What's the most profitable price for an ebook?

There are a few things to keep in mind. First, the “right” pricing and the average “right” pricing are two different things. I would drop $50 to read a new Neal Stephenson book without batting an eyelash, but I’ll balk at paying $10 for an ebook from a total unknown with only a few reviews. I would be a lot more interested if it tried to break out various optimal selling prices. Does a new author have a different optimal price than an established one? Does it vary by genera? Are UK folks buying more short stories?

The average optimal price for everything is about as interesting as reporting that the average human has one boob, on ball, half a penis, lives on average near the center of the earth, which is located on average inside the sun, which is located on average inside of the super massive black hole in the center of the galaxy. Anyone who works with numbers for a living knows that the average is something you glance at for a sanity check before you start doing the real work.

What’s the confusion here? This is simply where the supply curve and the demand curve meet, and since the supply curve goes flat as soon as the number of copies sold reaches the revenue break-even point, it’s all about demand. This ironically is one of the few times when the supply curve is almost backwards; development costs for an e-book are basically fixed.

Some books-as-products will never have a very high public demand but will be essential to those that actually need them, and will command a high price even with low demand, and arguably that low demand will raise the price to pay for the production of the text.

It’s expected that many books will see an increase in demand as the price drops, but only a portion of that curve will be a sweet spot, and predicting or measuring it may not help a whole lot. It’d be like trying to quantify the Laffer Curve, it’s really not possible without experimentation, and even that experimentation may only be good for a short amount of time or on that single volume.

I feel that e-books are too expensive. I buy a paper copy and I’ll have it forever and I can insure it against loss, and it’ll always work as there’s no medium or machine involved that has to be able to interpret it. E-books are useful from a search perspective, but for leisurely reading they come with baggage that makes me think they should sell for about a quarter of what a dead-tree edition sells for at any given time.

It seems like Luzme basically requires you to know what you want to read when you go to their website. If people are generally looking for the cheapest version at the moment, then you probably see a lot of people purchasing books at the typical price point (and we see a small peak at the $9-10 range). Luzme probably misses a lot of the people who just wander the cheap deals.

I wonder about the details of those books at the lower end. Are they generally popular books that briefly dropped in price? Do the people who buy those books tend to have large wishlists and lots of patience when it comes to waiting for price to drop?

hmmmm i think 1GBP equals 1,63$

You’re right, that’s a typo. Off to fix it I go.

Hi @fireshadow, if you read my original article , you’ll see that I think my users at Luzme fall broadly into 2 categories:

  1. The avid readers, who have a long, long watchlist and buy several books a week; usually happy to buy whichever happens to be on offer today; and
  2. The specific reader, who knows exactly which book they want, and just want to know when and where it’s available; they’re usually very insensitive to the price, they just want the book.

I’ve been surprised just how long some people’s watchlists are; I think the current largest on Luzme is approx 4.5k books. With a watchlist that long, there’s always going to be a book on a price deal to buy!

So I think, in answer to your question about the books at the lower end, they are a mixture. There’s definitely many normally-higher-priced books that get bought at the low price; I can see this from the response when I send out a price alert email. But there are also some, often from the self-published authors, who are on permanently low price.

As a rule of thumb I never buy an e-book that is higher or equally priced than it´s pocket edition.

And if there could not be pocket editions of that particular work (roleplaying manuals for example) I would not pay more than a second hand store would offer me for the same, physical, book.

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If you think they are not maximizing profits, their market cap and earnings report have something to say to you.

Exactly. A lot of people seem to be in the mindset that an ebook is some sort of lesser alternative to a physical book that one would only purchase as a cost-savings measure in the same sense that one would buy a paperback over a hardback, but in general the opposite is the case. And it’s not because ebook users hate printed books – I own over 1000 myself. But I live in an apartment and use mass transit frequently. So ebooks are just more practical.

Faulty logic.

Apple’s prices are high, because they do not go for the low price, low margin market at all (Well, nearly at all) and because enough buyers are are willing to pay a premium for convenience and design. And yes, even quality.

I think they TRIED to maximize ebook profits through collusion in forcing a price increase marketwide. Had they raised prices all on their own, that would have minimized profits. Hence the antitrust action.

Apple wanted to increase the amount each customer spends and link that to increased profits by illegal collusion with book publishers. That was the only point.

But that doesn’t apply to ebooks, so it isn’t faulty logic. Unless you can show me some way in which an ebook from Apple is higher quality than one from Amazon.

For comparison,

Of note: $10 is between the average price of a paperback and hardcover.

(Edit: apparently I need to change this post more to edit it. I only wanted to add a forgotten line break.)

My thought on this is that delivering bits is much much cheaper than cutting down trees, milling them, turning that into paper, mining ore, turning that into ink, applying the ink to the paper, slaughtering cattle, turning that into glue, using the glue to bind the paper together, shipping it to a warehouse, shipping it to a store, paying people at every step of the way…

If it’s cheaper for the publisher, why shouldn’t they pass the savings on to us? The “you should pay more because it’s better” is the same bullshit the music industry tried to pull when they switched to CD. It doesn’t matter that the quality is higher, the delivery costs are lower and I should be seeing those savings, especially if I had to pay up-front for a device to read them and am trying to recoup that upfront cost in cheaper per-unit costs.

This smells to me of protectionism for their other business model. “We can’t price them cheaper, they would cannibalize our dead tree sales!” This is incumbent thinking, and in a proper market would result in the incumbent being eaten by smaller upstarts not chained to the outdated business model.

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I really like having both for technical and academic books. The reading experience is much better with the paper text: no glare, bookmarks on your own terms, it doesn’t monopolize my computer/other device, and other reasons. However, having a pdf is also really useful. It is easier to take my reference material to the coffee shop. Searching – indices almost always miss the thing that you want to find.

I really wish this was more common. Most of the paper+pdf combos I have are a result of knowing the author (or one of their students) and just asking them for it.

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The price you pay for something generally has no relationship to how much the inputs cost. The cost of the raw materials only sets a price floor.

It does if there is proper competition. You can’t set arbitrary prices if there is a danger of being undercut. Of course copyright grants inherent monopolies, but there are millions of other books out there and for the most part people can choose alternatives if your price goes too high.

The publishers tried to collude to raise prices over $10, to $14 or $15. According to this data, had they succeeded they would have reduced ebook profits.

The data here supports the idea that the company doing the most to maximize ebook profits was — brace yourself — Amazon.

Think about it, Amazon tried to make $10 the standard price for an e-book, the price which this article suggests maximizes author profit. And ironically, many authors excoriated them, and sided with the publishers who wanted to damage their income.

As I wrote back in 2010, I suspect Amazon did the market research and discovered for themselves where the peak on the profit curve was and set their standard e-book price accordingly. They’re not dumb.

But the article also says for the UK: “The most revenue was earned in the <= £1 price range.” So why the difference?

More of the money goes to the author at the $10 price point.