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Mar 15, 2011

Will All Books Become $.99?

In general, the cheaper the price, the more inclined the consumer will be to buy.

However, when it comes to books, I'm not convinced that prices always drive down. (It's possible economists are laughing at me right now.) But as I tried (badly) to explain on Konrath's blog, I think price pressure can also drive prices up.

Suppose the consumer has a flat budget of $10 and a choice between two books, a $10 book by Author A and a $1 book by Author B. If books were completely interchangable, the consumer would always choose the $1 book. But we know that books are not completely interchangable. Let's say that the consumer prefers the $10 book, and so buys that one. The consumer will not have enough money left to buy the $1 book, despite how cheap it is. The author of the $10 book makes $7. (I am assuming both authors are indie and make 70% royalty.)

Now suppose the consumer does buy the $1 book. This author, however, only makes $.70. (Actually, it is worse, because on Amazon right now this author will only make $0.35). So even if the cheap book beats out the expensive book 9 times out of 10, the author of the $1 book will only make $6.30 for every $7.00 the other author makes. At the lower royalty rate, the difference is even more stark. The author makes only $3.15.

If all authors charge $1, then all consumers can buy 9 extra books. The consumer can buy Author A and Author B. So instead of 9 sales, the author with the lower price makes 10 sales, which, at least if royalties were at $.70, is equal to selling one book at $10. For consumers, this is a much better situation, obviously. So maybe all books will float down to the $1 price, as music and games have.

But what if price is not the only restraint?

If the consumer could buy 10 $1 books, but actually has time to read only one, then lowering the price is not a smart move for authors. Even if the consumer buys more books than can be read, say, 3 instead of 1, this does not make up for the loss to the author.

P.S. Right now my books are on sale for $.99. But this probably will not last. :)


Jeff Beesler said...

Thereby effectively proving that times truly is money.

Tara Maya said...

Indeed. :)

Cherri Galbiati said...

Hi Tara,
I think once the air clears and we get the taste of the dust out of our mouths, we'll either (a)be glad we stuck to our guns, or (b)kick ourselves silly.:-)


Michelle D. Argyle said...

To me, the .99 cent books are no different than a discount used book store where there are bad books and good books and they are all cheap and good to read. What matters most is the time I have to read the ones I decide to buy. Honestly, when it comes to book, prices rarely affect my choice of what to read.

Michelle D. Argyle said...

Excuse all those typos. My goodness.

Tara Maya said...

Typos in blog comments don't count. :)

Michelle D. Argyle said...

Is that like calories on holidays don't count, either? I like that rule.

Gina @ My Precious said...

Here's my 2 cents. A new author, especially "indie" ones, probably don't have a lot of promotion going on. So, its almost better if they start off selling their books cheap. Especially if its a series. If the book is good and readers enjoy the series, then they will pay more for the next one and the next one. Eventually the author can slowly eek up the price as the book gains in popularity. If the readers are really dying to read what happens next they will be willing to lay down the green stuff.

Tara Maya said...

If you take food from some one else's plate, the calories don't count either. That's why you should always let your spouse order desert, then snatch bites from his plate. :)

I agree that it makes sense to have lower prices for unknown authors, for lose leaders, shorter stories and even for some genres. A low price does encourage me to take a chance on a new author or a book outside a genre I normally read. But once I like an author, I'm willing to pay more (within reason).

Anonymous said...

I think certain readers are still spending $10 on books, they just want to their $10 to buy a whole batch. It's just that they'd rather get 9 books for $10, instead of 1. They figure they're 9 times more likely to find a gem that way.

I would guess that those readers are a) diehards who are only interested in one genre (particularly paranormal romance); b) unconcerned with some commonly-held writing commandments (such as, "no passive voice" and "no adverbs"); c) quick to put down a book for good and go on to the next one if they're not thrilled, and d) rather cynical about marketing. That is to say, they've read enough expensive books that failed to please them that they think that price has little or nothing to do with quality.

wannabuy said...

Time is money.

I see $0.99 books as the 'author intro' with $2.99 to $4.99 books the bulk of the ebook market. Once one has found a good author, it is worth the 'petty cash' to 'read them out.' :)

Perhaps the top 100 will all become $0.99. Yawn. Authors are making a better income now than under the old system. Just imagine when e-books are more than 10% of the market. :)


Aurora Smith said...

GOOD points. I am going to have to think. Dang,I hate thinking.