Sunday, April 3, 2011

Ebook pricing and loss leaders

There was a debate a week or two ago on Twitter and a few blogs about pricing and the insult that is the 99 cent price point for ebooks. I stayed out of the debate because I figure that each author is essentially his or her own small business. A business is welcome to price its product however it wants to.

There are two arguments against 99 cents as the price of a novel in e-form. The first is that a writer's time and effort should be worth more than that. It takes quite a bit to actually get 75,000 or so words onto a page. Then to revise and rework. It's a lot of effort. In that case, I understand the argument. The other argument is that if readers get used to and expect 99 cents to be the price of an ebook it hurts everyone. Once anything more than that is seen as "expensive" then it's going to be tough to price anything higher than that. Again, I kind of understand that argument. It goes hand in hand with argument number one.

But like I said before, price your book wherever you want to price it. There are people making a good amount of money from 99 cent books.

If you haven't noticed, Chasing Filthy Lucre is 99 cents. A more than fair price in my eyes. For less than a dollar, you get roughly 80 pages of, at least in my eyes, a fun story. It's fast-paced, has lots of action, and a satisfying ending that also leads you into the next book.

For 99 cents, it's a great deal. I wish I could charge more, and I suppose I could. But I didn't feel comfortable charging $2.99 for it. It's a novella, just over 21,000 words. What I had originally wanted to price it at was $1.99, but that seems like a dead zone in ebook pricing. So, if $2.99 seemed too high I wasn't left with much choice. It was 99 cents or nothing.

And now, to get to the point I was really wanting to make. Wow, I'm long-winded on this blog sometimes. One thing you won't ever hear me call Chasing Filthy Lucre is my loss leader. I hear lots of authors calling their 99 cent book their loss leader. Except it's not, at least not by any definition I've ever heard of the term. A loss leader is a product you take a loss on as a way to introduce a consumer to other products you have available. That's not what these authors are doing at 99 cents. They are still making a profit of 35 cents on every sale through Amazon, and more when sold through other sites. That's a 35 percent profit margin. Are they making a killing per sale? No, believe me, they're not. But they are making money. Will it mean they have to wait a little longer to pay for whatever personal funds they sunk into the book's production? Yes. It's an introductory price. It's a smaller profit. It's a way of making less, hoping you'll make more later. But it's not a loss.

So are 99 cent novels hurting ebook authors in the long run? No, I don't think so, but it's a discussion worth having. Maybe my mind can be changed. But one thing we do need to do with 99 cent books is stop calling them a loss leader, because they're not.


  1. Interesting points, Jarrett.
    I'm no expert, but 99 cents seems ridiculously cheap for all that effort.

  2. I agree, Col. But that seems to be where the market is right now. We can like it or not, but I'm not going to ding someone for pricing there. They are just doing what the market seems to be telling them. I may raise the price of Lucre in a few weeks because I think it's worth more than 99 cents. I'll see if I can't make that dead price of $1.99 work for me. It'd double my royalties.

    I can't, however, justify $2.99. That doesn't seem fair to me considering how the market is set right now. Not when a readers can get full novels for the same price. I can wish it was different, and I do, but wishing it won't change anything.