The Problem with eBook Pricing

The Problem with eBook Pricing

I received a Kindle Touch for Christmas and over the last month I’ve read four books on it. I absolutely love reading on the Kindle and would actually prefer to read every book on the device if I had the choice. There are several reasons why:

  • The Kindle is lighter than even the lightest paperback
  • I can look up the definition of words instantly
  • I can highlight passages and take notes without needing a pen and notebook nearby.
  • Highlighted passages and notes can be manually or automatically sent to my computer for easy inclusion in database entries or blog posts
  • I can carry around hundreds of books in my pocket
  • The font size is always exactly how I want it.
There are still lots of great things about reading a physical book, such as the smell, the feel, the cover art, but in general, I do think the actual experience of reading a book on a Kindle is superior. So, if that’s the case, why have the last three books I’ve purchased been paperbacks? Easy – the pricing on the Kindle editions of books is completely ridiculous. Publishers seem to completely miss the point of electronic editions of books, and all it is doing is hurting them in the long run.

If I’m going to purchase a book, there are many things I consider: price, look and feel of the book (cover art, page thickness, size), and condition (new or used). I always prefer new to used, and I’m willing to pay a higher price for a higher quality edition of a book with non-movie inspired cover art. However, I won’t hesitate to buy used if it’s in good condition and the price is right. There’s no magic formula, I simply make a decision at the time of purchase.

And here is where the pricing of eBooks is currently failing – eBooks aren’t competing against only the new hard cover price of books. They aren’t competing against the new price of books at all – they are competing against the best price of a book in the condition that I want to read it in. Whether that condition is new or not doesn’t really matter to me. Is it used, but has better cover art? Then that’s the one I want. Is it digital, but a great price? Then that’s the one I want.

I think that’s why, despite all the positives about reading the electronic version of a book, I won’t pay the same price or more for the Kindle version. Why won’t I pay even the same price? I’m not opposed to owning goods digitally – my Steam collection of games is well over one hundred now, and I prefer to buy all music as .mp3s. I firmly believe the digital edition of a product has worth as a consumer as long as I can consume it in the way I want to, when I want to. Games, music, and books all fit that requirement.

At the same time, as a savvy, price-conscious consumer, I also realize that the electronic copy of a book costs the publisher less money to produce than the physical copy. So why should I pay more for what costs them less? Plus (and here’s another reason why Publishers should be pricing their books to compete with used copies), why buy the electronic version when I can a physical copy that I could choose to sell or give away if I don’t like it?

Instead, however, publishers are pricing electronic versions at the same price, or typically higher, than the physical version. Now they’ve lost the electronic sale which would not only have given higher revenue share than the physical, but also given me the opportunity to resell that book at a later date, further reducing their potential revenue in the future. And guess what else? If you are selling your eBooks at reasonable prices, I'm way more likely to take a chance on an unknown book or author because my total budget for books suddenly goes further.

Another way to look at this is if I have $50 to spend on books, and in the traditional model the publisher gets half of what I spend on books, then they get $25 of my total budget. Chances are good that's about 5 books. However, if they sell eBooks at better prices, I can suddenly get 10 books with the same budget, and the publisher (who gets 70% on Amazon), now makes $35. This is a win-win for everyone.

While this isn’t rigorously scientific, I took a look at a handful of books I would currently like to read, and would happily buy if they were priced appropriately. The only requirement I had for this list was there had to be a Kindle edition available, and the used copy had to be in at least Good condition or above.

Title Best New Price Cheapest (with shipping) Kindle New-Kindle Savings Cheapest-Kindle Savings My Suggested Kindle Price
Kokoro $10.20 $10.20 $12.99 $2.79 $2.79 $8.99
The Abolition of Man $9.59 $5.99 $9.99 $0.40 $4.00 $5.99
1Q84 $18.87 $18.74 $14.99 -$3.88 -$3.75 $14.99
A Song of Ice and Fire $8.96 $7.08 $8.99 $0.03 $1.91 $6.99
The Magicians of Caprona $4.77 $3.56 $5.99 $1.22 $2.43 $3.49
On Stories $11.17 $11.17 $8.79 -$2.38 -$2.38 $8.79
Kusamakura $11.92 $9.47 $11.99 $0.07 $2.52 $8.99
The Winter of Our Discontent $7.94 $4.99 $12.99 $5.05 $8.00 $4.99
Tortilla Flat $7.83 $4.00 $9.99 $2.16 $5.99 $3.99
The Best of H.P. Lovecraft $8.93 $3.94 $11.99 $3.06 $8.05 $3.99
Norweigan Wood $10.20 $9.20 $11.99 $1.79 $2.79 $8.99
As you can see, only with 1Q84 and On Stories is the Kindle price better than the cheapest edition. And one of these books is new, and the other relatively obscure. Now, if you were to take my suggested price into consideration, the Kindle edition suddenly becomes a great deal. You get a new copy of the book, in a great format for reading, for the lowest possible price. It’s even a good deal for the publisher because, with Amazon’s 70% revenue share, they still make more than they probably do for the new paperback copy.

Going back to my original $50 budget, if I buy new I can get 5 books. If I buy used, I can get 6 books, but the publisher gets nothing, so obviously they don't want that. If my suggested Kindle prices were in place, I would be able to get 7 books, which is obviously the best option for me. Plus since I've purchased 2 additional books, chances are more unique publishers have made money off me than in the new paperback scenario.

It's also worth noting that every Kindle sale means one less potential used sale in the future because I can't resell the Kindle version. If book publishers are anything like video game publishers, they must hate used sales. And if that’s the case, why aren’t they using electronic books as a way to supplant them?

There are some new publishers who seem to understand the changing eBook landscape, and are pricing their titles appropriately. The big ones aren’t, though, and it’s driving people like me, who will happily pay good money for books, away from the version that will make the publisher the most profit. Hopefully they will eventually understand that eBooks are competing more with used books than new, but until that time, don’t expect me to buy any.


Keith on 02/07/2012 12:01 p.m.

I'm new to using the Kindle App on my iPhone and I have to say I'm pretty disappointed in the pricing I've seen out there so far. I (obviously) haven't put as much thought into it as you have, but your ideas are intriguing to me and I wish to subscribe to your newsletter.

Scott on 02/08/2012 9:18 a.m.

You are welcome to subscribe to my newsletter but beware - it carries a terrible curse.

Dave on 02/21/2013 2:01 p.m.

I have had a kindle for several years and although I do enjoy it, it does have it's downfalls. I agree that the publishers are not on the right path by having the so high to the point that it makes sense to buy a used copy. I usually buy a lot more used books than I do ebooks just for the simple fact that I can get them cheaper used and on top of that I can sell the book after I'm done through a site like and be on to the next book. I really like that you displayed the spreadsheet with all of the prices, it verifies exactly what I have been thinking. Thank you very much for the interesting read.

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