Killian McRae on #eBook Price Points: Are we getting fleeced?

Welcome Guest AuthorKillian McRaeto the blog today!
I'm please to welcome Killian McRae to the blog today to discuss ebook price points - something both authors and readers care a lot about. Take it away, Killian...
Are we getting fleeced when it comes to ebooks?by Killian McRae
On Amazon.com, you can currently pre-order J.K. Rowling’s highly anticipated The Casual Vacancy in hardback for $20.93. Or, if you’re an ebook reader, for your Kindle for $19.99.
Wait, $19.99? That has to be a typo, right? I mean, a Kindle book is electronic. It doesn’t require shipping, paper, shelving, etc., so it should be far less than the hardback, shouldn’t it? *Looks back to Amazon.* Nope, that’s what it is. True, the MSRP on that title in print is set at $35, but when’s the last time Amazon charged full price for a new release of this magnitude? They buy in gross, get a discount, and pass that along to consumers. But still, twenty bucks for an ebook?
As an indie writer who, in large part, is responsible for setting the price for her own books, such considerations as “what everyone else is doing” weigh heavy in my price points. It is for this reason that since moving towards self- and indie-publishing last year, my eyes have been trained on trends in the market in this area.
And the trend, at least where large publishers are concerned, has been upward. You may not have been the only one recently who’s noticed that titles “traditionally” published are favoring Jackson to Lincoln these days. Prices in the $15-$25 range for new release books by prominent authors aren’t uncommon. Even middle list fiction works generally hit $10-$15.  Sometimes the electronic version of a book costs more than the paperback or even hard cover edition.
At first blush, the logic on this is hardly logical. Firstly, the difference in production cost between print and ebooks is huge. As much as 70% of a print title’s cost is just to cover the paper, presses and ponies to get it to your hands. Even for mass market paperbacks (think any romance book you’ve ever seen at the checkout aisle of your local grocery store), that number tends toward one-third. For an ebook, however, the only per-unit production cost for a purchased copy is a nearly insignificant use of bandwidth to perform that transaction. (Assuming one already has the technology to display the book, but that cost is not unique or attributable to a single purchase, therefore I suggest we not factor that in to our consideration for the moment.) It should stand to reason, then, that if those production costs are eliminated, the final product cost should fall as well.
But herein enters the market. According to Reuters, in 2011, ebooks accounted for 30% of all retail sales in the United States, which is more than double its market share from just one year prior. While the majority of sales are, consequently, still print, the fact that a bigger slice of a publisher’s earnings come in this sector has caused a shift. For traditional publishers, there are still many upfront costs born of putting out an ebook in tangent with a print volume. Covers must still be produced; editors must still be hired; for big-brand authors, a marketing campaign must be launched.  Whereas a few years ago, any ebook sales were but a few extra sprinkles of cinnamon sugar on piece of bread, now those very sales are becoming a publisher’s bread and butter. They hedge a heavy price against the hope that die-hard fans will be willing to shell out at a price comparable to what they have historically paid for print, and thereby be able quickly to break even on their investment.  As a business practice, it seems a sound one.
But let me remove my author’s hat here and speak merely as consumer. For disclosure’s sake, let me back up and state this bluntly: I am a libertarian and a full-fledged believer in free markets in almost all cases. I have to remind myself that a house - as with most anything - is worth whatever someone is willing and able to pay for it.  If there was not a significant share of the audience willing and able to pay $19.99 for an ebook, the price would fall. Simple as that. (And over time, as a title ages, its price tends to drop.)
I fear, however, the consequence of this reality. I have become such a firm believer in the ebook that I will not read print books unless fiercely required. No matter how much I want to read it as a fan, I refuse to pay almost twice the price for an ebook as its paperback counterpart costs new, knowing that the profit margin’s increase is the sole reason for the match to be made. If distributors really want us to adapt the technology (and no doubt they do; it’s a win-win-win between them, the consumer, and the author/publishers for so many reasons), why are they allowing publishers – with whom large companies such as Amazon and B&N have great sway – to give us suOne concluding note: the large publishers’ folly in all this may the indie- and self-publisher’s - and readers - gain. While ebook prices from the big six have been on the rise, most I/SP titles still retail for less than $5. Given the recent instances of self- or indie-published books that have exploded and been picked up by large publishers after having been first rejected by them (i.e. 50 Shades of Grey, Beautiful Disaster, and Slammed, just to name a few) due in part to this more reasonable range, methinks readers might find the density of enjoyment per penny is much higher in this brave and unrestricted world of that surely holds the next “big thing” than anything offered to us at 5th Avenue prices.

Killian McRae is an author of historical romance, science fiction, and fantasy. She’s proud to note that her regency romance, A Love by Any Measure, has never retailed for more than $4.99 in ebook format. 

So, what do you think? Killian would love to receive your comments or questions!

Thanks for reading!
Laura