Amazon Explains Why It Thinks $9.99 is the Right Price for Ebooks

In News by Dennis Abrams

On the Kindle forum, Amazon said it wants to price most eBooks at $9.99, claiming lower prices will sell more books and return more money to authors. Many disagree.

By Dennis Abrams

The Huffington Post reports that Amazon has finally opened up about its continuing fight with Hachette.

AmazonIn a post on the Kindle forum, Amazon said that its goal is to drop the price of most of the ebooks it sells to $9.99. Then, 30% percent of the sale would go to Amazon, 35% to the author, and the remaining 35% to the publisher.

“A key objective is lower e-book prices,” said the message, signed by the Amazon Books Team, adding that ebooks priced at $14.99 or $19.99 are “unjustifiably high,” since digital books don’t have the same printing, storage, shipping, or other costs that digital books do. “E-books can be and should be less expensive,” Amazon said.

Amazon claims that for every single copy of a book priced at $14.99, customers would buy 1.74 copies of an ebook priced at $9.99. So when a lot of ebooks are sold, there’s more there for everyone.

“[I]f customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same eBook at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. So at $9.99, the total pie is bigger,” Amazon said.

The company added that lower priced ebooks were necessary to compete against “mobile games, television, movies, Facebook, blogs, free news sites, and more.”

In addition, Amazon had comments specifically aimed at Hachette:

“…how does Amazon propose to share that revenue pie? We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. Is 30% reasonable? Yes. In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise e-book prices. We had no problem with the 30% – we did have a big problem with the price increases.”

Is it Amazon’s position that all ebooks should be $9.99 or less? No, we accept that there will be legitimate reasons for a small number of specialized titles to be above $9.99.

“One more note on our proposal for how the total revenue should be shared. While we believe 35% should go to the author and 35% to Hachette, the way this would actually work is that we would send 70% of the total revenue to Hachette, and they would decide how much to share with the author. We believe Hachette is sharing too small a portion with the author today, but ultimately that is not our call.”

However, not everyone is buying Amazon’s rationale.

Novelist Roxana Robinson, president of the Author’s Guild, says she questions Amazon’s claim that lower prices mean higher sales.

“They don’t include any sources for the study that they cite, so it’s unclear how they reached the numbers they put forth,” Robinson told the Huffington Post’s Timothy Stenovec. “The idea of simply lowering eBook prices over and over isn’t necessarily good for all authors.”

“Amazon keeps promoting the idea that an eBooks should cost much, much less than a hardcover because the cost of producing it is so much lower. But what they aren’t acknowledging is that an eBook represents an enormous amount of time from the authors,” Robinson added. “It’s an investment of time and intellectual energy from the author, and time and money from the publisher.”

About the Author

Dennis Abrams

Dennis Abrams is a contributing editor for Publishing Perspectives, responsible for news, children’s publishing and media. He’s also a restaurant critic, literary blogger, and the author of “The Play’s The Thing,” a complete YA guide to the plays of William Shakespeare published by Pentian, as well as more than 30 YA biographies and histories for Chelsea House publishers.