An American Editor

June 18, 2012

The Value of eBooks: Is $2.99 The New Value

One excuse the big publishers used for going to the agency model of pricing was that Amazon’s $9.99 price for certain bestsellers was undervaluing the books and would establish expectations in ebookers regarding maximum pricing. So, if that is true, how do these very same publishers justify putting certain ebooks on sale for $2.99 or less?

This question popped to mind when Little, Brown, a subsidiary of Hachette, put City of Veils by Zoe Ferraris on sale for $2.99. This is the second mystery book by Ferraris featuring the same Saudi Arabian investigative team. (Although this is not a review of the book, it is worth mentioning that it is a 5-star book that offers both a fascinating insight into Saudi culture and a great mystery.) City of Veils is neither the first nor the last ebook by one of the Agency 6 to be put on sale for $2.99 or less; such a sale seems to be a regular happening. (The first book in the series, Finding Nouf, is listed as discounted to $11.16 from the list price of $13.95, with neither price being a price I would pay for a fiction ebook.)

Which makes me wonder about the “value of ebooks” and whether we are seeing the erosion of price to where, eventually, Agency 6 fiction ebooks will be regularly priced at $7.99 or less and frequently on sale for $2.99 or less.

There has to be something magical about this $2.99 price point. Why $2.99 and not $4.99? Or $3.99? Both prices would be substantial discounts off the list price and even off the standard 20% to 25% discount price. I suspect the answer lies in what experience is rapidly showing as the price point for maximizing volume of sales. I also suspect that publishers are finding that ebookers are unwilling to pay more than $2.99 for an introduction to a previously unknown author. Yet, I don’t see any evidence that after the introduction to a new author, ebookers are running to spend $11+ for other ebooks by the same author — I know I am not.

But regardless of the motivation, isn’t this $2.99 price point setting an expectation among ebookers as to what the correct price for an ebook should be? I find that it cements my belief that ebooks should be both DRM-free (which Tor, a Macmillan subsidiary, will be doing shortly) and list priced at no more than $5.99 and frequently discounted to $2.99 (or less). These Agency 6 discounts are also cementing my belief that I will only rarely pay more than $2.99 for any ebook.

The price point problem is exacerbated by other steps publishers are taking. I recently preordered Spycatcher with a bonus excerpt by Matthew Dunn, published by HarperCollins, one of the Agency 6, for 99¢. (The bonus excerpt is from Dunn’s forthcoming new novel Sentinel, which can be preordered for a whopping $12.99!) At the same time, Spycatcher without the bonus excerpt is available for $9.99. This type of discounting with bonus material included happens regularly. My question to publishers is this: Why would I ever consider buying Sentinel for $12.99 or Spycatcher for $9.99 — neither book nor the author being previously familiar to me — when I expect that at some future date I will be able to buy them for significantly less?  Doesn’t your offering one of the books for 99¢ create an expectation in me, the ebooker? And even if I can’t buy them in the future for $2.99 or less, why would I buy them at all — regardless of how good a read the introductory book is — at a price that has already demonstrated as far too high?

If there is any validity to the complaint of Amazon’s $9.99 price point setting consumer expectations at a price that is unsustainable by the publishing industry, how are publishers fighting that expectation by offering ebooks for $2.99 or less? Why is the publisher’s tactic sustainable but not Amazon’s?

Valuing of ebooks is difficult. Yes, there are costs that can be objectively measured but those per-unit costs diminish with volume sales. I grant that each ebook cannot be looked at in isolation as best-selling ebooks need to subsidize those that do not sell well so that overall there is an industry profit. Yet, where previously the argument was that no ebook should be sold below a price that sustained the industry, which price was somewhere north of $9.99, Agency 6 publishers belie that argument by demonstrating that at least some ebooks can be sold for significantly less without damaging the industry. That action reraises the issue of what is an ebook worth?

The industry has put itself into a straitjacket of its own making. Originally publishers planned to window ebooks. Windowing of ebooks allegedly would let publishers subsequently publish the ebook version of a pbook at much reduced price, more in line with ebooker expectations. But after much protesting from ebookers, publishers ultimately went to simultaneous release. Unfortunately, with simultaneous release, publishers decided they could not price the ebook much lower than the pbook for fear of cannibalizing pbook sales, losing money, and devaluing the book.

Then to shore up the value of ebooks, agency pricing was instituted. It was touted as necessary for the health of the publishing industry — from author to publisher. Now, within the past year, these same publishers are regularly pricing some ebooks at $2.99 or less, shattering the justification for the higher agency pricing.

In the end, I think publishers will find that $2.99 is the magic price point for ebooks. The combination of the self-publishing phenomenon that ebooks have produced, the use of the $2.99-or-less price point by self-publishers, and the apparent willingness of at least some of the Big 6 publishers to discount ebooks — even if for just a limited time — to that price point, will create an expectation in ebookers that publishers will be unable to combat. We may be a few years away from seeing that magic price point, but I suspect it is coming on fast.



  1. As a small independent publisher, I’d say the current pricing models are the result of a rapidly evolving segment of the publishing industry. Publishers are trying to find their way with no road map to help them navigate. There is too little historical sales data on which to base decisions for current pricing, and future pricing decisions will depend on the decisions made today.

    For myself, I’ve roughly priced ebooks at approximately half of the print book price. Thus far, I’ve been creating ebooks of back-list titles and of new titles following their print publication, but only for text-centered books. Books with graphics will be the next big undertaking. Once I complete the ebook creation process, I’ll begin testing changes in prices, trying to find a point where I recoup my development costs and still receive a fair price for me and the authors I publish. I’m sure it will result in lower prices than I’ve currently been charging, but I’m not intending to try to compete with the big publishers on price.


    Comment by Leland F. Raymond, Publisher, CyPress Publications — June 18, 2012 @ 10:31 am | Reply

  2. Reblogged this on Lucy Black.


    Comment by lucyblack418 — June 18, 2012 @ 11:41 am | Reply

  3. I wonder if it’s partly due to how some ebook publishers set up their royalty scheme for self-published authors. With Amazon (it’s been awhile since I looked at their info, so this may be incorrect), if a writer prices a book under a certain dollar point, he gets a bigger cut of the royalties, whereas if it’s over that benchmark price, the percentage is smaller. I think, but I’m not positive, that it’s $2.99.

    Considering that Amazon is such a driving force in the ebook market, it would not surprise me if they had an influence on the ebook price of ebooks publishers.


    Comment by coffee zombie — June 18, 2012 @ 12:48 pm | Reply

  4. […] on a TeleRead blog post, which was apparently a reblog, but I didn’t copy my comment to the original post. Instead I’m posting it here. Basically, it’s another article discussing how $2.99 is […]


    Pingback by Short rant on the “value of eBooks”, another rant on the value of MY books | less than this — June 19, 2012 @ 2:15 am | Reply

  5. […] Is $2.99 the new ebook value? […]


    Pingback by Stumbling Over Chaos :: Linkity languishes in the dark — June 22, 2012 @ 3:02 am | Reply

  6. […] este punto bien vale la pena dar una mirada al artículo de Rich Adin “The Value of eBooks: Is $2.99 The New Value” en donde se analiza el fenómeno de la erosión de precios y la expectativa de que la salida […]


    Pingback by Algunos hitos actuales de la industria editorial. Breve mirada a 10 fenómenos que hoy nos marcan línea y generan oportunidades para el sector. | Jaime Iván Hurtado — June 27, 2012 @ 10:28 am | Reply

  7. […] o texto completo do blog An American Editor aqui. Confira […]


    Pingback by Será que R$ 5,99 é um valor ideal para eBooks? | - notícias e opiniões sobre ebooks, livrarias e o mercado do ebook — July 17, 2012 @ 12:00 pm | Reply

  8. […] este punto bien vale la pena dar una mirada al artículo de Rich Adin “The Value of eBooks: Is $2.99 The New Value” en donde se analiza el fenómeno de la erosión de precios y la expectativa de que la salida […]


    Pingback by Blog – Jaime Iván Hurtado – Algunos hitos actuales de la industria editorial. Breve mirada a 10 fenómenos que hoy nos marcan línea y generan oportunidades para el sector. — April 1, 2015 @ 1:45 am | Reply

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