The power of impulse pricing

I had a really interesting conversation this morning on the Twitter machine with Lilith Saintcrow, an urban fantasy novelist I’ve liked for a few years now. Lili was linking to another post on Nathan Bransford’s site, this one explaining why, sometimes, an ebook just has to cost more than the paper version. As I’ve explained before, Nathan’s math is fatally flawed because he assumes that post-scarcity goods like ebooks still conform to supply and demand economic theory. They don’t.

I pointed out that with ebook supply being effectively infinite, it doesn’t make sense to price the books high enough to drive away anyone. That it’s better to price the books as low as you can, 99 cents to $2.99 on Amazon, depending on what royalty rate you’re looking for. Over time, you’ll pull in more total income at a lower price because of the Long Tail effect and making the purchase an “impulse buy.”

Lili disagreed, stating that the ebook market is bounded by the cost constraints on buying an ereader, that not everyone had a laptop, Kindle or Nook. While this is partly true, Amazon makes it possible to read their Kindle books on just about every platform available, from phones to ereaders to tablets to full computers. There are people in some parts of the world who have cell phones but not electricity (they charge at the village market, which does have power, or at least a generator). I would argue that the ratio of humans to ebook capable devices will approach 1:1 in my lifetime.

But don’t listen to me. I’m a Pollyanna futurist, after all. But it’s not just me saying this. Amazon started selling more ebooks than hardcovers last summer, and recently, they announced that they’re selling (not giving away public domain works, but selling) more ebooks than they do paperbacks. The world’s largest bookseller is selling more ebooks than paper books. Somebody has to be buying them.

Maybe it’s a technological filter thing. Obviously people who already buy their books online will be more inclined to read on one of the various Kindle-friendly platforms. But not everyone lives digitally. A lot of people still walk into brick and mortar bookstores and buy stacks of good old-fashioned wood pulp, right?

Do they? Mall bookstores like B. Dalton’s and Waldenbooks faded away a while back, and now Borders is going out of business, leaving Barnes and Noble as the only national chain bookstore in America. Independent bookstores like Powell’s in Oregon and the Tattered Cover here in Denver are seeing a resurgence of sorts, but then again, so are record stores now that Tower is gone. And for the same reasons.

Paper books, by the end of this decade, will be collector’s items, like vinyl records are now. There will be a market for them, and they will sell, but mostly to pretentious hipsters who like to show how analog they are. For the vast thundering herds of humanity, sitting on busses and beaches, shuffling through airports, ebooks on a convenient handheld device will be the order of the day.

Lili doesn’t see that, and I understand why. She’s blogged extensively about her life as a single mom supporting her family through her writing. She has literally bet everything on the publishing system as it exists today, or rather as it existed five to ten years ago. Feeding her children depends on that system remaining viable, so she can’t afford to doubt it. When I pointed out that it was better to sell 1,000 copies of an ebook at $1 than 100 copies at $5, she disagreed, stating that those thousand copies would cannibalize the market, resulting in lower overall revenue. To her eyes, the market is fixed and unchanging. There are only x number of people willing to buy her books, so she needs to make as much off of each of them as she can.

The ebook market is still growing, and that growth is accelerating, not declining. And with ebooks, the supply may not be truly, mathematically infinite, but if your market of potential readers is x, then the supply is always x+1. There are always more readers, unless you’re JK Rowling, whom I believe does actually have 6.5 billion sales. She would have to start beaming books into space. But for everyone else…

Ebooks, in fact, make discovering new writers easier and more tempting that ever. And this is really why impulse pricing is so important. I already buy more Kindle books than I can possibly read, even having my Kindle read them to me while I’m driving. When I see an interesting book in the “Recommended” or “Buyers also bought” lists on Amazon, if it’s under $3, I just buy it. Even if I don’t get around to reading it, it’s worth such a low amount of money to have it handy in case I want to. But if the book is more than that, I’ll click the Sample button instead. This sends the first few chapters to my Kindle as a “stake in the ground” in case I come back to the book later. And you know what? I almost never do. Unless the sample is hella compelling, why spend more money on Book A when I already have all of Book B on my Kindle? Both are the same genre, both look interesting. Convenience wins, because humans are lazy when they can get away with it. And impulse pricing is what buys you that convenience.

In fact, that’s how I found Lili in the first place. I hadn’t read much Urban Fantasy, but eReader.com had the first book in her Hunter series on sale and I decided to give it a try. I was put off at first by her obvious pseudonym, but that was before I learned about who she was as a person and that she kept her real name on the down low to protect her kids. The book was gripping and exciting, and I’ve been hooked ever since. But without that impulse price, I never would have given her a second look.

And this is the danger that authors who have built careers on print ignore at their peril. Their worldview, their paradigm, is based on a publishing industry and more importantly a publishing market that doesn’t really exist anymore. If they can’t adapt to new realities, like Amazon selling more ebooks than paper books, all they’re going to be left with is a pair of dimes.

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