10 Things You May Not Know About Ebook Prices

How much should you pay for an ebook? $9.99? $0.99? $0? And how much should you price your ebooks? I’m going to tell you what people have actually paid for their ebooks, based on some hard data from Luzme.

You can set the price of your book to be anything you want; what really matters is what someone will pay for it!

This article originally appeared on TechCrunch.

Last year, Luzme captured a large amount of ebook price data and reader pricing preferences. I am analysing this data and will share any interesting results.

I do not claim that this is representative of the whole ebook industry, but I hope that some real data might contribute something useful to the debate.

So here is my analysis of the actual prices that people have paid at Amazon in 2013, when they bought via Luzme.

USA

For the US data, I have normalised it against the “standard price” of $10.

Here is the way the various prices worked in terms of units sold.

luzme-2013-comparative-units-us

The most popular price points are at the low-end, with a local peak around the $10 mark, and then tailing off as the price increases.

This does not surprise me. But what I did not expect, is how much people will actually pay for an ebook (well over the $10 price! How much do you think the most expensive one went for? I will tell you later…)

Now look at the revenue over the same price points.

luzme-2013-comparative-revenue-us

See how the $9-10 range shows a spike of revenue? I suggest this validates the industry viewpoint that there is a good market for books priced around $10.

UK

The UK market is a completely different story. Here, I have normalised the data around the £6-7 range, which is roughly $10.

luzme-2013-comparative-units-gb

By far, the largest number of units sold is £1 or less (mostly 99p). And then it tails off as the price rises. There are hardly any sales over £5 (approx $7.50)

luzme-2013-comparative-revenue-gb

And the revenue tells the same story; £5 or less is where the sales are.

So why the great difference?

I can understand why there are markets for both low-price ebooks and $10 ones.

From talking to my users, they fall broadly into two categories.

  • First there is the avid readers who buy many books each week; their watchlist is so long that they are happy to buy whichever is cheap today.
  • Then there is the reader who has a particular book in mind; they do not buy very often but when they do, they are not price-sensitive, they just want the book straightaway.

But why the difference between the US and the UK?

In the UK, there is usually a fierce price war going on between Amazon and some new entrant; currently it is Sainsburys, previously it was Sony and Nook. But there is usually someone trying to buy market share by discounting the price. Previously we had the 20p offer from Sony, now 99p seems more common.

In the USA, the current tussle appears to be between the existing ebook stores and the new startups wanting to sell you a subscription model (aka “Netflix/Spotify for ebooks”)

In Summary

10 facts you may not know about 2013 ebook sale prices, as seen at Luzme:

In the USA:

  1. Ebooks sell at all prices from $1 up to $10.
  2. The most popular price range was $1-2.
  3. The most revenue was earned between in the $9-10 price range.
  4. Specialised ebooks sell at high prices, over $100.

In the UK:

  1. It’s completely different!
  2. Ebooks don’t sell well above £5.
  3. The most popular price range was <= £1.
  4. The most revenue was earned in the <= £1 price range.
  5. There is less evidence of specialised ebooks selling at high prices

And..

  1. Someone thought an ebook was worth $134.84! “Digital Signal Processing in Power System Protection and Control”, to be precise…
    1. P.S. This is the first in a series of pieces I plan to write about ebooks and their prices. Please let me know if there’s a ebook price question you’d like me to investigate.

30 Comments

  • Seamus Scanlon

    Reply Reply January 17, 2014

    Do you know is there alot of people in the UK/other countries who buy books through US amazon to take advantage of the exchange rate?

    I live in Ireland but use a US address (taken off a property website) cause the ebooks using my Irish amazon ebook can be more expensive then both the US and UK ebook stores. All you have to do is change your address to switch between stores.

  • Julian

    Reply Reply January 17, 2014

    I’m a UK ebook buyer with a Kindle.
    One thing you should note is that ebooks in the UK also have 20% VAT on them, so those price points have 20% less revenue for the seller!

    My 1 rule for buying ebooks from Amazon is that I won’t pay more than the physical book price. This means I am willing to pay more for an ebook I really want to read that has just come out and is only available in hardback, and generally substantially less for a book that has been out for a while and is available in hardback.

    I follow a few publishers (Tor, Gollancz, Orion…) on Twitter and they have done a pretty good job in marketing their authors to me. Offering the first book in a trilogy at 99p just before the 3rd book in a trilogy is published has got me to buy the 2nd book at ~£5 and then the newest book at full price ~£7.50. I’ve then gone on to buy physical copies of the books as presents for friends & family.

  • Jostein Trondal

    Reply Reply January 17, 2014

    Great info!

    Can you say anything about how to set the prices of an eBook compared to a physical book if I plan to sell both?

  • Si MacKenzie

    Reply Reply January 17, 2014

    Cheers for this, very interesting. I don’t suppose you have split data looking at fiction vs non-fiction, reference etc?

    • rachel

      Reply Reply January 17, 2014

      That’ll be my next post :)

  • Dave Bell

    Reply Reply January 17, 2014

    The UK’s VAT rate can be misleading. The rate charged depends on where the server is located. Amazon is based in Luxembourg, and the VAT rate is under 5% there, but they don’t tell you that.

    Somebody selling from the UK, or from outside Europe, is liable for 20% VAT.

    From the point of view of the author, the total sales at a price-point are irrelevant. It’s how their book sells. And there are different sorts of average. Amazon publicises the mean sales. You may have enough info to take the revenue at each price-point and show the mean per-book revenue.

    My guess is that the cheap books don’t bring much return. A very few people sell lots, but the numbers for the really cheap books are a huge number of texts, each selling a few copies per month.

    Incidentally, for Amazon at least, the way Amazon arranges things, UK authors who self-publish are forced to deal with the US tax system. It’s the same for printed books, but the scale of payments for e-books does make me wonder if it is worth the effort of dealing with the US tax system.

  • sanfordbegley

    Reply Reply January 17, 2014

    Actually there are e-book prices far higher than that. I myself may be shelling out $346.89 for an e-book soon. Manufacturers manuals have you over a barrel if they want.

  • Tim

    Reply Reply January 17, 2014

    What are physical book prices like in the US? Like Julian, I’m a UK buyer who simply won’t pay more for an ebook than a physical copy, which is why I almost never pay more than about £4 for an ebook; any more than that and it’s usually only a little bit more money for the paperback and I’d rather pay £6.99 for that than £5 for the ebook (and then won’t buy something only available as an ebook because that’s a lot more than I usually pay!). If paperbacks are usually a lot more than $10 in the US, could that be why the ebooks still sell up to that price?

  • Kent

    Reply Reply January 17, 2014

    It sounds like the $10 price range may be populated by traditional hardback buyers. At that price point, they are getting a signicicant discount over the first-release price of a hardback. Also, is there any data on the marketing effort behind the various price points? It may be that blockbuster books by major publishing houses are heavily promoted and skewing the $10 purchases higher.

  • Jennifer "InfertilityMom" Saake

    Reply Reply January 17, 2014

    Is this kind of revenue really do-able? http://www.mackcollier.com/how-one-blogger-is-making-20000-a-month-on-her-ebook/ I’m thinking of selling my next book via e-book only and wonder how valid (and worthwhile) such an option may be???

  • Matt

    Reply Reply January 17, 2014

    Aren’t the first two graphs just a result of most ebooks on Amazon being priced at $10? Or is there some correction for availability within each price point?

  • Morris Allen

    Reply Reply January 17, 2014

    Great post (which I found via BoingBoing)! My question:

    For those avid readers who wait for a price drop before buying…
    a) what % price drop is most effective? and/or
    b) what lower price is the most effective?

    In other words, what sale price or price drop entices people to buy?

    • rachel

      Reply Reply January 17, 2014

      There isn’t a single answer to that question, it will depend so much on the kind of book.

      But I’ve been tracking one book for a year now, Ian Rankin’s bestseller “Standing In Another Man’s Grave”. I plan to do a piece on looking at the price vs. sales rank on that data once I’ve analysed it.

  • Mike D

    Reply Reply January 17, 2014

    @ Dave Bell — UK authors who self-publish are forced to deal with the US tax system.

    This seems not to be a big deal if you are UK based or anywhere with a Double Tax treaty with the US. You register with the IRS, get a ITIN and are paid without deduction.

    Yes until 2015 Amazon only pay 3% VAT on ebooks and they cut their price when Luxembourg cut the ebook rate to the paper book rate a year ago so this seems valid.

  • Stephen

    Reply Reply January 18, 2014

    I would love to see if you had any data on the authors/publishers of books people are buying. It seems like the books bought at $9 are more likely popular books by mainstream authors by large publishers. I would assume that the price people are willing to buy a book at is different for self-published authors? I.e., someone is willing to take a $2 risk on an unknown selfpublished book that sounds interesting rather than $9 on the same book. Also, I was wondering if you had any info or ideas about the revenue of self-published authors.

    • rachel

      Reply Reply January 18, 2014

      Good idea! I’ll see if the data tells me anything interesting

    • Mike D

      Reply Reply January 20, 2014

      @ Stephen ” likely popular books by mainstream authors by large publishers.”

      You missed “new” since prices usually go down when the mmpb comes out.

      And self-published authors include successful authors reissuing their backlist when rights revert.

  • Rudy Martinka

    Reply Reply January 18, 2014

    Great article. Perhaps you will add to your charts the amount an author is paid for each price category to determine if that also has an effect on an ebook price.

    Regards and good will blogging

  • thebooksluts

    Reply Reply January 22, 2014

    It’s not surprising that the most revenue was at the $9-10 range, though . . . if you want to buy a book that is relatively well-known, even a classic that has been in print for fifty or sixty years, that’s the price that they’re charging. So you either buy the book at that price or do without an ebook. With mainstream books, we don’t have much of a comparison for price points; they stick pretty close to the $10 mark.

    Except, of course, when Paulo Coelho dropped his ebooks to $1. He saw sales go up like crazy.

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