Pricing e-books: race to the bottom?

Writers clutch their chests at the idea of pricing their self-published e-books at 99¢.  Literature, they hiss, is worth more than gum.

But is it? Let’s break it down: A newly released hardback book from a legacy publisher might be priced at $24.95.  Most of that goes to the publisher and pays for the paper used to print your book, the teamsters who schlepped it from the plant to the bookstore, your editor, your editor’s boss, your editor’s boss’s boss, and so on.  You, the author, get about 10% of that for the first run of 5,000 copies, or $2.50 per book sold.  Subtract your agent’s 15% cut and you end up with $2.13 per copy.  Of course, that’s still better on a per copy basis than the 35¢ you’d earn per copy selling the title for 99¢ on Amazon.

However, that equation doesn’t address the all-important issue of volume.  At 99¢, far more readers are likely to pick your book than they would if it were priced at $24.95.  This isn’t basic economics, it’s common sense.  Consider a typical print run of 5,000 copies for a hardback book.  To sell out the run at $24.95 per copy, readers must collectively shell out a total of $124,750.  To sell 5,000 copies at 99¢, however, readers need to shell out a mere $4,950.

Legacy publishers are essentially making a bet that your book — or at least the first 5,000 copies of it — are worth $124,750 to the reading public.  Let’s assume they’re right.  If they are, your take will be $10, 650.  At the 99¢ price point, however, your take by self-publishing the title as an e-book would be $43,662.50.

The most loathsome thing about writers is our affectation that what we’re creating is “literature.” We like to swan around like bad actors in a Victorian-era touring company humping Shakespeare in Kansas and pretending we’re on the West End.  What we’re really doing is paying the bills.

Even though writers are notoriously bad at math, it should be evident to all of us that $43,662.50 pays more bills than $10,650.

To be clear, I don’t yet have a horse in this race or a dog in this hunt or whatever folksy colloquialism means I’m a genuinely disinterested party.  I have an agent who is currently looking for a legacy publisher and I have no intention of changing that arrangement.  (I wrote the book with a client who wants a legacy publisher, so it’s not my call anyway.)  That said, as a former Madison Avenue copywriter, I know that writing is a business that, in the end, is all about the money.  Just ask Amanda Hocking, or J.A. Konrath, or Barry Eisler — all writers who have, are, and will make their fortunes self-publishing.  From a purely economic perspective, the numbers are clear: literature isn’t worth more than gum, but it is worth a whole lot of gum.

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