How to Price an eBook
Many authors make the premature assumption that all customers buy eBooks based on price rather than value, even before they've done a thoughtful evaluation of their target market. Who is buying the book? Why are they buying the book? Will the content of this book help them to improve their finances—or their lives—in some measurable way? These are all very important questions to ask before deciding on the price of any book, whether it's a paperback or an eBook. Production costs are only a small part of this equation.
There are two schools of thought when it comes to pricing out an eBook (or any book, for that matter):
1. Some customers buy based on price
- they spent money on an eBook reader so they could save money on books
2. Some customers buy based on value
- they bought an eBook reader for the convenience (value) of having all their books in one place (i.e. so they don’t have to cart around lots of heavy books)
- they see value in the content of the book (i.e. it contains information and/or instructions that can help them to earn more money or better themselves/their lives in some measurable way)
- they see the value in going paperless to help save trees
- they see the value in having the latest technology in their hands before anyone else has it (these people will always pay more to stay one step ahead of others)
These are just a few of the reasons why people may buy an eBook reader and/or an eBook. There are probably many more. Robert Plank provides a wonderful example of a time when value is definitely more important to a customer than price in his online article titled Sell Based on Value, Not Price:
"Let's say you went to the store and saw two parachutes, side by side... one looks okay and costs 50 bucks. The parachute next to it looks HALF as good and costs 25 dollars. Which one do you choose?
The 'regular' $50 one, right?
Then you notice there's also a 100 dollar parachute on the shelf. It comes with an extra emergency backup chute, a checklist for what you should check for before jumping out of an airplane, and a DVD with skydiving tutorials. You also get one free skydiving lesson included... and one free issue of 'Skydiving Magazine.' (Ok I'll admit, I've taken this analogy way too far.)
NOW which parachute would you go for... the regular one or the fancy one?
You might be able to get by with the regular parachute, but you'd feel a lot better if you had that checklist, the DVD, the magazine, and the lesson.
People will pay more for handholding. Don't try to sell the smallest amount for the lowest price, try to sell the most USEFUL stuff for the highest price."
Do you see? While price is a consideration for some people in some situations, oftentimes customers buy based on perceived value first. (If value weren't more important to some people than price, we wouldn't see any BMWs on the road, would we?)
As an author, it is important for you to evaluate your customers—and the value of your book's content to those customers—before determining your eBook's final retail price per unit. Market to them. Price your eBook based on who your customers are, why they buy, what they appreciate most (i.e. price or value)—not based simply on production costs or other authors' prices. Remember, those other authors may be selling to an entirely different market than you.
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Categories: The Book Business, Sales and Marketing, Opinion, eBooks
Great job on following up on the e-book pricing. It sure seems to be all over the ballpark at the moment but that is probably just because the market and technology are so new. Prices will probably start to find a more consistent level as more people publish and buy e-books. BTW - yeah for e-books!
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This doesn't make any sense. Yes, you might buy the item with more value, even if it cost more, but that's not what we're talking about with most ebook pricing. Instead, we're talking about two items with equal value, one priced at $2.99 and the other at $9.99. Which would you buy?
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Hi Kevin,
Yes, it does make sense when you really sit down to think about it. Not all eBooks are equal. Some should be priced higher.
Value-type pricing can be applied to eBooks and paperback books as well as all other retail items. People have to consider their target market before deciding on a price ... and the lowest price is sometimes the wrong way to go. Here's another non-fiction example:
As an aspiring author ... if you saw a $5 eBook about "How to Publish a Book" that had a few typos in it (because the author neglected to have it professionally copy edited) ... and you saw another $20 eBook titled "How to Publish a Bestselling Book" that looked much more polished and professional ... which one would you buy? In this case, the content of the $20 eBook has a higher perceived value that will help the aspiring author to write a book that will actually sell … which will help them to improve their life in a measurable way. In this case, most people will be more apt to buy the higher-priced item. I know I would. Value is more important to me than price.
There is much more to pricing a book than production costs. Authors have to consider perceived value, too. It’s more about psychology than it is about production. You tell people what you’re worth.
Another important thing to consider—and this goes for all retail items, not just books—is that your message has to be consistent. If you’re selling on price, then stick to a low price. But if you’re selling on value, then never, never discount the item. Discounting it will send an inconsistent message about its value and cause customers to distrust the message. (i.e. That's like trying to sell a 2011 BMW for the "sale price" of a 2009 Chevy Cavalier. The client wonders, "Why? What's wrong with the car?" It’s an inconsistent message that will cause distrust in their perceived value of the car, and it will prevent them from buying it ... defeating the whole purpose of that sale.)
Kim
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Check out our website for a wide variety of E-books: http://e-library.net/
One of these automotive books is priced at $97
One of these health and fitness books is priced at $39
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I think that Kim makes an excellent point when she talks about the relationship between price and perceived value. Anything - a book, an antique, a work of art, a coat - is worth what someone is willing to pay for it. Of course income, utility, style, etc. influence demand and what members of the target market will pay for an item, and the amount offered must be what the seller is willing to accept. The projected volume that can be sold at each price point also determines the asking price.
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Re: Norma's comment, "...the amount offered must be what the seller is willing to accept." This is a valid point, and what authors need to consider is that customers are willing to accept different price points for different things.
It is incorrect to say "an eBook is an eBook, therefore all eBooks should be priced the same." It’s not the object itself that determines the price—it’s the value of that object, within a certain situation, that determines the price. Here's an example, in a different context, that I hope will help to illustrate this point...
Sometimes, when people go out for dinner, they just want a cheap hamburger at a fast-food restaurant. Other times, those same people want to go out for dinner and enjoy a gourmet hamburger. It’s all beef, right? So why would they be willing to pay more for one than the other? Because they value the experience of better service and a more enjoyable dining experience at the higher-priced restaurant. Also, that gourmet burger was prepared by a professional chef who has years of experience preparing delicious food, and that commands a higher price.
Just as not all beef is the same, not all eBooks are the same. You have to know your market and what they value most—value or price—and present, market, price your item based on that market. As Norma said above, “Anything - a book, an antique, a work of art, a coat - is worth what someone is willing to pay for it.”
Someone posted something on my blog about an automotive eBook that is selling for $97. I don’t know what that book is about, but it got me thinking this would be another good example of an eBook that could be priced higher. Spending $97 on an eBook about car repairs is valuable if it can save you $1,500 in labour costs because it was written by an auto-mechanic with over 25 years’ experience who can show you exactly how to do it yourself.
It's the value of the content and what your readers can gain from it that means the most to your customer. Therefore, you should be basing your eBook price on this. Yes, your production costs are a factor in pricing it out. But it's only one of many factors.
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And on the topic of gourmet burgers ... if you went out to a high-priced restaurant, expecting to purchase a gourmet burger, and that burger was priced the same as a fast-food burger ... would you not question the quality of that burger?
If you say your information is valuable, and that you're an expert, then price your eBook based on value and expertise ... otherwise people will question its value. It's human nature.
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I agree with those that say this doesn't make sense. You can tell yourself all day long as a publisher that because a book is printed on paper it is better, but that's not going to cut it. The fact is that ePublishing allows publishers to market the same content at almost zero overhead compared to the immense costs that go into printing physical books. Consumers are not unaware of this fact. When you consider the fact that some companies (I'm speaking from experience here) know how to use digital palates to publish books that are far more immersive and appealing than their printed counterparts, then the standard of the printed book disappears. What we are left with is a struggle to valuate our quality work while considering the ways in which our low overhead can allow us to offer better books at a lower price and still make significant profits. This isn't about comparing prices and deriving quality from some kind of conspicuous consumption perspective. This is about completely revising the entire publishing business model and understanding that when someone comes along with a digital product that is both of a higher quality and lower cost of physical competitors, the game changes.
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Hi Ryan,
I'm a firm believer that even if the format of the book has changed, the marketing game never changes. It will always stay the same.
No matter what industry you're dealing with, or what product/service you're trying to sell—whether it's books, movies, food, cars, whatever—there has always been, and will always be, two schools of thought on how to position yourself in the marketplace. Some people want the best price. Some people want the best quality. Regardless of the format of the book (paperback, hard cover, eBook), an author still has to consider the values of their audience before determining the proper marketing tactic and corresponding price for the book.
In my blog entry titled How to Sell Based on Value, Not Price , I give examples of this in the food, moving, and book industry. Another example is the movie industry. Why do so many people still pay $12+ for a movie ticket at a theatre when they can wait a few months and pay only $4+ to see the same movie on a DVD in their own homes? It's because sometimes people value the night out and the theatre experience. Or maybe they value being able to see that movie when it first comes out. Theatre tickets are marketed/priced based on value/quality, whereas movie rentals are marketed/priced based on price alone.
There will always be some people in this world who want more than just the best price, and they will always be more than willing to pay for it. There will also always be some people in this world who want a discount or a deal, and they won't pay more. That's life. So, there will always be two schools of thought to pricing anything. And because of this, there is much more to consider in pricing out an eBook than just production costs. "The best price" is sometimes the wrong tactic. It all depends on who you're trying to sell to. Authors need to give their target market serious consideration before they decide how to price their books.
Warm regards,
Kim S.
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