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.
British academic book retailer Blackwell will begin selling the