In other articles we have discussed the effects of professional editing, cover design, and the problems of self-publishing. We’ve discussed what makes great literature. And we’ve discussed the more obvious impediments — or barriers — to paradise in eBookville such as DRM (digital rights management), incompatible formats, geographic restrictions, lease vs. ownership, and pricing.
But what we haven’t really talked about are the less obvious barriers to eBookville paradise such as the psychological price-point barrier. Oh, we’ve talked about it indirectly, but not head on. What brought it to mind was my looking to pluck the next pbook from my to-be-read pile. It struck me that it was much easier for me to buy hardcover books without debating the price point than it was to buy most of my ebooks, where price was/is always a major factor.
There are several factors in play that formed a foundation for the psychological price-point barrier. First, of course, was Amazon’s setting of $9.99 as the ideal price point for New York Times bestsellers. Here the interesting phenomenon to me was not that Amazon set a price point but that it became the adopted price point — the psychological barrier against which all other prices would be/are compared — of ebookers, virtually without challenge. Why didn’t ebookers say, for example, ”No, not $9.99. It must be $7.99!” or some other number? Amazon announced it and it became the magic number. Perhaps we ebookers are really part of the herd and not part of the herders. Something to think about for another day.
Second, is the difficulty ebookers have in accepting/believing any claim that ebooks can legitimately be priced higher than the paperback version and certainly, under no circumstance, as high or higher than the hardcover version of the book. eBookers believe with all their heart and soul that ebooks should be priced no higher than the paperback version and preferably lower. No amount of argument will budge most ebookers from that price point or from the belief that the savings reaped by publishers by going digital are “huge,” not “nominal.”
A third factor is the new version of the direct from author-to-reader model of publishing — self-publishing – which is a modification/modernization of the original self-publishing model of just 5 or so years ago.
All of these, and other factors, too, contribute to the psychological price-point barrier that currently barricades eBookville, preventing it from becoming a paradise. Yet, there is another factor that is less prominent in our thinking about the price-point barrier, but is, I think, quite potent: the ephemeral nature of ebooks.
Consider this: I recently purchased two hardcover books without thinking twice about the cost. I saw them on the shelves at my local Barnes & Noble. They stood out not only because of their subject matter but because of their size. The two books are A Lethal Obsession by Robert S. Wistrich (which comes in at 1200 pages and a list price of $40) and Christianity: The First Three Thousand Years by Diarmaid MacCulloch (which comes in at 1161 pages and a list price of $45).
Think of the heft of books that size; the spine widths must be 2 inches and the weights more than 2 pounds. The pricing with discounts at B&N were $28.80 and $32.40, respectively (with Amazon being a couple of dollars cheaper) for the hardcover versions. I bought them without blinking an eye over the price.
But I would have blinked, blinked again, and ultimately not bought either of them as ebooks because of the price (B&N: $32 and $29.99, respectively; Amazon: $23.19 and $29.99, respectively), which is higher than the established psychological price-point barrier. The difference is that with the hardcovers I can subconsciously correlate mass with value, even though I know that with books there really is no such correlation, but with ebooks it is hard to imagine the value of bits and bytes — they are ephemeral. Even DVDs and CDs give you some mass in exchange for the price, so the price-point barrier is less powerful, but ebooks give you nothing — nothing to hold, nothing to see, nothing to weigh, nothing to correlate with value.
And this nothingness is a significant barrier to price acceptance by ebookers, even if only subconsciously.
When I talk to fellow ebookers, we all seem to agree that there is a sliding price comfort scale for ebooks that we do not notice with physical product purchases, even when the physical product is something as little as a DVD or CD in substance terms. We note that we have no hesitation whatsoever with ebooks priced up to $1.99; we give half a blink’s hesitation to books at the $2.99 level; a full blink at $3.99; and things start going downhill rapidly at the $4.99 mark. By the time we get to the $12.99 mark, we are not only doing multiple rapid blinks but we are struggling to find any reason whatsoever to justify making the purchase and almost never do. For several of us, we no longer even consider any ebook priced above $7.99 and will only consider ebooks priced $4.99 to $7.99 on rare occasions.
It appears that Amazon did its job too well when it set the psychological price point at $9.99 and the publishers did their job too poorly combatting it (and ebookers didn’t do their job at all when they acquiesced to Amazon’s price point with hardly a whisper in opposition).
It is hard to overcome that psychological price-point barrier when all I receive is air (bits and bytes) in exchange for money. I understand the advantages to just having air, but that is the rational part of the buyer in me. Unfortunately for the ebook industry, it is the irrational part of me, the part that wants to see some physicality, some sense of ownership, some something in exchange for the price — just air just won’t do.
The questions are this: Will this psychological price-point barrier fade to history as ebooks continue to grow market share or will it become a more signifcant barrier in the future? Will the low-price expectation negatively impact authors and publishers in such a way that quality is sacrificed by the authors and publishers because of the imbalance between cost of production and sales price? Both questions are worth pondering.
It’s called market research. Do you think that Amazon used the PFA method for the $9.99 best seller price?
An interesting and thoughtful article. The psychological question about value and mass … something to hold in your hands… interesting. It’s a attractive proposition because it would easily explain a lot to publishers and industry insiders who seek such an explanation.
Interesting but imho completely invalid. I see no logical rational or evident correlation between a person’s valuation of the eBook because it is somehow ‘air’, with no substance.
Let me go back a bit firstly and say that I am pretty much middle class. I have been also in senior management for many years and mix with quite a comfortable set. I have never, ever, known anyone who buys hard back books. The only solitary person I have ever known who bought hard backs was my older brother in the 1960s when he was a newly qualified airline pilot and so flush he was able to afford whatever he liked. So that’s one point – in passing …
Back to the question of this ‘price point barrier’. I suggest that is far more to do with people’s natural sense of value, after considering their experience of paperback prices, their knowledge of the huge savings being made by Publishers, and their comfort knowing that there is still plenty of leeway for writers to receive a fair fee.
The eBook industry is about to become an enormously profitable and wealthy industry. Let’s make no bones about it. There is no need for anyone to feel sympathy for them. The only part of the industry that is and will suffer are those who refused to face up to the changing technology and those that are still refusing to change their structures and business models.
Readers are going to read many more books than ever before. As the pricing becomes more realistic and closer to a level where the masses of people can impulse buy without thinking of the impact on their budget, the more and more books will be bought. I and most thinkers on this issue are completely confident that this is the future of the publishing business.
Of course there are inherent problems that need to be sorted out. Publishers need to restructure. Writers need to take control of their contractual dealings and deal with the new reality. The juxtapositioning of Agents and publishers needs to be sorted. There will, inevitably, be a dark period, during which some publishers will resist and promoting of new writers and developing writers will suffer and new models of promotion need to be developed. Books shops will collapse and morph.
I personally see prices settling in two ranges. Current best sellers 7-10 dollars. Mid range known writers 4-6 dollars. The rest 2.50 to 4 dollars. I see nothing to be gained by dropping below 2.50. It just devalues the purchase and creates a sense of lack of value and I believe readers would agree.
You omit a significant reason why an ebook version of a high-priced book is much harder to accept–the ebook has a high chance of not being usable in the future. In 5 years, I’m likely to own completely different reading devices and the device I was using may have disappeared, along with comfortable ways to reread the book or review a section I found interesting. DRM is a much more significant restriction on high-priced ebooks than on lower priced ones.
(Another reason for the reluctance, which may not apply to your two books, is that higher priced books tend to more graphics–maps, illustrations, photos– and these translate very poorly into ebook format).
My psychological price-point was set back in 2000 when I experimentally paid six bucks for the Glassbook edition of ‘The Right Hand of Evil’ by John Saul (thinking, “man, first thing is prices need to come down!”). I bought it on the ‘strength’ of its cover image and suspenseful-sounding description, but would *never* have purchased it in print. I never got around to reading it, and lost it in an upgrade. Lucky John Saul. Except whoops! I’ve still never read any of his work, so have no reason to stalk Amazon looking for more.
Interestingly, that whole ‘the price will drop as the book gets older’-thing really is a load o’ hooey, and if publishers think we’re really swallowing that line, they’re deluded. Ten years later, the Kindle price is $6.39.
I just honestly believe the eBook should never be MORE expensive than your typical mass-market paperback.
The traditional publishers setup this idea themselves by making us believe the hardback should always be more expensive than any other format.
The format of the book then always defined the price restrictions.
Amazon just picked up on that and since they typically sell hardcovers for $9.99 then new eBooks for that price are not that hard to buy.
“Mass” has nothing to do with the perceived price point, value does. The physical books you purchased you will own forever. You can lend them, sell them, or give them away. You can’t do any of those things with an ebook, therefore, they are of less value. If they are of less value, I shouldn’t have to pay as much as the physical version.
I just read a good story on my Kindle and would have loved to share it with my daughter. Due to the fact that you can’t filter your library when you share with family members on the same account, I can’t share that book with her, she would have to purchase it again, which isn’t going to happen. It’s too bad for that author, who could have gained another fan, but didn’t. I can’t even share the many free books I get from Amazon.
Until those issues are resolved, ebooks will always be perceived as being of less value than physical books.
Once again, I completely disagree with you. You talk about the magic price point of $9.99 for NY Times bestsellers, which is a valid point. BUT, I believe, and most thinking buyers will agree, that this price point is for FICTION!!! It is NOT true for research based non-fiction, like biographies, histories, etc.
And this is reflected in the hardcover prices. Most new fiction hardcovers are priced about $25.00 or so. But major biographies are closer to $40.00. No one really expects the ebook of the $40.00 biography hardcover to be priced at $9.99. (A political tract, etc maybe- but those hardcover prices are closer to the fiction prices.)
So, there is a reasonable expectation of ebook buyers that ebook prices should be about 20% lower than the current paper book release. James McQuivey of Forrester research has indicated this in their surveys, etc. But no psychological price barrier. Please.
Richard, I think you need to revisit your numbers. Consumers have spoken loudly through both their wallets -by favoring Amazon over all other ebook retailers- as well as through polling. The data clearly shows that you are in the minority when it comes to price expectations.
Kobo: Publsiher’s set prices/sales data
http://blog.kobobooks.com/2010/02/04/when-publishers-set-prices-with-pictures/
CNET Survey: What would you pay for an ebook.
http://polls.cnet.com/polls/show_results.php?action=results&poll_ident=2346&template_set=news_fd
The real problem is that there are (extremely roughly) 5 billion available reader-slots in the US each year, 2 million book titles in print, and 200 thousand new books each year. With press runs of 5-20 thousand for each book, there’s an eyeball shortage. It doesn’t matter whether it’s an ebook or a pbook.
In that environment, with a glut of wanna-be writers, and demanding corporate masters, the book business is on the edge of lethal trouble. There is no way they can maintain a high price point for very long in any format. Add in author/small-press/POD publishing for cheap doubling the number of book titles available, and book prices don’t have much of a floor. The BPHs can probably (barely) manage to do this math.
So can Amazon. I suspect Amazon’s $9.99 was a desperate attempt to keep prices UP in the face of the coming deluge. It was likely the highest price they think they can make ‘common’ or ‘customary’. The BPHs apparently didn’t believe them. They seem narrowly focused on their high-profit hardback business.
If ebooks drop to $2 lower than MMPB as a ‘customary’ price*, and take over 50% of the market*, everyone in the supply chain is in big trouble. No one will be making enough profit to meet their yearly corporate yield numbers**.
*Which seems reasonable from a cost and marginal price basis.
**That’s not the same as losing money. It means managers lose their jobs, and eventually, publishing divisions get sold or shut down.
Regards,
Jack Tingle
I believe the paper guys have already lost the price war. More and more authors are putting out reasonably priced (i.e., less than the same book in paperback) ebooks of their backlists and some are starting to put out new books digitally themselves. Avid readers like me simply don’t have to pay the bloated prices to satisfy our appetites for new books. Some of us indie authors are selling well enough that we’re going to be keeping at it, making careers, and making them with low prices that yield us as much per book as known authors get for traditionally published paper books. (God bless Amazon.) That’s another alternative to the overpriced Pig Five books.
Advocates for high ebook prices are howling at the wind. You will never convince enough of those of us who go everywhere with our ereaders clutched in our hot hands that an ebook should sell for as much or more than a physical book. Non-fiction IS different. I’ve paid much more for non-fiction ebooks than I’d ever consider for fiction.
I am also middle class and used to buy at least 6 hard back books a year from my favorite authors (and probably more than 200 a year paperback books). I haven’t bought any paper book since getting my Kindle more than two years ago.
The many incidents such as asphalt cites with the Saul ebook being priced higher 10 years later are why some of us are beginning to actively dislike the big pubs. In what world does that kind of stupidity make for loyal customers?
I quit buying hardbacks 15 years ago or so, except for occasional reference books, because even though I could afford it, the price wasn’t worth the value to me. I think long and hard before spending even $25 on a hardback, much less $45. Am I going to want to re-read this book? Do I want to allow limited shelf space for it? Is there something about it (lots of color pictures, a need to quickly flip back and forth rather than read linearly) that would be better in paper than electronically?
With ebooks, first, I don’t have to make the decision immediately. I can download a sample, and make a more informed decision later. At $9.99, it is pretty much an impulse buy, and even at $12.99, only a moment’s hesitation. I don’t have to find shelf space for the book, and I know I’ll have it with me when I decide to read it (not left on the shelf at home when I’m off somewhere else).
For me, there are costs associated with hardbacks that aren’t reflected in the price. I read a lot of books, like to have a lot of books in the queue ready to read, and I’ve run out of shelf space and places to put more shelf space.
I’m on a budget. I can’t afford to spend a whole lot on books. I saved up to get an e-book reader in part because the books were going to be cheaper. Now I expect them to actually *be* cheaper.
Of course the marketing people can’t convince me that the story written on free electrons should cost more than the story written in a paper book. If the paper/binding cost nothing I would be able to buy blank books for free.
Since the publisher is saving the cost of a blank book, I expect part of that savings to come to me, and I base my purchases in part on that expectation. Some publishers are conspiring to drive the price of e-books up; they won’t be getting any cooperation here.
I think many of the assumptions of readers are quite reasonable though. Why should I pay $9.99 for an ebook I can’t share, loan or re-sell when a NEW mass-market paperback of the same book costs $6? When a book is a new release hardback, I would have no problems paying a higher price. And if I could trust them to actually lower the price when the paperback comes out, that would be fine too. But $12-14 ebooks for books which have been available in mass-market paperback for well over a decade? How stupid do they think we are? There is just no sane, logical argument they can give to excuse that sort of price gouging. Granted, that price is not the norm for every ebook. But it happens enough times that customers are wary and suspicious and don’t really believe them when they make other promises.
@Jack Tingle – “So can Amazon. I suspect Amazon’s $9.99 was a desperate attempt to keep prices UP in the face of the coming deluge. It was likely the highest price they think they can make ‘common’ or ‘customary’.”
I agree completely. $9.99 is the *maximum* price I’ll ever pay – the frequent purchases I make are in the $5-7 range. I think big publishers will soon regret that they didn’t do better research in sustainable pricing, because by the time they figure it out, enough people will have turned to either really cheap ebooks or piracy, and $9.99 will seem outrageous, too.