(Some) Kobo books more expensive than other ebooks

[pietvo]

Originally Posted by Mememememe

Most consumers want cheaper EVERYTHING, but the people who produce things can't set prices that result in losing money. I'd buy more cars if they cost $1000, but it's not realistic to expect that. Ditto for $5 books.

The car analogy just doesn't hold. It costs to produce each car. But once you have the ebook, producing additional copies is virtually free. So if a $5 ebook would sell 4 times as much copies as the same ebook for $10, the publisher would make more money. I don't say the it will be 4 times as much but at least it could be worth the experiment. It did work for some iPhone apps at least. People might be willing to take the risk of buying it at $5 that they will not take at $10.

[RedRoverJ]

The car analogy does't work since each car has a minimum price at which it can be produced. Factoring parts and labor for each individual car means that you cannot produce one below a certain price. eBooks, on the other hand, have only minuscule reproduction costs. Not to say that it doesn't cost to produce one, but whether one or 1,000 the cost in virtually the same.

I am sure prices of eBooks CAN be dramatically reduced, but only at the expense of pBook sales. This, I feel, is the primary reason for keeping eBook prices inflated. If the savings were in eBooks, we would see much wider adoption of the format and this would negatively impact pBook sales.

As a middle ground, I am willing to pay, for an unencumbered eBook, the same price as the currently available pBook. Be that hardcover for new releases or mass market paperback for older titles. There is no reason that an eBook should ever cost more than that.

[Mememememe]

Originally Posted by pietvo

The car analogy just doesn't hold. It costs to produce each car. But once you have the ebook, producing additional copies is virtually free. So if a $5 ebook would sell 4 times as much copies as the same ebook for $10, the publisher would make more money. I don't say the it will be 4 times as much but at least it could be worth the experiment. It did work for some iPhone apps at least. People might be willing to take the risk of buying it at $5 that they will not take at $10.

No, you're missing the point. The cost of the physical materials isn't really an issue here. Remember, the cost of printing and binding a physical book isn't nearly the expense people think it is. Most of the expense in producing a physical book is editorial, marketing, overhead, etc. Printing and binding accounts for roughly 1/8 of the cost, so if simply making a book $5 would create sales that resulted in huge sales that covered all the other costs, publishers would already be doing that.

Believe me, I'd love to sell ebooks for $5, but the sales would simply not be there. The market isn't as big as you think -- the number of ereaders out there is not big enough, and you can't reach all of those ereader owners with your marketing. We're talking about a fraction of the ereader market, which itself is a small fraction of the book-buying market as a whole.

You could sell ebooks for $1 and you still wouldn't sell as many ebooks as you do physical books.

To do some math ...

If the list price for an ebook is $5, that doesn't mean the publisher gets $5. The publisher only gets part of that. I'll be generous and say the publisher gets half -- $2.50. From that, the publisher has to pay the author. The author's royalty on ebooks varies -- a lot of agreements give authors as much as half of the publisher's earnings (that's just ebooks, mind you). But let's assume a standard royalty of 10% of list price. I'll even be kind (and simplify things) by not including escalations. That's 50 cents per book, bringing the publisher's take down to $2.

If the publisher is to cover all the costs, they likely have to sell at least 20,000 copies of that book. (It would vary from company to company, of course.) And that's just not going to happen very often ... even with the price incentive. A bestseller in Canada is 5,000 copies of a book -- and while that seems like a low number, only a handful of books sell that many copies. Ebooks aren't going to boost that number a heck of a lot.

The market will certainly buy more books if the cost is lower ... but it's not an issue of how many books the market will buy. It's a matter of how big the market is, and ebook readers aren't creating more book readers, at least not in significant numbers. For the sales you're talking about to occur, the book market itself -- ebook or otherwise -- has to grow exponentially.

Long term? Who knows ... But for now, publishers simply cannot have such low prices. They can't take a loss for years on end in the hope that the market will get bigger. The market has to get bigger first, because at the moment there's no real evidence that the book market is growing.

[Mememememe]

Originally Posted by RedRoverJ

I am sure prices of eBooks CAN be dramatically reduced, but only at the expense of pBook sales. This, I feel, is the primary reason for keeping eBook prices inflated. If the savings were in eBooks, we would see much wider adoption of the format and this would negatively impact pBook sales.

On this point, I disagree with you, and I disagree with people in publishing who share this belief.

I don't think ebook sales cut into physical books sales. I think once someone has an ereader that they use regularly, they're out of the physical book market. So if an ebook price is too high, I don't think an ebook person decides to buy the physical book instead; I think they simply choose not to buy the book at all.

But in disagreeing with you on this point, I'm also agreeing with you in that you're right about this being the thinking of some publishers. But as I said at length in my previous post, the answer isn't a $5 book, because that's simply not in the financial cards. If publishers sold nothing but ebooks, $5 would be the first ingredient in their recipe for bankruptcy.

There has to be a happy medium here. If we want ebooks to flourish, publishers have to see them as a revenue source ... and a superior revenue source to physical books. (I, for one, believe they can be.) But they're not going to see that potential with $5 books. If they set the price at $5, they're going to look at the resulting sales and say, "well, we sold some, but if we had to rely on those numbers, we'd be out of business; thank God for physical books!"

Make no mistake, even sub-$10 is a stretch for publishers at the moment, but as ebooks grow in popularity I believe that will become the magic price-point that strikes a balance between affordability for the consumer, and profitability for the publisher. Varying from that range would create too many problems for one or the other.

[pietvo]

The cost of printing and distributing pbooks may be less than is generally assumed, but there are other costs that you forget. First the handling at the bookshop. Having an inventory, the rent or other financial cost of the brick-and-mortar shop, the high cost of labor in the bookshop, and not to forget the cost of having to return the unsold copies of books are probably more than those other ones. For ebooks you don't have returns, and the ebooks can be sold at a significantly lower cost.

If we want ebooks to flourish, publishers have to see them as a revenue source ... and a superior revenue source to physical books.

I think this is the wrong attitude. Of course publishers need to make profit but the primary focus should be the wishes of the customers. The only way for a company to survive is to deliver what the customers want, at a price that the customers feel happy about and that gives the company a reasonable profit. If you sell at a price that the customers only accept grudgingly, with a product that the customer only accepts because he has no choice (for example DRM), you will lose that customer at the first occasion that he can get a better deal. If you make your customer happy he may stay with you and give you more profit in the future.

[pietvo]

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[Mememememe]

Originally Posted by pietvo

The cost of printing and distributing pbooks may be less than is generally assumed, but there are other costs that you forget. First the handling at the bookshop. Having an inventory, the rent or other financial cost of the brick-and-mortar shop, the high cost of labor in the bookshop, and not to forget the cost of having to return the unsold copies of books are probably more than those other ones. For ebooks you don't have returns, and the ebooks can be sold at a significantly lower cost.
I think this is the wrong attitude.

Most of the costs you're talking about have absolutely nothing to do with the publisher. Publishers don't own bookstores.

The costs of booksellers have nothing to do with the price a publisher sets.

What you're really arguing here is that the ebook sellers are getting discounts that are too high, because if they're not bricks & mortar they don't have the expenses you talk about, and should be getting LOWER discounts than traditional booksellers. Currently, they're getting HIGHER booksellers.

So if those are the costs that concern you, then your issue is with Kindle, Kobo, etc., not with publishers.

(Now, to be fair, Kobo, with whom we've done the most business, does offer buyers reduced rates, so they cut into their own discount.)

As for returns, when I talk about the price point that will sustain ebook programs I'm talking about numbers I've worked with with ebooks. Returns aren't part of that pricing. But you should keep in mind that booksellers place larger orders for books knowing they can return unsold copies -- ebook retailers don't do the same thing. Also, booksellers don't return for hard cash -- they return for credit on future purchases.

Of course publishers need to make profit but the primary focus should be the wishes of the customers. The only way for a company to survive is to deliver what the customers want, at a price that the customers feel happy about and that gives the company a reasonable profit. If you sell at a price that the customers only accept grudgingly, with a product that the customer only accepts because he has no choice (for example DRM), you will lose that customer at the first occasion that he can get a better deal. If you make your customer happy he may stay with you and give you more profit in the future.

But you're saying all this and dismissing your own concession that publishers need to make a profit. If readers won't accept the price publishers need to sell ebooks at, then ebooks fail, not publishers, because publishers will then continue to make nearly all their revenue from physical books.

No one has to publish ebooks; there's no government regulation forcing us to do it, and physical books continue to sell quite well (despite doomsayers' predictions, more Canadian books are being sold than ever before). If ebooks aren't going to be financially viable they'll forever be publishers' afterthoughts.

And it's important to note that to date, the overwhelming majority of the feedback we get from readers is that $8-$10 is a price they're very happy with. I didn't come up with the number range out of thin air.

As I said, we'd all love to buy everything at a lower price than what it's sold at. As a buyer, I'd love to get quality books for $5, but as a publisher, I know that if we have to list ebooks at $5, the future of books is paper. And personally, I'd rather go the more environmentally friendly route.

There has to be a middle ground between the publishers' needs and the buyers' needs. $5 might satisfy the latter, but not the former. $15 is probably the ideal price for publishers (for most books) but far too high for consumers. $8-$10 is a push for publishers, but is doable, so far people are buying ebooks at those prices and providing us good feeback.