The Psychology of Fair Pricing: The eBook Perception


An Editorial by Sheila English

A coffee at Starbucks costs me nearly $5.00.  Valet parking can cost up to $20.  Movies, which provide two hours of entertainment costs me about $12, more if I want to see it in 3D.  Internet at fine hotels costs around $10 for one day.  My Coach bag cost me $200 on sale and I was euphoric to get it at that price! The fact is, people will pay for convenience, entertainment, art, education, enlightenment, fun, the ability to have something instantly and many will even pay a little more for a product that is friendly to the environment. Guess what? Ebooks are all of that and they can be read again and again without costing you a penny more.  People love to be entertained. They love to be enlightened. They love convenience. They love instant gratification.  So why is it that publishers are fighting a pricing battle for ebooks?

Amazon wants to see ebooks at $9.99 or less, publishers are fined for allegedly trying to price fix ebooks and readers demand to know why they should have to pay the same for an ebook as they do a paper book.  With authors, publishers, booksellers and consumers all trying to be heard on this topic of ebook prices the question persists; how much should ebooks cost?

At the end of the day good old “supply and demand”  and win out as it always does, but at what cost to readers and to the publishing industry?  Reading the flurry of articles written about the DOJ’s charges of price-fixing, as a reader, I initially felt like I was being taken advantage of. I must be, because the DOJ is forcing publishers to pay back some of the money readers paid for books. So obviously readers were over-charged, right? Not necessarily. And I realize that the charges against the publishers are about the conspiracy and not a reflection of what the government thinks ebooks should cost.

Regardless of what it costs to create a book, if no one is willing to pay the price publishers are asking then one of two things will happen; either publishers will offer less books, taking less chances on new authors, or publishers will have to cut costs in other ways to lower pricing. Or, perhaps, publishing houses are no longer needed, as many have speculated of late? Of course, a lot of people are speculating the downfall of big publishing that have agendas and stand to benefit from self-publishing or are struggling to be part of an industry that can’t afford them.  There’s a Catch-22 going on where publishers cut costs in order to meet the demands of readers for less expensive books, then the publishers can’t take chances on publishing books that are not a sure bet to make money, leaving many out of work authors to move to self-publishing, setting lower prices that publishers are then expected match, which causes them to make less money.  What a vicious cycle!

What does this have to do with ebook pricing? A lot really, because it causes us to focus on the side effect of the problem instead of the problem itself.  The problem is that no one is addressing the psychology of fair pricing of ebooks from the point of view of the end consumer; the reader.

Self-published authors are setting their own prices, often starting at $1.99.  There are a lot of valid reasons to do this.  The author may be looking to gain new readers by selling their back list, their previously published books in which the rights to the book have reverted back to the author, which is a good idea, or the author may just be looking to make money by selling high quantities of books.  Some authors are new and keep the prices low knowing many readers are more likely to purchase a book from an author they are unfamiliar with if the price is low enough.  A quick glance at Smashwords, a site where people can self-publish, shows their prices are sorted starting from free and going up to $9.99. There’s not an option that I found that was over $9.99. On the Smashwords blog I discovered an interesting blog that talks about pricing ebooks and how that affects sales. The blog, titled Can Ebook Data Reveal New Viral Catalysts to Spur Reader Word-of-Mouth? Looks at questions such as “What impact does price have on unit sales?” and “What price range ears the author the most money?” Mark Coker, the owner of Smashwords openly challenges what he calls “Big Publishing”.  I have attended one of Mr. Coker’s talks and he is very charming and entertaining and he is a crowd pleaser.  But everything he says is, of course, within the context of his agenda and data.  His agenda is to promote his business, which is a successful self-publishing business and he should get kudos for all that he has accomplished.  But, his talks take jabs at big publishers and authors, who have been serially rejected by publishers over the last few years, and are happy to hear the message of antiquated publishers in New York frightened of the future and how those publishers will one day regret rejecting the author.  Like I said, he’s a crowd pleaser. He is also an influencer.  Recall that his site did not display a button for books that cost more than $9.99.

Readers see the $9.99-or-less message in many places on the internet.  Amazon favors the $9.99 price even when it means they will take a loss selling at that price. They do that as a business strategy to put other booksellers at a disadvantage and in some cases (we miss you Borders!) put them out of business. And though most everyone in the industry knows of this practice and what its intent is, the government chose to see publishers as price-fixing when Apple and several New York publishers got together to discuss how to combat the effects of Amazon’s pricing tactics and try to figure out how to take back their right to publish books at the prices they feel is fair.  Unfortunately, they chose to have these discussions in fine restaurants, with only certain people invited and that is a no-no.  So, Amazon can put themselves on a path to being a monopoly and when the government does nothing about it, leaving publishers to fend for themselves, they are punished.  Yes, I know there’ s more to this story, but to me, in a nutshell, this is how I see it. And don’t think I’m an Amazon-hater. I buy from Amazon, I give Amazon cards out at Christmas and I even sell my own book on Amazon.  I don’t want to see any corporation be a monopoly. I’m not prejudice against Amazon. Of course I do have some apprehension that, by writing this article, I may find the buy button turned off when I check on the progress of my book on Amazon next week. What does that say to you?

Back to pricing.

What is a fair price for an ebook? How is that determined? It is determined by a lot of factors.  How much does it cost to create the ebook?  How much is a reader willing to pay?  When those two things are in sync everyone can be happy.  But, out of sync and we get the problems we are seeing today.

The problem is that publishers have not done one aspect of their job correctly.  Yes, publishers do a lot of great things and they do it very well, but the one thing they should have excelled at, the failed at, and they are now paying the price for it. They have done nothing to create a psychology of fair pricing within the reader that matches the price they want to get for a book.

Publishers should, right now, be working on campaigns that promote books in ways that people are made to understand that a price of $15 – $25 for an ebook is a fair price. They should promote books so that people don’t second guess what a fair price is.

Do publishers not recognize the issues readers have with ebook pricing? Are they so focused on Amazon that they don’t see the needs of their customers?

I asked some readers why they think an ebook should be cheaper than a paper book and here are some good questions they posed-

  1. It doesn’t cost as much to make an ebook.
  2. You can re-sell a paper book or share it with friends so it has more value.
  3. There are so many books I can get for free or really cheap, so I don’t know think I should have to pay a lot for a book.
  4. I just don’t see the value for paying more than a couple of dollars for a book.


I’m certain there are more issues readers have, but those were the main things I heard again and again.  When I spoke to the readers and addressed each of their issues I was able to change their minds and make them understand, and more importantly, accept the reasoning because it makes sense.

Some points to make about ebook prices compared to paper book prices-

People tend to think that having an actual, physical book in their hands, one they can share, re-sell, put on their coffee table and mark on (yes people do mark in their books), are all reasons why they are paying a higher price for a book. Those are all good reasons, too.  We will infer, for the sake of this lengthy article, that people include “good story” and “known author” as part of their acceptance to paying more.

The issue seems to be that people feel an ebook has less value because you can’t do those things with it. That is simply not the case. True, it’s not paper and harder to display on your coffee table and you can’t re-sell it or even share it as easily as you can a physical book but you’re paying for something of equal value in the trade-off. You don’t have to cart around heavy books everywhere you go. You can have instant gratification because you can buy the book and start reading it immediately from the comfort of your own home.  It is friendly to the environment.  It is convenient, given that many books are available across platforms including your computer, mobile device and/or tablet as well as in some kind of cloud system. So if you forget your ereader at home, but have your mobile phone, you can still read your book.

There are things a reader can do with a physical, paper book that cannot be done with an ebook. There are things a reader can do with an ebook that cannot be done with a paper book. The reader is paying for preference. They are paying for what they want, how they want it.  Where does that de-value ebooks in the mind of readers? That is the big question, isn’t it?

Because it is easy to access a book online readers sometimes think ease = less valuable. But that’s not true at all.  Most Americans will pay extra for life to be made easier for them. That’s why there’s valet parking and beauty salons.  Yes, we can do those things ourselves, but we pay a lot of money each year to have other people do those things for us. Why? Because it’s easier on us.

Value of Storytelling

There was a time when actors were on par with harlots.  Being an actor would shame your family.  But now, if you’re an actor everyone wants to know you.  You can make a lot of money if you’re good at it.

Many famous painters went hungry because they weren’t getting commissions and their painting didn’t sell. They die and then they get famous and their paintings are worth a fortune.

We are talking about perspective here.

I have seen a painting sell for tens of thousands of dollars and I would not put that ugly thing in my bathroom let alone pay that kind of money for it. But, someone pays for it. Why? Because people value art.

Reading is important.  You need to read in order to get a job, go to school, sign a contract, learn.  Reading is important to everyone. Yes it is.

Storytelling expands our minds and imagination.  We learn, we are entertained and we can cast away our cares for a while as we live out the lives and adventures of characters we love or find interesting.

Storytellers are artists and educators.  They make us feel. They make us learn. They challenge us with words.

Yet, people seem certain that they are overpaying for a book if it costs more than $9.99.  The thing is, you are only overpaying if that is your perspective.

Two large coffees at Starbucks will be gone in an hour and people are happy to pay $10 for it.  Why aren’t we asking people what they would be willing to give up having an amazing adventure, being educated, and expanding their understanding, or simply to escape?  How can we show them all the little things they pay for each day that are gone in an instant that, if they gave those up for a day, they could have a story that could change their lives, give them hours of entertainment and can be read over and over?

Perspective is hard to change, especially once someone takes the lead and begins to create expectations.  It is up to the publishing industry as a whole to band together and change the perspective of the reader when it comes to ebook pricing.