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Apple Raises E-book Prices For Everyone
Nom du Keyboard writes "I was informed by my publisher this week that they would have to raise my e-book prices because they planned to sell them through the Apple iBooks store. How could this happen? A lot of my individual stories sell in the $1 to $3 range, which is well within the impulse purchase amount for many people. In this price range a 50-cent price difference may well be the difference between a purchase and a pass. Meanwhile, Apple is touting its new 'agency model,' whereby the publishers set the prices. However, it seems that Apple requires books sold in its iBook store have prices ending in .99 — nothing else." (More below.)
"Furthermore, Apple requires that if you sell books through them that you absolutely cannot sell them for less through anyone else. To my understanding Amazon also requires this, so Apple and Amazon prices should be identical in the future, but Amazon doesn't force prices to end in .99. What this means is that an e-book that the author was quite happy to sell for $2.29 or $2.49 is now going to cost $2.99 from everybody. While that sounds like only a few extra cents, it adds up over time and can lead to resentment against authors for charging higher prices, even though they have little real control over pricing. I, for one, do not understand why Apple computers only understand numbers ending in .99, or just how Apple is making it better for the consumer this way."
Because you obviously couldn't charge $1.99 for that book both places?
"He's lost in a 'floyd hole"
Almost all my ebooks come from Baen. They may cost a little more, but they are 100% free of Apple-style dickery, including DRM.
"Prefiero morir de pie que vivir siempre arrodillado!"
The problem is that Apple has and Amazon will shortly have a "you can't sell your book for cheaper at other ebook stores" clauses in their agreements. (The Amazon one is part of their newer pricing model, which matches Apple's 70% cut but adds restrictions on pricing, which should go into effect this summer.)
A hypothetical:
You've been selling your ebook on Amazon, and you've done some pricing experiments. You've found that you sell half again as many books at $2.49 than you do at $2.99, and the volume more than makes up the difference, so you set your price accordingly. In order to expand to the iBookStore, you must price your book at $2.99 there, and take the hit in sales. But wait! Apple will refuse to sell your book if you're selling for cheaper on Amazon, so you have to raise your price to $2.99 at the Amazon store as well.
So, now all your customers are paying more, even the ones who are not buying from Apple, and you have fewer of them. You are not making as much money, and neither are any of the distributing companies that make their money by taking a cut off yours. Everyone loses, all for the sake of a nice round (?!) number.
Did you RMFP?
The publisher made a decision the poster disagrees with. If it's a big enough deal then the poster should find a new publisher that refuses to sell through Apple until Apple changes their policy.
Except you might make more money if you drop the price to $1.99 and now sell in 2 marketplaces instead of one. Who says that the price adjustments have to be positive?
If Amazon really wants to fuck with Apple they'll force their pricing to end in .98 which would mean that books on iTunes would be $1.01 more (until Apple adjusted their pricing to .97)
Whatever. I'm heading down to the Apple store to get a new 3g iPad and hit In-n-Out for a Double Double. Cheers.
I still cannot find the droids I am looking for...
Disclosure: I work (in-house IT) for a publisher. We publish in physical and ebook formats.
The vast majority of texts that authors give us are incredibly poor. Our editors have an extremely hard job of cleaning these up and rewriting them so that they are generally understandable and professional and are correctly targeted for our audience. To our established authors, we also offer them an advance on their work.
Even if it's just ebooks, getting it into all the available distribution channels and formats for the various stores requires a high level of technical competence, this is likely more than a lone writer wants to learn.
Of course they could pay someone independently to do this for them, just as they could pay someone independently to edit the book. It is a trade off and while some authors will prefer doing it alone, some(many) prefer the relative security of going through an established publisher who has existing links to distributors, printers, editors and the technical know-how to get it into the required formats to ensure the maximum market for the book.
Apparently there's some research that indicates that people are actually slightly more likely to buy a $x.99 priced product over its $x+1 identical counterpart.
Even if it's just 0.01%, when you're looking at inventories as massive as Wal-Mart or Amazon, that can be a LOT of sales.
which means the developer would get $700,000 without the requirements of setting up distribution and to a large extent marketing. Clearly you've never run a business and had to pay for sales, marketing, advertising and distribution expenses.
30% for built in exposure to 80 million potential customer and application distribution is actually pretty cheap. Plus it's a flat pay-as-you-go situation. Generally you have to pay for marketing sales and distribution channels up from and hope you make enough to cover your costs.
Personally I don't like Apple's schizophrenic approval process, but the model is brilliant.
I still cannot find the droids I am looking for...
OK. You write an app and put it on a webserver set up to take credit cards, pay-pal,etc, and charge $1.99 for it (as in you have to charge their card before they download it). I'll write a similar app and put it in the App store for $1.99. I guarantee you I'll make way more money than you even with the 30%.
I still cannot find the droids I am looking for...
In the parent post it says the author did some trials and found out $2.49 was the price where he made the most profit. At a lower price, enough new customers weren't created to offset that lower price. A higher price caused customers to chose not to buy. Profit was optimized. So selling at $1.99 means forgoing revenue, as would selling at $2.99. Now if parent didn't say they had experimented with pricing, either pricing higher or lower could end up creating more revenue.
http://en.wikipedia.org/wiki/Price_elasticity_of_demand
Why not just be honest and stop pretending that the money that was "taken" in tax was ever yours to begin with? Without the tax the system wouldn't work and you wouldn't have been able to earn the money. Such is the way of the world and it might as well be accepted.
I'd happily pay slightly higher prices to have the tax included in the quoted price, too. If they also (as in the UK) display the charged tax on the receipt so much the better. The same can be true of service, if they like. Quote all service charges in the prices of the food and stop using "tips" as an artificial way to have higher food prices. If necessary, say on the receipt that a proportion of the food charge was specifically for carrying it to you as opposed to cooking it, which for whatever reason is already included.
The 0.99 gimmick should absolutely die, though, irrespective of whether tax is going to be added on or not.
Seriously, will this .99 and .95 thing ever die? Does anybody really look at a price-tag that says $4.99 and not just think in their head "$5"?
Quite the opposite: a lot of people think $4. That's the whole point.
http://en.wikipedia.org/wiki/Psychological_pricing
I've caught friends doing this on a few occasions, and when I call them on it they do a sheepish "oh, yeah". :)
I see the "Let's place an ad in the New York Times and we'll be rich because SO MANY PEOPLE READ IT" fallacy made it to the net intact.
Your "exposure" to 80 million customers is bogus. There are tens of thousands of apps - how many people are going to see YOUR app?
And the more apps in the closed store, the less that being in that closed store is worth.
Think of it - if everybody had 10,000 friends on facebook, it would become even more useless than it already is. You'd have to filter out 99% of it somehow.
Network effects don't scale when the amount of time a person has doesn't scale.
If it's such a great model, and the best way to get your apps sold, then why is Apple afraid to let people install stuff from outside the App Store? They should welcome inefficient competition as a way of demonstrating their superior approach - except that, like any pyramid scheme, it's only superior for those at the top.
This wasn't even some crazy coup by Steve Jobs, it's in fact actually the standard publisher price. I heard the business model on Fresh Air this week and it's quite interesting.
Amazon has been taking a loss on almost every new ebook in their store. They did this to gain marketshare (they have about 80% of the ebook market) and hoped to make up the difference on kindles. The publishers feared that Amazon would demand lower prices from them over time since they have a huge marketshare and because Amazon wants to drive sales of kindles. Amazon is also trying to cut the publishers out by providing publishing services for books. The old publishers hate Amazon right now.
Along comes Apple and the iPad, and Steve basically made an agreement with publishers that they like. Steve doesn't compete on price, he competes with flash and glamour, and does to very well. The publishers in fact like the fact that there's more competition now, and that Apple has agreed to, for one year, a price structure favorable to what they want. Now Amazon will lose marketshare and be in a less favorable negotiating position and publishers can increase their prices again.
Yes Apple did agree to this, but besides the .99 thing, Steve could care less about the true price of the book. The price increases came from the publishers directly.
It's the 4/29/10 podcast of Fresh Air on NPR, check it out.
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