When I bought my Kindle a little over a year ago, I calculated that I would save money on my book purchases after a year. It hasn’t worked out that way:
1. I tend to buy more books because of the convenience.
2. The price of many mainstream eBooks have gone up, in some cases the eBook is more expensive than the hard-copy.
3. Many of the titles I want aren’t available as a eBook.
4. Some books just don’t work as a ebook, photography and woodworking books are a example.

I think the publishers and authors do need to reevaluate their business models.

I’m glad I bought my Kindle, it is a very handy … small, lightweight, easy to read and the battery lasts forever. I’ll still be buying real books for anything I want to hold on to or refer to later. I’m still concerned that I don’t really own the eBooks on my Kindle or PC.

Two major business issues stand in the way of lower book prices: the author’s advance and a lack of sales data for books at lower prices. Konrath doesn’t have to worry about either, of course, by paying himself and developing the data as he goer.

Regarding advances: let’s say you want to acquire a project that you think will net 15,000 copies in hardcover, given how comparable books by authors with comparable platforms have sold. If you price that book at $25, it will throw off an advance of $46,875 at standard trade retail royalty rates (10% on the first 5000 copies, 12.5% on the next 5000, and 15% thereafter). Pricing the book at $26 throws of $48,750. Pricing the book at $27 throws off $50,625. Given that offers are usually made in round numbers, that the $25 price would get you an offer of $45,000 while pricing it at $27 would get you $50,000, which might be what the author wants or needs. So you pay the $50,000. Now you’re locked into that $27 price tag.

Of course, most trade publishers don’t look at the numbers this closely and might just offer $75,000 or $100,000, imagining that somewhere along the way the extra $25-50,000 worth of underpants they bought will somehow turn into profit. Thus, paperbacks by John Grisham, he of the seven- or eight-figure advance, cost $10.

Let me add one thing to the side of the topic: another reason for higher prices now is the discounts given by the chains. If you charged $22 for a book five years ago and it sold fine, but now the chains are offering a 20% discount, why not price it at $27? The final price is still roughly $22. It’s not that prices have gone up; it’s that now there’s discounting.

Anyway, here’s the key to the second issue, which is a much bigger one, I think: “how comparable books by authors with comparable platforms have sold.” When a rep goes into a bookstore and pitches a book, the buyer immediately looks up the sales of the author’s previous books and any comp books on the computer. Then he orders accordingly. For instance, if the author’s last book sold 2000 copies at B&N, B&N likely won’t be projecting anymore than that unless major media coverage is likely. These comp books were assuredly sold at a similar price to the one being pitched.

So the problem with lowering prices in order to stimulate more sales is that there is no database of sales of books at those lower prices to use as a model. There are examples here and there, like Konrath, but nothing wide-ranging. So publishers can’t build a p&l around a book with a lower price and consequent higher sales.

In addition, hardcovers that have been published at lower prices than comp titles are actually seen as being somewhat devalued by it, which then hurts sales. I would also think that, with so many books given as gifts, a lower price hurts the gift value too (books are the rare product that come pre-tagged for all to see). So there is a cultural bias against lower prices too.

Some might say ebooks change the rules. That may be true. What ebooks don’t change, though, is the publishing infrastructure that has prices fixed in catalogs, then fed out the etailers, and those etailers better have the same price or there will be hell to pay. It’s easy to play with the price of one book, when it’s your book and you’re selling it. It’s tougher when you don’t sell your own product directly for the most part, and a price drop could be read by an agent and author (and some corporate master) as a way to hurt their bottom lines.