Saturday, March 30, 2013

A Book, or a Big Mac?

I have been thinking about the price of books. In Australia, books are very expensive. The long awaited final volume in a long fantasy series is selling in paperback at Barnes and Noble for US$8.98 (about AU$8.62). Angus and Robertson sell the same book online in Australia for either AU$14.99 or AU$16.99 (I am not sure why there are two paperback versions for sale). The price of the ebook is US$7.99 and AU$11.99 respectively. No doubt there are explanations for these price discrepancies; but it would be hardly surprising if I were to choose to purchase the ebook from the US, rather than Australia. By the time shipping is included, the paperback is probably cheaper if purchased in Australia.

The point of this is not to complain about this discrepancy in price, or about the high price of books in Australia in general. It is, rather, to explore the difficulty of placing a price on something like a book, particularly an ebook, which, on the surface, seems to cost next to nothing to produce. It is true that once it is finished, production costs are very low. But should we not factor in the many, many, hours of work that have gone into writing the book, sometimes over a period of several years? Let’s say that someone works on their novel for an average of one hour per day over a period of one year. Would $20/hour be a reasonable rate? I think so, but let’s conservatively set it at around the minimum wage in Australia, say, $16/hour. With just one hour a day for a year, this amounts to $5840. Many self-published books then go on sale at Amazon for anything from 0.99c to $4.99, rarely more. Even at the higher price, with a margin of 70% (which is not always the case), an author has to sell over 1600 books to get their money back, if we actually put a dollar value on the time spent in production. This does not even include any money spent on editing costs, cover design or advertising.

There are, it seems to me, two ways of valuing a single object. The first is to factor in all the costs that have gone into production, including labour and materials, and then add a margin. The second is to permit the market to determine its value: what are people willing to pay for it? The first method of costing does not really work with ebooks, because there is no single product at the end of the process, but, rather, a potentially infinite number of identical products. Thus, one ebook is clearly not worth $5840 plus a margin, although one luxury leather lounge suite might be. So it seems inevitable that the market will determine the value. What value, then, does the market place on something as intangible as an ebook? Certain things add value to a particular book, such as the reputation of the author, or enjoyment of a previous book by the same author. These, again, are such intangible qualities. Of course, whether it is actually a good book will also affect the value. Unknown, self-published, first time authors face a real struggle, because they do not have a reputation. Perhaps, once a book starts to sell and people like it, it will increase in value. Unfortunately, the first hurdle is often getting anyone to buy the book in the first place. Offering the book free for a limited period of time may help to generate a reputation for the book, and others may then be willing to pay for it.

On the other hand, I look at what people are willing to pay for other things and am forced to ask myself, why would they buy that, but not buy my book? People will pay $7.00 or $8.00, or more, for a lotto ticket which will probably give little, if any, return for their investment. They will pay almost $5.00 for a Big Mac, which will give them a few minutes of dubious pleasure (and hospital bills later in life). So I figure that any book I write that is half decent is worth at least the value of a Big Mac. Of course, people may not pay that, but it’s not a bad place to start.

For this Easter weekend only, though (Pacific Standard Time), Maybe they'll remember me is FREE - grab a copy and write a review! 

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