Rafi Mohammed, a specialist in pricing, has an interesting posting at TheWrap about the reasoning behind the pricing of e-books. Well worth a read. A critical statement, one that points to changes needed in publisher thinking is Mohammed’s comment that “Since e-book sales were somewhat of an afterthought, in most book contracts today, authors receive a lower royalty for an e-book compared to a hardcover sale.”
E-books cannot be an afterthought. The publisher needs to be engaged with the author’s interests, as well. If more can be made from e-books, because the production and returns costs are so much lower, it is time that this new format and channel become the focus of profit-making decisions. Price the e-book to sell profitably, make deals with authors that move physical books based on actual demand, which can be impacted by the availability of e-book versions.
Typically, publishers and authors think of e-books as cannibalizing trade paper and hardcover books, but Mohammed points out that the resale of hardcover books, which does cannibalize sales, is not an issue with e-books. Therefore, you can price an e-book lower without diminishing sales. Instead, those early readers can become evangelists without simultaneously competing with new sales of the book.
I continue to believe that, once the e-book is established, a wide range of prices will be acceptable, based on the audience for information and the services that can be embedded in books that raise their value to readers over time.