Re: The Psychology of pricing

From: Michael Martinez <Michael_at_xenite.org>
Date: Fri 06 Oct 2000 12:47:59 -0500

MICHAEL MARTINEZ <Michael_at_xenite.org> WROTE:
> I've been following eBook discussions in various
> forums. Talk about one of those armchair industries
> where everyone has an opinion! Electronic publishing
> has been around at least since Project Gutenberg
> started its free etext library of public domain works
> on a Xerox server around 1970. And yet we're still
> trying to figure out all the rules.

TO WHICH BRAD JENSEN <brad_at_elstore.com> REPLIED:
> Book publishing and distribution has a lot of markup in
> it - about 60% of the retail price of a book is markup
> after it leaves the publisher, perhaps more.
>
> So an ebook that costs 40% of the paper version is
> still just as profitable to the publisher, all else
> being equal.
>
> But all else isn't equal. There's no printing, no
> warehousing, no inventory selection cost, no ordering
> costs, no return costs, no cost for unsold inventory.
>
> I would think that a well-run ebook publishing concern
> could make good money at about 25% of retail cost, or
> even less. Author's royalty becomes a significant
> expense.

One of the controversial issues in ebook publishing, as
far as traditional authors are concerned, is that the
majority of epublishers won't pay advances. Instead,
they offer anywhere from 30-50% royalties. So the
publishers ARE giving up a huge chunk of the retail
price in order to entice people to produce ebooks.
Many people in the traditional community have viewed
the ebook authors with a bit of disdain for not digging
in their heels and demanding up-front royalties.

I guess it would be fair to say they are insisting that
someone else blaze the way for them. Well, there are
arguments on both sides of every issues. But
traditional authors stand to lose less through ebooks
than they think. They, at least, have more
name-recognition than people just breaking into
epublishing. And many authors are now putting their
Web site URLs in their books. The promotional power
of a widely distributed book is underrated, in my
opinion. People don't even have to buy the books to
see http://www.my.domain/.

Rob Frankel makes a good point about value. Even
ebooks have some sort of perceived value. They don't
today have as wide an audience as print books. But
then, the United States publishes something like
100,000 titles every year through traditional
publishing, and most of them don't sell many copies.
Traditional authors want those fees up front because
it's in their best interest to be paid for a book that
the publishers lose money on.

What we have are two opposing systems of value: the
value of the product to the publisher, and the value
of the product to the author (the producer).

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Received on Fri Oct 06 2000 - 12:47:59 CDT