Ebook Pricing

Pricing is a hot topic of conversation among e-book authors and readers right now. There’s a lot of myth and misinformation bouncing around on some reader forums, and I’d like to address three mistaken beliefs I’ve seen out there:

“Authors should tell their publishers to end agency pricing.”
This is never gonna happen. It can’t happen. In the traditional NY publishing world, publishers have all the power and writers have none. Zip, zero, zilch. Publishers have the exclusive right to set a book’s price, a right that’s spelled out in black-and-white in every publishing contract. When it comes to pricing and royalties, publishers decide the “industry standard” and writers are told to take it or leave it. More and more of us are leaving it. The only real power we have is the power to say no to crummy contracts.

“Authors keep quiet about agency pricing because they’re getting rich.”
Even I used to believe this one, but it’s 100% untrue. Authors get almost no benefit from agency pricing. Seriously. Here’s why: on print books, most major publishers pay an “industry standard” 8% to 10% royalty on the cover price. For ebooks — the ones they charge those over-inflated agency prices on — publishers pay an “industry standard” 25% net royalty. They consider this generous, compared to the scanty royalties they pay on print editions.

But wait, what was that little three-letter word in there? Oh yeah: net. “Net” means that the publisher deducts Amazon’s 30% cut from the author’s share of the profits. And then the author’s literary agent takes another 15% of what’s left. So even though you’re paying an over-inflated agency price, the author only earns a small amount on that e-book.

How small? Thriller author Joe Konrath has done the math and calculated that authors actually pocket just 14.9% on e-books released by their NY publishers. Yep, they’re getting just a few pennies more than they earn on their print editions. (And sales of their dead-tree books are dropping like…well, like dead trees.)

So every time you buy an agency-priced book, the bulk of the profit goes straight into the coffers of the NY publisher. Publishers created the agency pricing scheme because (1) they want to persuade readers to keep buying print books, to delay the demise of their dead-tree business and (2) the high profits they’re making on agency-priced e-books enable them to stay afloat as their dead-tree business dwindles. Long story short: agency pricing benefits publishers, not authors.

“Authors go indie because they’re greedy.”
Authors choose to go indie for a lot of reasons. We want the freedom to write the books we love. We want freedom from insane deadlines. We want the freedom to choose our own editors. We want the freedom to create covers we actually like. And yes, we want the freedom to earn a living.

Amazon pays authors 70% royalties on the cover price of books priced between $2.99 – $9.99. That means, for the first time in the history of publishing, it’s possible for mid-level authors — not just the superstars — to earn a decent living. Most of us won’t get rich, and we know it. The reason why millionaires like Amanda Hocking make news is because they’re rare. Unusual. Newsworthy. Most of us just hope to follow our muse and still manage to pay the rent and send our kids to soccer camp. The good news for readers: because we’re earning decent royalties, we indie authors can keep our prices low, usually under $5.

So here’s the most important point readers need to know: every time you buy an indie e-book, 70% of your purchase price goes directly to support the author — not to a big NY conglomerate. Every time you buy an indie e-book, you’re sending NY a message that you’re sick of agency pricing. And you’re saying it in the only language they can hear: money.

It’s easier than ever to find great indie e-books, thanks to the Backlist eBooks site. BeB lists genre novels (romance, mystery, suspense, SF/fantasy, etc.) from indie authors who used to write for NY publishers. The site includes authors who have appeared on the New York Times and USA Today bestseller lists and received major awards such as the Hugo, Nebula, Edgar and RITA. Many of their books are priced in the 99 cents – $3.99 range, and some are even free.

Go buy a few today, and tell New York what you really think of agency pricing.

  • Good post. There is a recognized backlash to traditionally published authors who are becoming Indy Publishers. The base point is that while writing is a craft, it is a business, too. A Business for income that provides for living needs. In tough financial times, authors are taking a severe look at their income needs now and how to handle their careers accordingly.

  • Awesome post! As both a writer and reader, it is nice to know that there are options. I like knowing that I can experiment with genres and lengths, control pricing and cover, and choose how much or how little marketing to put into a project. The book itself is what’s important, not chasing elusive trends. As a reader, I like knowing that I can buy two or three or more quality books for the price of a paperback.

    One more minor point: the starting point for the 70% royalty rate from Amazon is $2.99. The $0.99 – $2.98 price range, and anything above $9.99, gets 35% royalties. Still a far sight better than NY is willing to pay!

  • Oops! Thanks for the correction on the price point. Fixed it. :) And you’re absolutely right — 35% beats 14.9% any day.

  • Great post, Shelly! Thanks so much for getting the truth out there.

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