September 13th, 2010 by Mike Fulton
Posted in eBook Publishing

The available evidence would seem to indicate that there are certain publishers who simply don’t understand where eBooks fit into the grand scheme of things. They don’t understand that traditional notions of pricing, marketing, and selling regular hardcover or paperback books simply do not apply without modification to eBooks.

Macmillan

One such publisher is Macmillan. They came to my attention recently when I discovered that they were the publisher of several classic Isaac Asimov science fiction novels which were selling at $10.99 and $11.99 for the eBook editions. Since Asimov died nearly 20 years ago, and since the novels in question have been available as mass-market paperbacks for at least that long, and in some cases much longer, I had a hard time understanding where these prices came from.

Macmillan was the main publisher at the center of the big blowup with Amazon earlier this year over eBook pricing. Amazon had been pricing eBook versions of new hardcover fiction releases at $9.99, and Macmillan wanted the price bumped up to $14 or $15. Up to this point, Amazon had pretty much a lock on the eBook market, but the new Barnes & Noble Nook and Apple’s iBooks had opened things up a bit so that publishers had other outlets. At the end of everything, Macmillan got the price increase they wanted.

Macmillan recently published new hardcover editions of several Asimov classics. These are priced at $24.99 and are typically selling for around $16-18. Not too different from a regular new release, except of course that these are reissues of books that are 50-60 years old. The price of the hardcover edition might not be unreasonable, but it simply doesn’t make sense to set the price of an eBook edition accordingly when the books have been out in mass-market paperback for decades.

I really don’t have a problem with somewhat higher prices for eBook editions of brand new releases, as long as it doesn’t break the 2nd Commandment of eBook Publishing: an eBook version should never be priced higher than any physical edition. However, Macmillan is not just doing this on new releases. They’re consistently pricing eBooks at significantly higher prices than the mass-market paperback edition that’s already been out for awhile.

Macmillan CEO John Sargent wrote a blog post defending their pricing setup where he discusses how their overhead contributes to the price they set. The blog has a long list of comments, none of which take his side of things.

From reading that post, it seems that one of the big problems is that Macmillan is using what I call “goofy” accounting practices where they’re confusing the costs of producing eBooks with the costs of producing physical editions. They are trying to wedge eBooks into their existing business model and setting prices basically like it’s just another paper edition.

The only way this is going to work in the long run is for publishers to get the accounting done right. If they don’t, they’ll be underestimating the overhead of their print editions while the market for such is shrinking. That’s going to come back and bite them in the behind at some point. No doubt they’ll eventually figure out how to fix things or they’ll go out of business. Personally, I’d rather they bought a clue somewhere and stuck around.

Their website is http://us.macmillan.com. There are various email links there if you want to email them. You can also write them a real paper letter at:

Macmillan
175 Fifth Avenue
New York, NY 10010
(646) 307-5151

There are no comments yet »

September 9th, 2010 by Mike Fulton
Posted in eBook Publishing

There are a few simple rules that we think all eBook publishers should follow. Individually, they probably all make perfect sense to most people, but yet there are many publishers out there who fail miserably at these ideas.

1) Thou Shalt Make Thy Prices Reasonable — Seems easy, right? Yet there are many publishers who set their eBook prices according to rules that probably don’t even make sense to themselves, let alone anybody else. We don’t necessarily mean “low” here, either. “Reasonable” in this case has to do with how the price is set relative to other things. See the other commandments about pricing below.

2) Thou Shalt Not Price Any eBook above Any Physical Edition — This is very simple… if you’ve got a hardcover edition that’s selling for $12.99 then the eBook version shouldn’t be priced at $14.99. For that matter, it doesn’t make really make much sense to sell the eBook for $12.99 either.

Note that we’re talking about street prices for physical editions, not “suggested” prices.

Always keep in mind that the physical edition has extra added value compared to an eBook. The concept of first edition eBooks simply doesn’t exist, but a first edition hardcover is often a collectable worth many times its original price. And even if it never becomes a collectable, a hardcover edition can still fetch a few bucks at a garage sale some day. An eBook will never be a collectable or sold at a garage sale, and the price needs to be at least a little cheaper to reflect that reality.

3) Thou Shalt Not Use Goofy Accounting Practices to Set Prices — In business, it’s not uncommon to take all your overhead costs for creating a family of related products and pile them into one big lump sum which is then used when figuring your prices. In many situations, this makes perfect sense, especially when you’re only dealing with physical products. However, the overhead involved with virtual products like eBooks is so drastically different from those of physical products that these accounting practices simply don’t make sense. Continuing to use them as if they did make sense is just plain goofy.

One of the reasons hardcover books cost more than paperbacks is because they use more expensive materials. For example, if it costs $2.45 per hardcover book to actually do the printing and binding, it makes sense to include that amount in your overhead when figuring out the price. On the other hand, when you’re setting the price for your eBook edition, it makes no sense whatsoever to factor in that $2.45. The same is true for any costs relating to shipping or warehousing those physical books. They simply do not apply to the eBook edition and should not affect the price in any way.

Of course, there are some costs that do apply to both editions. The cost of editing the book, for example, is something that applies to all editions. Marketing costs might apply to both, but not universally. An advertisement in a magazine for the book would apply to both editions, but point-of-sale displays for a bookstore are biased strongly towards physical editions.

4) Thou Shalt Not Raise Prices of eBooks To Match Reissues — Once a book has come out as a mass-market paperback and the price of the eBook version has dropped accordingly, then that’s where the price should stay. If you decide to come out with a hardcover or trade paperback reissue at some point down the road, that should not have any impact whatsoever on the price of the eBook edition.

Don’t forget that the market for hardcover or trade paperback reissues is not quite the same market as for new releases. Anybody who just wants to read the story has either already read it, or is probably looking to find the cheapest version. Nobody who’s seriously interested in the reissue is going to pass on it in favor of the eBook version, and in fact you’re likely to pick up sales of the reissue from customers of the eBook version. As long as you don’t screw up by doubling the price of the eBook for no good reason, that is.

To Be Continued…

There are no comments yet »