eBooks: What are Consumers Willing to Pay?

This week is Read an E-Book Week. The purpose of this event is to raise awareness for and promote ebooks.

Those of us in involved in the publishing world have been hearing a whole lot about ebooks lately. Publishers and retailers are having skirmishes over the pricing of ebooks. The number of ebook reading devices is escalating. The competition over ebook readers’ dollars is growing.

The popularity of ebooks is definitely rising. Just since Christmas, I have encountered more people reading on a Kindle than I had in the all of the previous year (2009).

A recent study by BISG showed that the number one reason people purchase an ebook is affordability, followed by the ease of download, the instant access to books, and the portability of an ebook.

Affordability is a big issue. People expect to pay less, sometimes much less, for an ebook.

Smashwords, the largest publisher and distributor of independent ebooks, offers various pricing options. One of the options they make available is “Reader Sets the Price.” With this option, the customer pays whatever they want for an ebook. The customer can take the ebook for free or select a price of $0.99 or higher.

Recently, Smashwords looked at a sample of 353 purchases for books where the customer was allowed to set the price. They found that of the 353 customers, 299 took the ebook for free and 54 paid money for the ebook. The average price the customer chose to pay for one of these ebooks was $3.20.

Interestingly, when Smashwords computed the average yield per book purchased, including those who took the books for free, the yield per book averaged out to each download grossing $0.49.

So, if you are an author or a publisher of ebooks, what this means is that you won’t be getting rich off of your ebook sales anytime soon. Price your ebooks too high and no one will buy them. Price them too low and you will have more buyers, but less revenue.

Your best bet is to find the sweet selling price that nets you the best yield of both buying customers and dollars.

Now go read another author’s ebook for Read an Ebook Week. A great list of free and discounted ebooks can be found on the sponsor’s website.

[Note: to generate your interest, I pointed out that there were free and discounted (a.k.a. cheap) ebooks on the list.]

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