would always mean that the price can be lower, but I agree that there is the matter of how much. I didn't assume that the .99 prices were a matter of great coincidence

Agreed, removing costs means the price can be lower. It doesn't mean it will be.

If I'm a producer of any product, I'm always interested in lowering my costs. If my costs are lower, more of the revenue I get in sales flows to my bottom line. Whether I'll reduce the price I charge for my product is another matter. I'll cut the price because I have to to respond to competition. If I think I can successfully maintain my price where it is to benefit from my lowered costs, I'll do just that.
______
Dennis

[BearMountainBooks]

I think you're probably simplifying the self-publishing model. What makes it cheaper isn't really entirely "do-it-yourself" it's more controlling the costs and shopping around. For a large publisher, they have in-house people and that salary for book cover (whether photoshopped or outsourced there's someone with a salary at the house in control of that cover). They have a salary for the editor, the copyeditor, the proofreader, the publicists and so on. Their costs are set and only likely to go HIGHER over time.

For a self-publisher, I can get artwork from any number of places. I may or may not be paying for health care, salary and retirement when I pay an artist. I'm likely to pay a lower fee simply because I am not a big house. Not to mention, I'm not likely to commission work from a big-name artist. BOTH of us are hungry. So we work to negotiate a deal that works for both of us. Just as an example: I might buy artwork and photoshop it myself. I might draw it myself. I might hire an art student or I might hire a graphics artist. The prices for all of those can range from near zero to, let's say 1500 dollars per book. But I get to decide. If I HAVE the resources for a particular project, I can go straight to artist D and say, "here's the project. Give me a bid." If I don't like the bid, I can look around for a lower one.

But a big house is going to be paying staff ALL the time, year round. They will work multiple projects, but they will be paying health care and all those other costs for multiple employees.


Same with editors and every other part. The key is there is an open competition for me to find the cheapest but BEST that I can afford for a given project. Some of my covers I did myself. As those books made money, I was able to put that money into an artist for better covers. The same thing happens on a larger scale at a big house, but there is a cost they never go below because they have constant employees.

One of the things I can do as a self-publisher (and that some smaller publishers are doing) is put out the book as an ebook. Less cost in TIME and upfront MONEY than if I do both a print AND an ebook. I'm not paying for proofs. I'm not paying for the more expensive wrap-around artwork required for print covers. I'm not paying for review copies to send around, nor am I paying postage to send them. These may seem like small costs, but they add up. I don't think I could put out a print version for less than 200 dollars even if I did all the work myself; proof costs and copies that I'd need, not to mention the various program costs associated with being on Amazon or B&N, etc.

If the e-books are successful enough at a given price I (or a small publisher) can decide to invest in a print book. But the key is to try different things while watching the bottom line. The big guys don't bother. They stick to their old model. And that's okay with me because it create a tier where I can survive. It's up to me to thrive--and them to figure out how to thrive with their higher cost structure and different pricing expectations.

I target the frugal reader. I target the library reader who wants to splurge on an ebook now and then. I target the reader used to buying used books for 3 or 4 dollars.

The big houses are in the middle of trying out whether they even want to target those same readers and if they do decide to target them, which books? Backlist? New on special? Never? Teasers?

Because it's not all about one price. It can't be. It's not all one audience.

[DMcCunney]

Originally Posted by Sil_liS

I don't think that they get applied at all since the price is set based on guess work. And my point is that you won't find an article on that since publishers like to pretend that hardcovers are the only ones out there.

I think I understand. We're dealing with the Amazon Effect.

A lot of this is fallout from the Agency Model pricing scheme. For some interesting background on how it came about, see this Boston Review article.

But unhappiness with the rise in price of ebooks on Amazon created a distortion of subsequent dialog.

The basic question is how much you should pay for an ebook released at the same time as the hardcover.

The hardcover best seller is critical to a lot of publishers. It generates the highest revenue and earns the most profit. Whether they have hardcover bestsellers often determines whether publishers show a profit for the year or take a loss.

Amazon was selling Kindle editions of new books at $9.99, competing with hardcovers priced at 2.5 to 3 times that. As you may imagine, publishers were not pleased. They saw declines in revenue and profit because people bought the cheaper ebook edition.

There's a fair bit of controversy over what Amazon was paying the publishers for the ebooks, and whether they were taking a loss on every copy, or whether they were paying under a different price schedule and the publishers were getting less per book. I suspect the latter, but don't know for sure.

The publishers initially pressed Amazon to delay the ebook release by several months to give the hardcover time to sell. The mass market PB edition isn't released till a year after the hardcover, to avoid competing with it with a lower priced edition. Publishers wanted the same thing for the ebook.

Amazon's response was to price some Kindle editions cheaper than $9.99, in a nose thumb at the publishers. The publishers then withheld ebooks from Amazon entirely. Amazon was forced to compromise. The compromise was Agency Pricing, which required Amazon to charge a higher price on ebooks and not give a discount.

The practical effect was to tell Amazon "If you want to sell the ebook at the same time as the hardcover, you have to charge a higher price and give us a greater cut, to compensate for what we lose by not selling the hardcover."

The unanswered question thus far is what happens to the ebook price when the MMPB is released. It ought to drop to prices comparable to the MMPB editions. Whether it will is another matter. There are publishers dumb enough to try to keep prices at HC levels.

But as a general rule, I'd say if you want to read the ebook at the same time as the hardcover, expect to pay more for early access. If you want the ebook cheap, expect to wait, just like you do for the paperback.

If I would truly take a guess at how the pricing is done I would say that some of the costs like marketing and the cover art for example are only attributed to the HC and the price is set accordingly. So the price that we get for a PB is lower because some of the costs have been covered already. If I'm right, the reason why the publishers can't say this out-loud is because they would be saying that whoever buys a HC is covering some of the costs for those who buy PB, essentially paying more because some people are cheap.

I don't think you are right.

To begin with, not all books get a hardcover edition. Most start life as mass market paperbacks.

The traditional market for hardcovers has been libraries (which like durable reading copies), collectors, and people who simply want to read the book now if there is a hardcover edition first.

More books get hardcover editions now because more people buy hardcovers. An example is Baen Books, who credit the Baen Free Library with driving their transition from a struggling mass market publisher to a thriving hardcover publisher with a 70% sell through rate. Baen discovered that their audience would buy hardcovers of books by authors they liked that they discovered though the Free Library, so more Baen Books get hardcover publication.

But meanwhile, the hardcover is still the exception, not the norm.

What happens to your assumptions when there isn't a hardcover to hang costs on?

Then the reason that the price of the ebooks can't be lower is because while in themselves they represent a lower risk (no returns), they increase the uncertainty for the paper version. While if you see a popular HC you will want to buy it before the store runs out, the ebook can be there forever, which means that there is no worry, and who knows, maybe tomorrow it will be cheaper, or if you don't find the HC anymore, you can just get the ebook.

See above about "there's no HC edition". And the ebook isn't guaranteed to be there forever.

Back in the days before ebooks, you had the notion of "out of print". Publishing contracts stated that when the publisher let a book go out of print, the author could request that the rights revert, and attempt to resell it elsewhere.

Ebooks and print on demand forced a reevaluation of what "out of print" means, as they meant a publisher could potentially hold on to the rights indefinitely. Authors who want publishers to actually try to sell their books aren't thrilled by that idea. So current contracts factor that in, and include sales levels for electronic and POD editions. Sales below the level specified in the contract are taken as evidence the publisher is no longer actively trying to sell the book, and the author can ask that the rights revert.

Once the rights revert, the ebook isn't available from the publisher or retailers (though there are probably pirated copies floating around.)

Increasingly savvy authors will likely try to sell their own ebook editions once the rights revert, like this effort: https://www.mobileread.com/forums/showthread.php?t=98016, but there will still be a hiatus.

Since they are accustomed to working only with paper, such an event wouldn't fit their predictions, especially since the number of people with ereaders is continually increasing and will spread differently among readers with different book preferences. As many who buy their first reader will buy more books in the beginning, it is even more difficult to interpret the trend. A higher price for ebooks limits these erratic behaviors in buyer mentality and also means that some of the extra profit of ebooks will cover some of the extra losses of HC.

Well, they'd like to think so. But once again, there may not be a hardcover.

Ebooks are an increasing factor in publishing. There are optimists on MR who look forward to the day when there won't be paper books. I advise not holding your breath waiting: there are whole classes of books ill suited to electronic publication, and lots of people who still prefer print. But I do suspect the ebook will increasingly cannibalize the mass market paperback market, especially for fiction, because that sort of thing is well suited to electronic publication.

What happens in the case where there is no print edition to theoretically soak up various costs?
______
Dennis

[murraypaul]

Originally Posted by DMcCunney

No. The costs I mentioned earlier are costs involved in acquiring, editing, and preparing a book for publication. All are incurred before the book is actually published in any form. They will be there regardless of whether the book is issued as a printed edition or as an ebook.

But they only become 90% of the cost of the book by excluding many other things from the definition of cost. And the 90% figure is then used to say that eBooks can't drop in price very much compared to pBooks.

[Sil_liS]

Originally Posted by DMcCunney

But I encounter enough resistance to posts like this on MR that I'm forced to conclude a lot of folks simply don't want to hear anything that disagrees with their notion of how little an ebook ought to cost.
...
Mine too. I just happen to think mine is an informed guess.

It looks the same from the other perspective. Here you are saying that you know more about publishing than the rest of us because you talk to publishers. And we are supposed to believe that their perspective isn't biased?

Originally Posted by DMcCunney

You think the author places no value on her time?

Not *no value* but *no cost*.

Originally Posted by DMcCunney

I don't think you are right.

I'm shocked!

Originally Posted by DMcCunney

To begin with, not all books get a hardcover edition. Most start life as mass market paperbacks.

But we were talking about the division of costs between the different formats. That implies that there are other formats beside MMPB.

Originally Posted by DMcCunney

Baen discovered that their audience would buy hardcovers of books by authors they liked that they discovered though the Free Library, so more Baen Books get hardcover publication.

That would be marketing. The free books go into marketing costs.

Originally Posted by DMcCunney

What happens to your assumptions when there isn't a hardcover to hang costs on?

The costs get cut. Smaller advance, less people working on copyediting, less time spent on the cover, little if any marketing.

Originally Posted by DMcCunney

What happens in the case where there is no print edition to theoretically soak up various costs?

There are also no print related costs. And I'm not talking just about manufacturing. Marketing is easier, accounting is easier, and this translates to less costs.


But there is a solution to the current problem: ads. Have the initial sale of the ebook be a "HC" version when it comes to price, but release a different version of the book when the PB comes out that would show on the header of every page something along the lines of "this cheap version was brought to you by...". You know, something that is easy to do, and everyone can be happy. And of course, for those that want a clean copy, they can pay the full price.

[Sil_liS]

Originally Posted by BearMountainBooks

I think you're probably simplifying the self-publishing model. What makes it cheaper isn't really entirely "do-it-yourself" it's more controlling the costs and shopping around. For a large publisher, they have in-house people and that salary for book cover (whether photoshopped or outsourced there's someone with a salary at the house in control of that cover). They have a salary for the editor, the copyeditor, the proofreader, the publicists and so on. Their costs are set and only likely to go HIGHER over time.

But in the self publishing model the author can be the editor, copyeditor, proofreader and publicist. And the author will not get an income for each of these jobs.

One of the disagreements between buyers and author/publisher/retailer crowd comes from the fact that most of us expect the author to do the copyediting and proofreading. I don't want to know that an author that I might enjoy can't be bothered to use spell-check, can't get his facts straight and doesn't read what he wrote a couple of times before submitting a book for publishing.

[cfrizz]

Originally Posted by BearMountainBooks

I think you're probably simplifying the self-publishing model. What makes it cheaper isn't really entirely "do-it-yourself" it's more controlling the costs and shopping around. For a large publisher, they have in-house people and that salary for book cover (whether photoshopped or outsourced there's someone with a salary at the house in control of that cover). They have a salary for the editor, the copyeditor, the proofreader, the publicists and so on. Their costs are set and only likely to go HIGHER over time.

For a self-publisher, I can get artwork from any number of places. I may or may not be paying for health care, salary and retirement when I pay an artist. I'm likely to pay a lower fee simply because I am not a big house. Not to mention, I'm not likely to commission work from a big-name artist. BOTH of us are hungry. So we work to negotiate a deal that works for both of us. Just as an example: I might buy artwork and photoshop it myself. I might draw it myself. I might hire an art student or I might hire a graphics artist. The prices for all of those can range from near zero to, let's say 1500 dollars per book. But I get to decide. If I HAVE the resources for a particular project, I can go straight to artist D and say, "here's the project. Give me a bid." If I don't like the bid, I can look around for a lower one.

But a big house is going to be paying staff ALL the time, year round. They will work multiple projects, but they will be paying health care and all those other costs for multiple employees.


Same with editors and every other part. The key is there is an open competition for me to find the cheapest but BEST that I can afford for a given project. Some of my covers I did myself. As those books made money, I was able to put that money into an artist for better covers. The same thing happens on a larger scale at a big house, but there is a cost they never go below because they have constant employees.

One of the things I can do as a self-publisher (and that some smaller publishers are doing) is put out the book as an ebook. Less cost in TIME and upfront MONEY than if I do both a print AND an ebook. I'm not paying for proofs. I'm not paying for the more expensive wrap-around artwork required for print covers. I'm not paying for review copies to send around, nor am I paying postage to send them. These may seem like small costs, but they add up. I don't think I could put out a print version for less than 200 dollars even if I did all the work myself; proof costs and copies that I'd need, not to mention the various program costs associated with being on Amazon or B&N, etc.

If the e-books are successful enough at a given price I (or a small publisher) can decide to invest in a print book. But the key is to try different things while watching the bottom line. The big guys don't bother. They stick to their old model. And that's okay with me because it create a tier where I can survive. It's up to me to thrive--and them to figure out how to thrive with their higher cost structure and different pricing expectations.

I target the frugal reader. I target the library reader who wants to splurge on an ebook now and then. I target the reader used to buying used books for 3 or 4 dollars.

The big houses are in the middle of trying out whether they even want to target those same readers and if they do decide to target them, which books? Backlist? New on special? Never? Teasers?

Because it's not all about one price. It can't be. It's not all one audience.

Outstanding post, that I can actually understand and agree with. Thank you!

It's pretty obvious that readers of ebooks are going to be in for a very bumpy ride for years to come.

For those in other countries bumping up against the stupid geo-restrictions, I'm sorry but my answer to that is to go to the darknet and get the books you want to read. I can/could live with drm, but the geo-restrictions is just plain wrong.

[BearMountainBooks]

Originally Posted by cfrizz

Outstanding post, that I can actually understand and agree with. Thank you!

It's pretty obvious that readers of ebooks are going to be in for a very bumpy ride for years to come.

For those in other countries bumping up against the stupid geo-restrictions, I'm sorry but my answer to that is to go to the darknet and get the books you want to read. I can/could live with drm, but the geo-restrictions is just plain wrong.

I would encourage you to FIRST try getting the book via the author. Not all of us will point you to the darknets and I would rather 1. sell it to you myself or 2. make sure you have a way to buy it or 3. give it to you outright if need be.

[BearMountainBooks]

Originally Posted by Sil_liS

But in the self publishing model the author can be the editor, copyeditor, proofreader and publicist. And the author will not get an income for each of these jobs.

One of the disagreements between buyers and author/publisher/retailer crowd comes from the fact that most of us expect the author to do the copyediting and proofreading. I don't want to know that an author that I might enjoy can't be bothered to use spell-check, can't get his facts straight and doesn't read what he wrote a couple of times before submitting a book for publishing.

Yes, I do get an income from Editing, copyediting and proofreading if I do it. It is PART of the job of writing. It's not optional. When I sell my book, part of the income I derive is DUE to editing/copyediting and so on. That doesn't mean I always do it well or perfectly--which is why I hire out some of these tasks when possible. BUT my plotting, another part of writing, isn't always spot-on either. Which is why I have beta readers and have actually bid on opportunities to have other "experts" do a read-through on the novel.

There are levels, whether an author is traditional or not. I edit and proof and plot at a particular level. In MOST cases, an outside editor is going to up the quality by a notch or two. Same thing with plot editors. It's all a matter of whether I can afford to do these things and at what level of expertise. The traditional publishing route is no different. Some editors DO NOT READ books they publish. Yes, this is true. I've talked to authors who have said, 'My editor told me that once the series was accepted, they wouldn't be reading the novels--it would go straight to copy-editing. I was lucky she read book 1."

This is not a one-off either. I've also known an author or two with small publishers who were told that their book was not going to be copyedited due to costs (and they were told their manuscript was 'generally' clean so it was good enough.)

There are short cuts all over. But the point is, as the writer, I do get paid--for every single step I take. I may not get paid MUCH, but I include my time spent editing as every bit as valuable and necessary as the original draft (actually more so). It may not be perfect, but the idea is to put out a good enough product that makes enough to afford things like outside cover work, editing and so on--to improve things.

But all writers value re-writing and editing--and it is part of the job whether I make my income from traditional publishing or self.

[Sil_liS]

Originally Posted by BearMountainBooks

I've talked to authors who have said, 'My editor told me that once the series was accepted, they wouldn't be reading the novels--it would go straight to copy-editing. I was lucky she read book 1."

As a reader I don't have a problem with that, in fact I don't think that there should be an editor in the first place. If you aren't good enough to write a compelling story to begin with, why should you expect to make a living out of writing?

[JSWolf]

Originally Posted by Lemurion

I think the problem is that many people want two things for ebooks:

They want the same release date as hardcover.

They want the same pricing as paperback.

I think the majority of publishers are more than willing to provide these things: Just not simultaneously, and that's the problem.

Most people who read primarily eBooks don't buy hardcovers and don't want to pay hardcover prices. So it's no wonder they want the eBook at the paperback price. Actually, I though that $9.99 was a good price for the eBook when the current paper version was hardcover.

[tompe]

Originally Posted by Sil_liS

As a reader I don't have a problem with that, in fact I don't think that there should be an editor in the first place. If you aren't good enough to write a compelling story to begin with, why should you expect to make a living out of writing?

Because it is extremely hard to see problems in your own text. Also an editor can help an author to get even better.