Ebook Pricing Discussion: Buy an ereader if you're considering giving out ebooks for free.

This keeps coming up.  People want to know how to price their books in a situation where nobody has had enough time to test a method–the method that might work great during one five-year stretch might not work out so well during the next stretch.  Who knows?

However, I'll tell you my theories at the moment so you can consider them and argue with me.  I'm no economist, so there are potentially a lot of considerations that I may have missed.  So be it: I plan to keep on learning and keep on experimenting, and this may not be my final word on the subject, either.

One thing I do know, though: the experience of reading ebooks is not 1:1 for reading paper books and probably affects people's purchasing habits.  So if you're thinking about epublishing, even if you're dead-set against the ebook-reading experience and want to stay with print books, you should:

Get an ereader

Before you start selling ebooks, get an ereader.  Heck, they're cheap–get several and write them off on your taxes.  Spend at least a month reading books on your ereader.  JUST on your ereader, if you can manage it.  Here are your goals for that month:

Download several books from your local library, if ebooks are available.
Download a THICK book from your ereader's online store.  Maybe even a boxed set.
Download 20-30 free ebooks from your ereader's online store.
Figure out how to read an ebook in the bathtub (hint: wrap the ereader in a freezer bag).
Download several books from Project Gutenberg.
Scroll through the Smashwords home page until you see at least ten books that you're tempted to buy.
Download 20-30 free ebooks from Smashwords.
Cruise through the ebook store for your ereader and find one book that you can't resist buying at $.99.
Do the same, but for a $2.99 book.
Again, do the same with an ebook $9.99 or less.
Finally, go nuts and buy a book that you've been planning to buy, regardless of the price.
(You might want to consider doing similar things on your smartphone, if you have one: try Aldiko and the Amazon and Nook apps, try the Overdrive app and set it up for your library.  You should download those things from your app store, by the way, not online.)

Buying books on an ereader isn't like buying a print book.  With print books, you have to consider both price and space.  Generally, you have to pay for print books, and you generally have to pay more than $.99, even at Goodwill.  (Mine are usually $1.)  And regardless of whether or not you pay for a print book, you always have to keep in mind that a print book takes up shelf space at your home (or chair space, or floor space, or space on top of your kids' heads if they're especially flat).

With an ereader, you could go for the rest of your life, reading a book a day, and never have to pay for another book again.  Don't believe me?  I set up a list on Twitter with nothing but free ebooks. And you'll never have to return the books, either, unless you get them from the library.  And those books don't take up space, except metaphorically on your ereader–but you can save books on your computer, too, should your ereader overfloweth.

Yet people are still selling ebooks for money.  How?  Logically, shouldn't readers be gravitating to free books?

The real cost of reading books, one that people don't talk about much, is that it takes time.  Is a book "worth" $1 or $5 or $8.99 or $27.99?  Without the distraction of a physical book and thinking, "Oh, well, it must cost a good deal of money to print and ship it, etc.," it becomes obvious that books cost hundreds of dollars to read.  Just take your hourly wages times the amount of time it takes for you to read a book.  I wouldn't be surprised if there are some people who've invested at least $5,000 of their time reading The Wheel of Time series, even though the cover price, in paperback or ebook, is going to be less than $150 total.  Probably.

(It's about 11,000 pages for the whole series.  I read quickly, at least a page a minute.  That's about 184 hours, or about $27 an hour to make $5,000.  I'm pretty sure there are people who make over $27 an hour who are reading that series…and people who read slower than a page a minute.)

So what's the real cost of reading The Wheel of Time?  At $27 an hour & a page a minute, about $5,150.  Or about 190 hours (184 hours to read, plus six hours to make enough money to pay for the books).  The actual cost of the books is not the big expense here.

The more time you spend on an ereader, the more obvious it becomes that you download or don't download books (free or otherwise) based on whether you think you're getting your money's worth for the time spent.

You'll have a ton of books on your ereader that you picked up for free.  Here's my prediction on most people's pattern in picking up free books:

They pick up anything that's free.  "SQUEEEEE!!!!"
They start limiting themselves to things that a) look professional and b) look at least somewhat related to their usual genres.  Except for that one book they just couldn't pass up.
They start limiting themselves to books from #2…except they read the sample first, to make sure it's edited and formatted decently, and that they have any interest in reading that author.
They bypass at least 99% of the free books they see and stop feeling guilty about not reading all the crap on their ereaders.  They may start reading an author that they picked up for free, but only if that author hits their particular sweet spot.

Writers will probably also go through a phase of picking up all the free indie writer books they can find; this will thin out after a while, too.

In the end, free is not a panacea.

Putting up a book for free will guarantee you more downloads, especially if your book has a professional-looking cover, is formatted and edited correctly, and shows some modicum of talent.  But it won't guarantee that people will ever read it.  With free books, you will run into a lot of people in stages #1 & #2, to whom free books are still like crack.  But they won't read your book unless it hits one of their niches.

I think there's a place for free; it's a tool that will catch lots of #1- and #2-stage readers that may fit your niche but probably won't, by a factor of hundreds if not thousands.  But acquiring those #3 & #4-stage readers–the ones who are both likely to read and enjoy your book–is much harder, and free won't always cut it.

"Free" cannot be the only tool in your sales toolbox, and this quickly becomes obvious if you have an ereader.  And, really, why would you want to sell something you wouldn't want to buy?  Even for free?

Next (probably on next Friday): How to calculate the money you need to make on your book to break even.