Amazon Charging to Publish, Low Ebook Prices and Other Crises

Posted: February 22, 2012 in Uncategorized

So lately I’ve seen many blogs and articles about whether or not Amazon is going to charge authors to publish their books, or if they should charge.  So far there has been nothing official from Amazon regarding this, not even a hint at it that I’m aware of.  Yet I’ve seen a lot of discussion about this in the Twittersphere.

Many authors would even support this.  Some have suggested a $500.00 publishing fee to put the book up on Amazon.  They argue this would instill some sort of quality among independent books.  At least it would cut down the field to the most dedicated and serious authors.  As things are right now, anyone can publish anything into Kindle format and sell it for .99, no matter how horrible it is.  So readers are left to sort through a schlock pile of drivel to find anything of any quality.  Somehow it is believed we will see less of this if Amazon charges some exorbitant fee in order to publish.

I find that interesting however.  Around ten years ago I wrote and indie published my first book.  At the time there wasn’t an ebook option.  Print on Demand was just coming into its own at that time.  You could publish your book in print for anywhere from $99.00 to $2500, depending on who you used, and what services you bought from them besides just the formatting and publishing.  During that time, prices to publish would often creep up, or you’d sign up for the 99.00 package only to be hit with hidden fees later down the road.  Among the author sites and message boards, authors complained that this was fleecing the authors and that everyone had a right to have their book in print.

I could understand the justification for some of the big fees back then for print books.  They did the setup, cover design, sometimes editing, marketing, etc.  So they had to charge for some of this.  Not sure how Amazon would even justify a 500.00 fee as they aren’t doing anything other than storing your book on their site.  If anything, I could see them charging an annual fee to house your book there, but nothing like 500.00.  Maybe 50.00 a year “storage fee” if that.

As it is now, Amazon makes 30-65% off each ebook sold depending on the price point.  They make this money for doing little more than hosting the book on their site.  Using this model, they make all the money off of sheer volume.  They sell millions of ebooks, indie and other wise each day.  They are doing pretty well with their cut of these books.  From what I read in the past, a lot of this has to do with Bezos and some conflicts he had with publishers when the Kindle first became a big deal.  So this is his way of pushing them out of the picture, by making them irrelevant.  So far they have done a pretty good job of that.  I don’t see why they would want to mess that up.

That brings me to my second point, the .99 cent price point. I suppose this could be two blogs, but I’m feeling energetic today.  I have a LOT of .99 cent books on my kindle I haven’t even looked at yet.  I will try to keep this part short and simple.  When it comes to price point, it comes down to two things, perceived quality and value.

I used to work in sales, for many years. Even had my own retail store.  Now, my store went out of business, so maybe I’m not the best expert here.  I had good prices on my items, problem was for me, I had Best Buy and Wal-Mart right down the road selling the exact same items for a fourth of what I could.  So in that case a low price point wins. But here is one story when I had my store.

My particular store was a cell phone franchise for a major carrier.  Often times, people would want free or cheap phones.  After Christmas of 2009, I knew there would be a big drop in business.  One of my wholesalers gave me a huge discount on some little flip phones he was trying to move.  So I decided to have an after Christmas sale and sell these for .99 with a 2-year contract.

So people would come in and say “I just need a basic phone.  Got any phones that are like that, and real cheap?”  I’d show them these phones, very good quality little phones too.  They’d look at them and say “99 cents?  What’s wrong with it?”  Every single person had to ask me that.

Then here is the second thing.  I did sell all the phones, they went pretty quick.  However a couple months later I got my quarterly deactivation report.  These were people who either cancelled their contracts or got their phones shut off for not paying their bills.  Dealers would get these every few months to see their cancellation percentage, not to mention the carrier would charge us money for people cancelling too soon.

So, I get the report for that quarter to see I had almost five times the amount of cancellations as I had in previous quarters.  The majority of these were from the people I sold the .99 cent phones to.  What was the lesson here?  Value.  These folks had no investment in their product.  It was a .99 piece of nothing. Once they decided the bill got to be too much of a hassle or the phone wasn’t as cool as they would have liked, they just didn’t pay the bill, or just cancelled.

What does this have to do with ebooks?  Well, everything.  I know a lot of folks, when they see a .99 ebook, they figure it must be no good, it must be on clearance, or there must be something wrong with it. If they do buy it, it’s not likely high on their priority list, because there is no value.  They have no investment in it, so they don’t really care if they get around to reading it or not.

One thing they often taught us when I was learning sales, is a good sales person can show the value in their product without having to slash prices.  Yes, you want to be competitive, but undercutting each other to the point where you have to sell a thousand books just to come out a little ahead, is not good salesmanship.

Another thing we learned was price high, then work low. When my book is out, I plan to price it at 4.99, but then have different sales and specials for 2.99 or even .99, but only for a day here or day there.  I’ve found with most products, that will grab more attention than a constant bargain basement price.

Unlike any other products I’ve sold, our books are our own creation, something we should take pride in and value.  If no one else values it, WE definitely should.  There is nothing wrong with presenting that value to others.  Sure, we went people to download our book, but then we want them to READ it.  Not only do we want them to read it, but we want them to tell their friends to read it, and they tell their friends and so on.  It can be done.  We might not sell a thousand copies a month, but if we’re making 2-3.00 per sale, we’ll make more with less sales.  It’s that balance of profit margin vs. volume.

So these are my thoughts on these issues today.  Feel free to discuss below.  Thank you all for reading.

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