Pricing an eBook

When growing up, my parents tried different techniques at giving us allowances. It was an on-again/off-again kind of affair. My mother created a working list of jobs that got checked off each week. These jobs were the teach the basic skills of survival kind of jobs: brushing teeth, picking up clothes, putting the toys away, etc. Some of it worked. Some of it didn’t. It works great for very young children. Not so great when they get older.

Allowance wasn’t an automatic affair. As we got older, the policy became, “If you want money, you work for it.” My father figured five dollars an hour was a fair rate for working around the house. That worked pretty well.

I gravitated to the things that kept me outdoors. Washing the cars, raking the leaves, etc. Mowing the lawn took between two and three hours. Fifteen dollars in my pocket for that. We had a large yard, so mowing the lawn involved riding the tractor. That made it the most lucrative and easiest job to do. The downside to it, unless there was a lot of rain, grass only grew so much in the heat of the summer.

I started buying books when I was around twelve-years-old. I had pretty much been through the entire science fiction section at the library. The Lincoln Mall had opened about the same time my family moved to Massachusetts, and in the mall was Walden Books. They had a huge section of science fiction, and I was looking for something new to read.

I averaged buying about three books each time I went into the bookstore.

When I first started buying books, the average price seemed to be between $1.50 per paperback book of maybe 200 pages in length. Just the right price for an adolescent with a penchant for reading. As with anything, that eventually had to change. Even as a young child, I understood that gas prices were going up. Food and clothing was getting more expensive. Heating a house was expensive. But, the price of a book was my first true lesson in the concept of inflation.

The first time it began changing was subtle enough I didn’t take much notice of it. Sure, a longer, larger book is going to cost more than an average-sized book. So when the price on the book was showing $1.99 when I expected it to be around $1.50, I didn’t think much of it. I don’t remember the date or the book. I just remember the thought and mild surprise that I had misjudged the price of the book. It was a somewhat longer book, so I dismissed the thought and went on with my business.

Much in the way a deer goes back to foraging after hearing the snap of a twig.

A while after that moment when I realized the average price on the books I was buying was around $2.50 per book. And it wasn’t because I was buying larger books. In fairly short order, prices on the books rose to $2.95.

I looked at a title I had purchased a couple years prior, and the price was now $2.95. I originally bought it for $1.50. In that time, the prices on books had pretty much doubled! My book purchasing slowed down. Where before I could buy over ten books with my allowance, I could now only afford four or five.

By the time I graduated from high school, the average price for a paperback was over $5 per title. At that point, books were moved to the luxury item category in my budget.

When I bought a paperback of Heinlein’s Citizen of the Galaxy in the early 80’s, it cost me $2.95. Today it lists for over $15! (Even on clearance at Borders, they still wanted $8 for it!)

This history is necessary because it plays heavily in my choices on how to price my books.

The first question I asked myself was what price did I think was fair for an ebook? A quick look online revealed many ebooks being sold for the same price as the hardcover edition of the title. I immediately rejected that.

The cost of preproduction for a completed book is the same, whether it will be electronic or hard copy. Once the editing and typography are done, all a publisher need do is press the “Save” button and the ePub file is created. While producing a physical book entails many further steps and consumables per each book manufactured, an ebook is merely a file on a server, costing almost nothing out of the server operating cost, and is copied to the customer when a purchase is made. The savings over the cost of production per book for the hard copy version becomes pure profit for the publisher.

With that brought to light, to charge the same amount for an ebook as for the hard cover edition strikes me as gouging the customer.

A rule of business says one should charge what the market will bear. In my mind, an ebook should not cost more than the paperback version of the title. I’ve noticed a lot of ebooks on the market seem to match the price of the cost of a paperback version, so it seems I was not too far off the mark with my opinion. I would go a step further and suggest an ebook should be roughly 75% the price of the paperback version.

There are a number of arguments over just how much—or how little—an independent or unknown author should charge for an ebook.

One opinion says to go for the 99¢ price. The argument goes, if you are an unknown author, people will be more likely to take a chance and make an impulse purchase of your book at that price. The flaw in that argument is the failure to consider that people have been impulse buying paperback books for years at three times that price.

There is also the argument that if you devalue your work like that, people may pass it by, judging the book by its price instead of the cover.

The flaw with choosing 99¢ is that often people will buy a paperback book from the store on impulse for three dollars. So, why limit yourself to 99¢ when you can collect at least $3?

Charge too much, and the customer may think twice, or thrice, about buying your title. I think they only time an author can get away with charging more than $10 or an ebook title is if that author is pretty much at the top of the market and everyone wants to read their next title. Again, that old business axiom of charging what the market will bear.

Ultimately, I approached pricing my ebooks this way:

The average price of an ebook is about $6.50. If I printed my book as a paperback and charged 1¢ per page, it would be between $6.50 and $7 in price. Some of the online stores demand that the price end in “.99”. (There are a number of reasons for this, but that’s for another discussion.) So the $6.50 would become $6.99 for that reason.

I’m a new author, untried and unknown. I need to compel people to want to purchase my book. $6.99 is a bit rich for buying an untried title. So, I need to compromise.

It’s too low at 99¢, and too high at $6.99 for an untried author. The middle is $3.99.

My goal is to sell a minimum of 10,000 copies in the first year after release of my book. The three top ebook sellers—Amazon, Apple, and Barnes & Noble—all collect a 30% commission from each sale, leaving me with 70%.

That is not money in the bank! While writing, I’ve had no income. I have some pretty serious debt to pay off to family, friends and the banks. And myself, for that matter, as I’ve drained off my nest eggs to keep the bills paid during this process and to cover the expenses that go with publishing a book.

At $3.99 a copy, I would be out of debt and have a lot less financial distress, but I would also have nothing left. I still need a bit more so I’ll have enough to survive until the second book is out.

I decided to up the price just a bit to $4.99. Just that single dollar difference can result in enough proceeds from sales to leave me something to live off over the next year while book two is completed. (I’m hoping I get faster at this once I’m done tripping over the process of writing book one.)

That’s why I chose $4.99. It does seem a number of other authors agree with me on that point. That price seems like the sweet spot for being not too expensive so people are willing to give it a try, and not so cheap that they question the quality of the writing without giving it a look. And it will yield me enough income to make a living at writing.