The Pricing War ~ The Big Five & Amazon
One ongoing dispute, beginning a few scant years ago, when the big five traditional publishing houses agreed with Apple to utilize a strategy to move the price point of eBooks upwards to a factored minimum, is being resolved. Amazon.com pretty much controlled the eBook market at that time, at around 75% of sales. Now they only control just over a half. That decision by the publishing companies to follow that price strategy was recently decided in court, as to be collusion to fix prices. My words. Apple has been ordered to pay restitution, mostly through rebates to readers.
Apple, through Steve Jobs, encouraged publishing houses to use the “wholesale” model of print books for pricing structure. Under that wholesale model, which became known as the “agency” model, publishers charged retailers half the cover price of the ebook, then the retailers set their own prices. Apple was charged as being the ‘ringleader’ of the collusion between its iBookstore/iPad division and the publishing houses that were charged with collusion in price fixing.
Amazon has created its own model of selling books, and remains likely the largest book seller in the world. The Amazon model is not dissimilar to that of the brick and mortar Wal-Mart in the quest for sowing market share. That’s another story altogether. The current struggle for book sellers and publishers alike is simply that publishing continues to change, and adapt to market trends driven by readers. One aspect of this ongoing struggle is the authors. It was posited that by reducing the price of an author’s work, it demeans and reduces the author’s status.
Pricing is a major decision by an indie author. Regardless of the outcome of the pricing battle between publishing giants and Amazon, the indie author retains the control of the sale price of their work. Theoretically, that puts them in the big tent with Amazon, being their books will be most likely sold on an Amazon market site. All the publishing platforms I am aware of list their authors on Amazon. Pricing strategy is one thing I do not offer direct advice, other than to say there is evidence that there are two price points for ebooks that show a distinct spike in sales data. Those two were shown to be $2.99 & $5.99 respectively. The reasons given were vague and for a more informed IT/marketing person to decipher. The Amazon model of ebooks, assumedly a traditionally published ebook author, was pegged at $9.99, the Apple ‘agency’ model was $12.99.
Simple micro economic theory suggests that a retail book seller would desire a higher retail price point than a lower one being that their cut for each sale rises quite a bit with the higher price point. If you were a retailer with a 50% profit margin, would you want to sell an ebook for $2.99 or $12.99? Multiply that sale by thousands, well you get the picture. I can only offer up my own choice in pricing my books. My print books are priced at or below trade edition pricing, leaving me just over $1 royalty for books sold through a retail book seller. I priced my ebooks at $5.99, being half the standard Amazon retail ebook, and even less than that for ebooks sold outside Amazon. It’s a fair price. There are many ebook authors selling their ebooks for .99 cents, in the hope that there will be a million readers who will buy their book because it is so cheap. I won’t get into that aspect of marketing genius mainly because there are so many such marketing strategies to get rich quick, over literary quality and author integrity. An endless debate subject.
EBooks will make up a good portion of future book sales, like it or not. Indie authors will need to learn to format their book files to accommodate eBook standards; i.e., no headings, page numbering, formatted text, etc. I have navigated those waters through four converted books, now listed on Kindle & KDP Select. There will of course be a post on just what that actually means, upcoming. There is a clear means of expressing what that process entails, including the technical aspects, as it is the same formatting process for print books, sans some of the settings. I will be posting on eBook formatting very soon. The idea is to point a way which will greatly reduce the many unknowns to self-publishing, for those authors who want to see their book in print, pretty much for free. Stay tuned.