Price, Value, eBooks, and Kindle Unlimited
There have been many discussions on social media of late regarding the price of books. Some authors are very frustrated by Kindle Unlimited and what they perceive as the devaluation of digital books.
I find these arguments a little amusing as that was the exact argument that traditional publishers made when they pushed back against Amazon’s pricing ceiling.
I remember sitting in a seminar where an individual from Bowker discussed the concept of anchoring. Anchoring stems from the concepts of primacy and recency.
People tend to remember the first things they have heard and the most recent things they have heard. When applied to pricing, people tend to fix on the first price they see for a product.
In the early stages of ebook adoption, the market grew at an astounding pace. Every month, new consumers adopted digital books and every month, every producer in the marketplace had an opportunity to set a new “anchor.”
Amazon wanted that anchor to be at $9.99. Traditional publishers wanted it to be higher. Hence the price fixing.
We know the outcome. Amazon won and everyone who buys a digital book expects the price to be a) cheaper than the print version and b) inexpensive in general.
Now there are authors who are pushing back against the continual decline of ebook prices but that ship has sailed. It sailed a long time ago with the 99c books and the non stop promotions. The new reality is that the digital book consumer expects and demands low prices and yes, maybe even “free” books.
I use “free” in scare quotes because Kindle Unlimited is not a free program. It costs the reader 9.99 to participate but because there is no transactional fee every time the book is downloaded it feels free.
In the marketplace, consumers what to get the best product at the lowest price. Producers want to get the most money for their products.
Consumers are willing to exchange a higher priced version for a lower priced version if they can achieve relatively the same result. Look at makeup and all the drugstore “dups”. Some brands like ELF produce cheap knock offs of more expensive brands like Sephora, Nars, and the like.
Telling a reader she should pay more for a book simply because she buys other products at a higher price doesn’t make economic sense to her because she sees a lower priced version of the higher priced product that delivers essentially the same result. In the case of books, it’s an emotional feeling.
Remember John Locke? He was one of the first indies to make seven figures. How did he do it? By pricing his books at 99c. He said that at that price, the competing product from traditional publishers had to be 9x better than his product.
Now, of course, there are some people who are brand loyal and will always buy a particular product regardless of the price. But for every 1 loyal brand follower there are 100 willing to try the other product that is sold at 1/10th of the cost.
This is even more true when it comes to the voracious reader. The voracious reader is likely to be a digital reader. But she is also the most price conscious reader.
Any long time publishing person will tell you that romance readers are the most price sensitive of any readership buying books. The higher the price, the more likely the romance reader will find a lower priced alternative.
She has to. In order to feed her reading habit, she needs low cost or “free” options. This was true even before digital books. The avid romance reader would read a variety of new, used, and library books. At my local UBS, I can buy Harlequin Presents for 10c each. Newer mass markets sell for $2.99 to $3.99.
To a great degree, the reader hasn’t changed but the market has evolved to meet her needs. Instead of a library and a used market, the romance reader fills her kindle with Kindle Unlimited books. And she saves her money for the one or two authors a month that have created that loyal brand relationship with.
For many a romance reader, the anchoring price for romance books was already low and digital prices are just now coming into equilibrium.