Angry Robot Books Want Your Opinion on Ebook Pricing

[birdbrainbb]

Originally Posted by cerement

hmmm ...
"heteronyms" have same spelling, different pronunciation, different meaning
"homonyms" have different spelling, same pronunciation, different meaning
what is: same spelling, same pronunciation, different meaning?

That's a homonym, actually. At least, according to Wikipedia:

In linguistics, a homonym is one of a group of words that share the same spelling and the same pronunciation but have different meanings, usually as a result of the two words having different origins.

(Emphasis mine.)

[DaleDe]

Originally Posted by sirbruce

But if you don't *care* about when the physical book is released, the fact the ebook is released earlier *won't* make you more likely to buy the ebook.

I picked #2, "at the same time", since I don't think ebooks should be treated any differently from regular books. I don't want them coming later, but I don't want the publisher to think they have to release ARCs or samples earlier, either.

Ah, you don't care but the publisher does. The question was for them to time the release of the product, not for you. I suspect they know that people who buy the ebook will not generally also buy the hardcopy but they are still in the mode of staging the release of a new book for maximum profit. They generally believe an eBook sale is the loss of a physical book sale.

Dale

[Xenophon]

I did my best with their survey, then visited their site and used the "contact us" form to tell them what I really think. Which basically boiled down to "copy Baen and you won't go wrong." Especially on the DRM front. I also made sure to point out the many benefits that bundles provide to buyers, publishers, and authors.

Xenophon

[Renaldo]

Originally Posted by cerement

I wouldn't be surprised if, despite all the best efforts of "language police", "affect" and "effect" merge into one word with the meaning dependent on context ...

Only if we can spell it this way: æffect.

[cerement]

Originally Posted by Renaldo

Only if we can spell it this way: æffect.

æsc to æsc, dust to dust ...

[garygibsonsf]

Concerning the cost of creating ebooks: I think it's important to remember that publishers have to ask a reasonable price for the books they publish. There's a fallacy that ebooks should cost a lot less than paperbacks because they don't need printed, based on the assumption that the printing is expensive. The reality is that per unit the cost of printing is very low; most of the money goes on editing, typesetting and promotion, all of which require dedicated and skilled professionals. They all need paid, they all have mortgages, and somebody has to pay the rent on the publisher's offices. Speaking as an author, I can assure you those people very, very much need to be recompensed adequately for the jobs they perform.

Also - as has been pointed out in other threads and all across the web - online booksellers like Amazon can easily take 50% of the price of an ebook, pushing the returns on sales even lower. And before anyone says 'Baen', the reason their ebooks are so reasonably priced is because they sell them direct from their own website. They don't have to fork 50% of their per unit income over to anyone else every time they sell a file. (And before anyone says 'drm', I'm not disagreeing with you on that. The situation I'm addressing here is an optimal one with no drm, as is the case with my own publisher as well as Baen).

I suggested £5 as a reasonable price to pay for one of their ebooks on Angry Robots' survey. That's around $7.50. A five pound note in the UK will buy you a cheap pub lunch, a take-away from the chippie, a cheap bottle of wine or a ticket to a movie (actually, I think a ticket might be closer to £6), so I think it's a very fair price, although I wouldn't be surprised if they had to charge more to meet their overheads and make a decent enough profit to make selling the e-editions worthwhile at all.

Remember: in most cases even before a book reaches a publishing company, some poor bastard like me has sweated and toiled for a year or more, writing and rewriting and rejigging and reshaping the same hundred thousand words or so into something resembling a decent narrative, knowing the whole time that being an author is a career that makes you squat all in monetary terms -- but you do it anyway. So if you want to read good books, be prepared to pay a reasonable price for them.

There's an old saying that the quickest way to lose a million quid is by getting into publishing; it's a business with one of the narrowest margins of profit there is. This isn't an argument in favour of outrageous price hikes or ebooks going for more than the hardback; far from it. It's about approaching the matter with a clear understanding of the actual economic realities of what it takes to produce a decent quality ebook.

In that light, it strikes me that if you want to support ebooks, one way to do it might be to try and buy them more often directly through the publisher's website whenever it's feasible. That way all the profit goes direct to the publisher, and they don't have to hand half their earnings over to some external online business. That publishers can now indeed sell their books directly to the public in this way is really quite a remarkable thing; and the more ebooks we buy from them directly, the more encouraged they might get.

[sirbruce]

You're leaving out the cost of distribution as well. For a typical $10 paperback:

Retailer: $4.50
Wholesaler: $0.50
Publisher: $4.50
- Printing Costs: $1.50
- Distribution Costs: $1.00
- Overhead Costs: $1.00
- Editing Costs: $0.50
- Profit: $0.50
Author: $0.50

Now, ebooks eliminate printing, distribution, and wholesaler costs. A $3 ebook would leave $1.50 in costs to the publisher, $0.50 profit for the publishers, $0.50 for the author, and $0.50 for the retailer. Now, $0.50 ain't much for a retailer, but it's far cheaper for them to run the machines to distribute ebooks via websites than to physically stock books in real stores. But even allowing for the traditional cut of retailers, a $5 ebook would give them $2.50.

So $5 is reasonable to me. Frankly, $10 is reasonable to me too, but only if the author is getting a 33% cut. But the Angry Robot survey included the implication that being a couple bucks cheaper than the paperback was not what they wanted. What else would I suggest, higher? $5 is a good price, but $3 should be doable with thin margins.

[cerement]

I think the best option is still the option the survey dismissed out of hand, ebooks should be "like the paperback/hardback but cheaper". I don't think they need to be significantly cheaper, but, as sirbruce points out, costs for server space and bandwidth don't come close to the savings from printing to warehousing.

Publishers have a pretty good idea of how to price a physical book that setting up some sort of tiered discount system for paperbacks should be relatively trivial.

Who knows, maybe something along the lines of:
ebook = 60% of hardback for new releases, bestsellers, promotional discount
ebook = 80% of hardback for "shelf filler"
ebook = 80% of paperback after paperback is released

[LeeH]

Thanks for the feedback, guys - I work for Angry Robot, and it's all vital information.

Some very valid points have been raised about the range of possible answers to some of the questions, and I'll bring this up at a future marketing meeting. However, as has been suggested earlier in this thread, we have a number of ideas of what we want to do, but our current survey is focussed on a very specific area.

As for the affect/effect thing - it was probably just a typo. I'll ensure the culprit is whipped.

In terms of what we want to achieve with this, your input is all really valuable, and we have already had a tremendous response to the survey.

We need to make sure the price we set for our eBooks is fair. Fair for the reader, fair for the publisher, and fair for the author.

garygibsonsf hit the nail on the head with his breakdown of cost areas. Just because a book is being published electronically, the other associated costs are still there. 50% to the retailer is a good rule of thumb - sometimes it's lower, usually it's higher. Then there's the editor, copy-editor, several layers of proofreader, advance to the author, office space, artwork, etc. Other than warehousing (which should be relatively low for a small imprint like ours) and the cost of printing (which is pretty much the lowest cost involved in the whole process), the cost of producing an eBook is identical to the cost of a paperback.

However, it is perceived that the cost is lower, so we need to address this misconception and set the cost of the eBook, accordingly.

We'll be selling our eBooks though many of the usual retail channels, but also through our own site, and as we can cut out the middleman this way, everyone benefits from the higher margins (which essentially means we can pay the author more, while at the same time making a higher margin ourselves, which in turn leads to good (and sustainable) eBook pricing in the longer term).

Nothing is set in stone, yet, and the survey answers we get will be vital in guiding our overall pricing structure.

Like all businesses, we won't always get it right, and our customers won't always agree with what we do, but we're determined to ensure that everyone gets a fair deal, all round.

[sirbruce]

Originally Posted by LeeH

garygibsonsf hit the nail on the head with his breakdown of cost areas. Just because a book is being published electronically, the other associated costs are still there. 50% to the retailer is a good rule of thumb - sometimes it's lower, usually it's higher. Then there's the editor, copy-editor, several layers of proofreader, advance to the author, office space, artwork, etc. Other than warehousing (which should be relatively low for a small imprint like ours) and the cost of printing (which is pretty much the lowest cost involved in the whole process), the cost of producing an eBook is identical to the cost of a paperback.

I guess you disagree with my cost breakdown, then, though it's in the same ballpark. One thing to keep in mind is that many of those costs are fixed. So for a *small* print run, it's a large part of each book, but as more copies are sold, it becomes less and less. So if in order to keep prices low a publishers has to accept little to no profit on the first 50,000 copies, I'm not going to cry for them.

Originally Posted by LeeH

However, it is perceived that the cost is lower, so we need to address this misconception and set the cost of the eBook, accordingly.

Again, the cost is lower, although I suggested it was about $3.00 lower and you're suggesting for you it's more like $1.00. Nevertheless, the survey included text suggesting that a few dollars less than the paperback was not an answer you wanted; all the choices were between free and $10, I think.

You can't really address the misconception; the consumer won't believe you. Furthermore, if you DRM your books, it will only add to the perception that ebooks are "less" than physical ones; you can't loan friends copies. So that will drive the perceived value down further.

The biggest thing you can do is force the retailer to accept smaller margins, and also eliminate those margins fully by selling them yourself. Beyond that, the only way you're going to get consumers to accept higher prices is to trumpet the fact you're giving authors higher royalties at the same time. If you do that, give the author $1.50 for every ebook, a $1.50 profit for you, and the rest of the price covering the costs of the ebook, you should still be able to sell ebooks in the $5 - $7 range which is lower than Amazon's $10 price point. Other retailers might charge $10 in order to make their margins.

I'm not complaining about a $10 price point; I've bought ebooks for more than that. But anyone can look at the numbers are see that both the retailer and the publisher are getting good profit margins on that number, and the author is getting very little. There's no reason why all parties can't make money on a $3 or $5 ebook; it's just they won't make as much as they are used to with paperbacks. A $10 ebook? You'd better be giving the author a bigger royalty than the usual 4 - 12%.

[zelda_pinwheel]

hi LeeH, thanks so much for telling us your point of view ! it's really a pleasure when a publisher shows they care about what their readers think and takes the trouble to ask for feedback and opinions.

i hope you'll continue to spend some time here ; we've got an amazing population of ebook readers, both veteran and novice and every degree in between, so this is a great place to meet your market.

please let us know how things are getting along for you and especially let us know when your ebooks are available. and if you've got any more questions in the meantime about formats, drm, pricing, and general best practices*, don't hesitate to ask them.



* to get you going, here are a few of my answers : epub = good, pdf = bad ; drm = very bad ; lower prices = more sales ; make ebooks available at the same time as the pbooks are published...

[Moejoe]

Originally Posted by LeeH

Thanks for the feedback, guys - I work for Angry Robot, and it's all vital information.

Some very valid points have been raised about the range of possible answers to some of the questions, and I'll bring this up at a future marketing meeting. However, as has been suggested earlier in this thread, we have a number of ideas of what we want to do, but our current survey is focussed on a very specific area.

As for the affect/effect thing - it was probably just a typo. I'll ensure the culprit is whipped.

In terms of what we want to achieve with this, your input is all really valuable, and we have already had a tremendous response to the survey.

We need to make sure the price we set for our eBooks is fair. Fair for the reader, fair for the publisher, and fair for the author.

garygibsonsf hit the nail on the head with his breakdown of cost areas. Just because a book is being published electronically, the other associated costs are still there. 50% to the retailer is a good rule of thumb - sometimes it's lower, usually it's higher. Then there's the editor, copy-editor, several layers of proofreader, advance to the author, office space, artwork, etc. Other than warehousing (which should be relatively low for a small imprint like ours) and the cost of printing (which is pretty much the lowest cost involved in the whole process), the cost of producing an eBook is identical to the cost of a paperback.

However, it is perceived that the cost is lower, so we need to address this misconception and set the cost of the eBook, accordingly.

We'll be selling our eBooks though many of the usual retail channels, but also through our own site, and as we can cut out the middleman this way, everyone benefits from the higher margins (which essentially means we can pay the author more, while at the same time making a higher margin ourselves, which in turn leads to good (and sustainable) eBook pricing in the longer term).

Nothing is set in stone, yet, and the survey answers we get will be vital in guiding our overall pricing structure.

Like all businesses, we won't always get it right, and our customers won't always agree with what we do, but we're determined to ensure that everyone gets a fair deal, all round.

Thanks for this post, and its from this post alone that I'll most definitely be (if you don't have DRM) purchasing from you. Besides all that, it seems you just signed on Mr Dan Abnett. I can almost guarantee that alone will bring you in a lot of custom

PS. Was it really a five-figure advance for 3 novels from Mr.Abnett? Not that he doesn't deserve it, he does, but, whooosh, that's some big mula right there.

[Xenophon]

Originally Posted by LeeH

Thanks for the feedback, guys - I work for Angry Robot, and it's all vital information.

Great to see you here!

Originally Posted by LeeH

Some very valid points have been raised about the range of possible answers to some of the questions, and I'll bring this up at a future marketing meeting. However, as has been suggested earlier in this thread, we have a number of ideas of what we want to do, but our current survey is focussed on a very specific area.

[SNIP]

We need to make sure the price we set for our eBooks is fair. Fair for the reader, fair for the publisher, and fair for the author.

garygibsonsf hit the nail on the head with his breakdown of cost areas. Just because a book is being published electronically, the other associated costs are still there. 50% to the retailer is a good rule of thumb - sometimes it's lower, usually it's higher. Then there's the editor, copy-editor, several layers of proofreader, advance to the author, office space, artwork, etc. Other than warehousing (which should be relatively low for a small imprint like ours) and the cost of printing (which is pretty much the lowest cost involved in the whole process), the cost of producing an eBook is identical to the cost of a paperback.

garygibsonsf is, of course, quite right. But please note that if you do it right, the eBooks should not add much (if anything) to the marginal cost of producing a book. Yes, you still have all the fixed overhead and the per-book variable costs of editors, copy-editors, etc. -- but you had exactly the same costs without eBooks. And in any well-considered eBook system, you should be preparing the eBook text directly from the final copy-edited-just-before-'type-setting' input that you use for printing. (And don't forget to archive the bits!!!!) Adding eBooks to the picture should lower your expenses per-book-sold. And if it doesn't, something is wrong with your setup.

Originally Posted by LeeH

However, it is perceived that the cost is lower, so we need to address this misconception and set the cost of the eBook, accordingly.

We'll be selling our eBooks though many of the usual retail channels, but also through our own site, and as we can cut out the middleman this way, everyone benefits from the higher margins (which essentially means we can pay the author more, while at the same time making a higher margin ourselves, which in turn leads to good (and sustainable) eBook pricing in the longer term).

Yes! Sales through your own site let you cut out the retailer (and possibly a level of distributor too, link Ingram's). The 50-60% cut those levels of distribution would otherwise take should let you price your eBooks much more aggressively than dead-tree-format -- while still paying authors a royalty that is at least competitive with paper (if not better) and also enjoying improved margins for the publisher.

Originally Posted by LeeH

Nothing is set in stone, yet, and the survey answers we get will be vital in guiding our overall pricing structure.

Like all businesses, we won't always get it right, and our customers won't always agree with what we do, but we're determined to ensure that everyone gets a fair deal, all round.

Kudos to you for trying, and for asking your customers what their opinion is.

Some highlights of the Baen model that I recommend that you copy:

• NO DRM!!!!!
• They buy non-exclusive (but nearly-permanent and universal) eRights. Authors are free to sell non-exclusive eRights elsewhere on whatever terms they like. Baen buys the right to sell the bits anywhere in the Universe with (I think) no reversion unless they outright stop offering the eBook for sale.
• Selling books in bundles for even more aggressive prices: my net cost-per-book from (after bundles) Baen is around $3.40 (that price is good to with ten cents or so). It would be a bit higher if all books were priced at current levels, but for the first few years they sold single books for $5 (now $6) and monthly bundles for $10 (now $15) so my overall average is lower.
• Royalties to authors that are better than trade paperback but not quite as good as hardcover. And obviously waaay better than mass market paperback.
• Extensive free samples: 25% of each book is available online for anyone to read.
• Broad format support: currently html, rtf, Sony Reader, Mobipocket (and maybe more).
• Users may re-download any book they've previously purchased at any time in any format.
• Did I mention NO DRM?
• Sell eARCs -- Electronic advance reader copies. Baen sells 'em for $15, with the understanding that it's the final turned-in manuscript before copy-editing, etc. And buying the eARC does not mean the customer gets the eBook too -- that's an addition purchase of a different product. Eager fans buy these too. I'm not sure what the author's royalty looks like on one of these sales -- but I've never heard any of their authors complain about it!

With all of the list above (and probably a bunch of stuff I don't know about), eSales are more profitable than paper sales (on a per-book-sold basis) for Baen -- even with each eBook sold covering its full pro-rata share of both overhead and editing/copy-editing/art/etc. costs. And they're a net win for the authors and readers as well.

It works so well, and builds so much customer loyalty, that I'm utterly mystified why more publishers don't do the same.

Xenophon

[mjh215]

LeeH;

It is great to see you here and know you are getting input from the community, that means a lot to me and the others. Most of us, I'm sure, understand that we can't expect everything off our wishlists. But as others have pointed out certain things WILL strongly impact your reputation.

• Releasing your eBooks DRM free will earn you respect and a very loyal reader base who will go out of their way to promote your product.
• Taking the time to provide a well formatted eBook in multiple formats may seem obvious, but it is often one that publishers fail on. Whoever prepares your eBooks would be welcomed to come to MobileRead for any advice on the subject.
• Treat your customers with respect, we all know mistakes happen and errors can occur. If a text has issues, a ready response and replacement when available goes along way. Many users are fine buying from certain publishers if they behave like this even if they are prone to the occasional bad format, however when ignored or abusively told that no replacement will be made available customers often refrain from further purchases from that company.

Thanks again, and welcome to MobileRead!

-MJ

[LeeH]

Thanks for the (very quick) response, everyone. It's gratifying to see so much support.

There are a couple of points raised I'd like to address.

Firstly, from SirBruce: "So if in order to keep prices low a publishers has to accept little to no profit on the first 50,000 copies, I'm not going to cry for them."
A typical genre bestseller sells far fewer than this number, so that's a major factor in setting out any pricing structure for any genre imprint. We'd love to sell 50,000 or each of our books, but it just isn't going to happen, so we have to price accordingly - to make a profit on a much lower number. If we don't, we stop publishing - it's as simple as that. Luckily, we have a model that will allow us to make sufficient profit to continue to publish. We're also lucky in that we're part of HarperCollins, so we can leverage their buying power when it comes to producing the pBooks.

And staying with SirBruce: "You can't really address the misconception; the consumer won't believe you."
You're absolutely right. We can't educate the consumer to the intricacies of the publishing business. It's not just that they won't believe you, they just won't be interested enough to care. So, the way we address the issue is through pricing, but it's a delicate balance. It's a learning curve, all round.

A few people have brought up the issue of DRM. My opinion? It's Evil. It serves no-one.

Oh, and we won't be producing e-versions of original novels from scanned texts. All our eBooks will be produced from original text files - likely to be in ePub and Mobi versions, though I'd be interested to hear your views on the matter.

In response to MoeJoe's questions: Yes it was, yes he does and yes it is!


from Xenophon: "if you do it right, the eBooks should not add much (if anything) to the marginal cost of producing a book. Yes, you still have all the fixed overhead and the per-book variable costs of editors, copy-editors, etc. -- but you had exactly the same costs without eBooks"
That's certainly true in the short term, but that would mean that you are producing an eBook as an afterthought to the production of the physical copy. For us, the eBook is an essential and integral part of the publishing model. It would be doing the format a disservice to say "you've produced the pBook, now do the electronic version". In future, as the gap between eBook and pBook numbers decreases, this will become even more evident. The eBook shares the fixed costs, it doesn't bypass them.

and also from Xenophon: "Sales through your own site let you cut out the retailer"
Absolutely, but let's be realistic, here - the percentage of eBooks we sell from our own site (at least initially) will be far lower than those we sell through retail channels.

I'm not going to comment on the rights issue, but in terms of bundling books - that's something we're certainly hoping to address once we have a bit more of a backlist.

Selling eARCs? That's an interesting idea. We currently make eARCs available to all our reviewers before the physical ARC is available, but I can confidently state we have not considered selling this version. First impressions are, I'm not 100% comfortable with this idea - the ARC, after all, is supposed to be a review tool, and selling it means you are making available via retail an imperfect item. Interesting, though, and I'll certainly bring the idea up.

and from mjh215: "Treat your customers with respect".
Well, for us this is a given, and the main reason we started asking these questions in the first place.

On a personal note, I'm glad I've found this site. I've been reading eBooks for a little over 7 years, now (and I publish a weekly electronic fiction magazine at HubFiction.com </plug>) - I'll certainly be coming back.