Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

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Wowsers.

J.K. Rowling has a new book coming out. You can get the hardback for $20. Or the e-book for $17.99!!

I’m wondering if the goal here is to protect hardback sales while avoiding the controversy of not releasing an e-book. Negative Amazon reviews have piled up on books recently that “window” or delay the e-book release. Or maybe they figure readers will pay anything, so why devalue the product?

What do you all think about this? Should a digital book have its price based on demand or manufacturing costs? I imagine there are Rowling fans who will think this is awesome of her and any price is a fair price. I also imagine there are Rowling fans wondering why they have to pay hardback prices for an e-book.

I’m mostly curious about the marketing strategy. To me, an e-book should never cost more than ten bucks. And if you price it low enough, many readers will probably end up buying a hardback and an e-book. Better yet: Why not give away a free download code with every hardback? Is piracy the concern? I hope not. A devoted fan wouldn’t give up that download code, and pirates are going to get copies no matter what you try and do. Worry about your readers, first! And price your e-books where people don’t think twice before clicking that purchase button.

**Update** It seems the original price for the e-book was $19.99!! A lot of discussion about this within the Amazon community.

Something else: Look at the most popular tags on the book. The reaction to this is already quite fierce.

19 replies to “Wowsers.”

Manufacturing costs are irrelevant. Products are priced to maximize profit. It’s absurd to suggest that a seller has an obligation to make less profit than they’re capable of.

Of course, with lower manufacturing costs across the industry, smaller players will try to steal market share by lowering their prices, which will in turn lead to shrinking margins and lower prices overall. But a J.K. Rowling doesn’t need to compete on price.

(An unrelated observation: To me, an e-book is more valuable than a printed book. I prefer the convenience; and I prefer to read on my Kindle. If I like a product better, I’m willing to pay more for it. Why should I demand to pay LESS for it?)

I like your last point, that perhaps the ebook is a superior product to begin with.

I’m not sure that a higher retail price maximizes profits, though. And where does PR factor in? Or should it?

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Hugh, you may be right that they made a suboptimal pricing decision. (And yes, PR is relevant to that decision.) If so, they’ll pay with their pocketbook and adjust their pricing models for next time. They’re way, way, way more invested than anyone else is in getting this pricing exactly right.

What I object to is the suggestion in many Amazon comments that it’s unfair or immoral for the publisher to charge $17.99 for an e-book. It’s neither right nor wrong: it just is. We can laugh at the publisher (or pity them) for making what we believe is a dumb business decision, but outrage doesn’t make sense here.

That said, I would be curious to see their analysis. Presumably in addition to price sensitivity (specific to “bestselling authors”!) they have to consider to what extent sales of one format cannibalize sales of the other, the “readers per unit” (since treebooks get lent to multiple would-be buyers), marginal production costs, royalties paid to Amazon vs. B&N…

Which brings me to one final thought: It’s silly to act like the cost of the paper and ink is the chief cost of a publisher (and thus claim that e-books are “free” to produce). In fact, I’d expect the marginal cost of printing “one more treebook” is pretty close to free, too (once you’ve already invested in a giant print run). What I would guess is far more relevant is the percentage paid to Amazon vs. B&N, the royalties to JK Rowling, and the fixed costs of overhead and promotion.

I expect to pay less because it’s SO much easier and cheaper to produce and distribute than a hardcover book. That’s why you paid so much for your digital device, because you expect to pay less for books. I do anyway.

The other issue here is that unjustly high prices for digital media promote piracy. I’m not motivated to “vote with my dollars” when I feel like I’m being gouged :/

Publishers are in this to make money and, unfortunately, there are fans who will pay that to get their copy, digital or otherwise. I have no idea what production costs are but, wow, that’s a LOT for an ebook!! What’s silly though is that if they priced the story at $9.99 on Amazon, they’d get a royalty rate (70%) of $6.99, whereas at $17.99 they get $6.29, and fans wouldn’t feel cheated.

Publishers are certainly out to make money, but they sometimes make decisions that don’t further those aims. My gut tells me this is one of those decisions. At $9.99, I would have pre-ordered a copy, and I’ve never read the Harry Potter books. The negative reaction on Amazon right now is out of control. These may be the noisy wheels for all I know.

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Fans wouldn’t be so cheated at the $9.99 price tag vs the $17.99 (obviously they do feel that way based on the tags’ screencap). What’s so silly though is that the lower price @ 70% royalty gets you more per book than at the higher price/35% royalty. Even at $19.99, royalty rates are equal to $9.99. WTH?!

I think you’ve just hit the nail on the head. JK Rowling has been hearing that indie authors make twice as much as she does per sale, so has decided to set her price at twice the reasonable amount to compete :p

I’m only guessing at this, but I bet Rowling has a better royalty rate worked out than the “standard”. I bet many big time authors have different contracts worked out… because they can.

So the math may be different than what we think.

Wow, that sure stirred up a hornet’s nest! I like the tag “when pigs fly”. That sums it up nicely. Each reader has their own for threshold for spending, though. Some may be okay with it.

It’s pointless to rant about the author or Amazon, since the publisher sets the price. I’m sure there will be J.K. fans that will be happy to buy the Kindle version; those same fans would have bought the hardcover anyway, but may be delighted to have another choice.

The publisher is offering the ebook because it’s the thing to do these days. They may not be particularly concerned with pricing or sales in that market. That’s probably a mistake, since this is not a Harry Potter book.

I’m not a fan, and I’m not buying. But when I looked at the pricing, the first thing I thought was “For $3.00 more, I’d just buy the hardcover.” I prefer my Kindle, but still think in terms of value for the amount spent. You may be sure the publisher understands that, too. They will get sales in both camps. But you’ve got to wonder if they will be aware of the sales they are losing by being greedy.

I don’t buy the tired old meme about eBooks costing almost as much as paper. I’ve heard somewhere that each incremental hardback in a large print run cost an extra two bucks. How much does an incremental eBook cost?

I can see the original setup costs being similar – edits, formatting, cover art – but once the book is ready, the eBook is zero increment, aside from a little overhead to keep an eye on things. Maybe the big houses think they are still paying for trucks to ship all those electrons around?

I ran into someone on a PW comment section who assured us that she was an insider and could vouch for the fact that there was little cost difference between eBooks and paper. When we asked for the details, we never got a answer.

In fairness, I think the publishers actually beileve what they are saying. I’ve worked for a large grocery and GM chain (38 Billion in revenue last year) and they pretty much sit in planning meetings talking about what WalMart does. Companies copy whoever is selling more. It’s human nature – kind of like when John Locke said he used twitter to sell a million books and, suddenly, twitter was overloaded with desperate authors.

Sooner or later, a big publisher will have an epiphany (or the CEO will fall over trying to hang a picture in the bathroom and hit his head on the toilet – leading to a mind blowing vision of the publishing future) and they will see eBooks as a great opportunity to stay afloat (see how I’m tying back to the toilet here) without all the pain in the butt from dealing with returns.

They need to jump on this while they still have a public image as arbiters of good taste (it’ll be a shore thing).

All other things being equal: If it costs $2 to print a hardback, and the hardback costs $19.99, then you’d expect the e-book to cost $17.99. These are the exact prices for Rowling’s new book.

Although I’m not familiar with the firestorm raging over this and have no intention of buying the impending opus from Miss Rowling’s brain, I do find the issue of ebook v. hard cover book interesting.

I suspect when Readers discover ebooks that cost much less from unfamiliar, though talented, writers, they may begin to question spending top dollar for the more established authors. There will always be that core group that will buy Author X’s work without question, but will the Publishers be able to grow the market beyond that? Hard to say — or see — with these prices.

Not long ago I took the bait and spent $12.99 on a new release from a writer I used to greatly enjoy. After slogging through a redundant, repetitive story that repeated itself again and again, I ended up throwing in the towel 27% — according to my Kindle — of the way through. And I frankly doubt I’ll buy from this author again. Unless it’s on a virtual bargain bin which, let’s face it, it won’t be.

And I gave up not just because the writing was subpar, which it was, but because for $12.99 I expected much more. In a market of $2.99 and $4.99 and $7.99 books — some of which are fantastic reads –, most readers would.

I just believe that if established Authors and Publishers disappoint fans one too many times — and who knows how a Harry Potterless J.K. Rowling will be received –, they’ll simply stop buying at those prices.

And great reads priced at more reasonable prices may prevail (he writes, hopefully).

I can’t vouch for anyone else’s buying habits, but I’ve noticed when I download a preview for a book I particularly want, if the ebook costs more than $7 to $10, I will wait and pick up the paperback so I can share it with friends (and have yet to make that purchase, in most cases). My threshold for e-book purchases is around $6, because as someone else mentioned, you can’t pass them around so it’s only going to be me reading it.

Hate to play devils advocate but didn’t most of us just pay $4.99 for Hughs last digital book when we’ve paid $2.99 and $3.99 mere months ago for roughly the same size books (First Shift, Molly series, etc.)? Dont get me wrong, i’ll gladly shell out some clams for Hughs latest book but i don’t see why people are so hopping mad. If it’s too much to pay, don’t pay it. That simple.

You are correct. But it comes down to a comment I’ve had in the back of my head while reading everyone else’s comments:

As already mentioned the supply side of the equation (read: the book seller, publisher, and author) are interested in maximizing profit. We all know or can research, the details of that.

But on the customer side it is all about perceived value. Factors already discussed such as the ability to lend and ease of use have differing level of importance to a customer. There is of course the purest of the pure: how much $$$ am I willing to shell out for the :) it will give me?

There are other factors, such as if you feel like you are “getting a raw deal” / the PR effect. That is where things like the assumed costs of physical vs. e-books come in. The supply side ignores that at their peril (as we’re seeing).
Back to your comment about Hugh’s latest … I repeat my comments above, especially the part about the $ per :) ratio and for his part, his ability to charge more without losing too many readers. I can’t blame him, and my most direct form of feedback should he go too far (you haven’t yet Hugh) would be to not buy his book.

PS: for the record I’ve read everything of Hugh’s I think possible except Hurricane (just not sure it is a story I’m interested in) and I, Zombie (not out on Nook last I checked). So I’m a huge fan … I wanted to be sure to put that out there since the above is my first post to the blog. Heck, it is my first post I think to any blog since I don’t read anyone’s blog with any frequency except Hugh’s

hmmm that just might classify my as a groupie … whodathunkit [shrug]

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