Publishing

Amazon and Pricing

keep calm publishingGood Morning! Yes, I’m going there again. Frankly, I didn’t want to, hadn’t planned to, and really, why am I? Well, because I spent a significant chunk of time last night explaining to two different people the realities of Amazon, and rather than have to repeat myself in the coming days, I’m doing this now. Besides, it’s art day, and I don’t have art for you, I have been writing. Snippet is up Thursday, though, along with a cover reveal!

Here is how it works. Amazon is a seller of books (and pretty much anything else in the world you’d care to buy, but that isn’t the point today). The publisher sets the price. I’ll say that again, the publisher, whether traditional, indie, self, or whatever you want to call yourself, sets the list price. When it comes to paper books, this might be, say, 15.99, for a 350 page 6×9 trade paperback. I happen to know that book costs a little more than $5 to make. So let’s say that if list is 15.99, and cost is 5.99, every copy you sell yeilds $10. Basic math, right? Well, Amazon takes a cut out of that, and if you the author are not also the publisher, the publisher takes a BIG cut out of that, and if you have an agent, they take a cut, and eventually, a trickle of income slides into the author’s pocket from the sale of that book.

Got it? Well, here’s the thing. You set that list price of $15.99, but Amazon being what they are, looking at prices, says ‘we’re going to discount that prices, so more people will buy your book.’ Yay! More sales!

Amazon doesn’t have to offer the discounts. They do it for their consumer, not to benefit authors or publishers. Amazon is a business, and a darn good one. They stay in business by making consumers of their products happy enough to come back, and keep coming back. So, they discount book prices.

Publishers, being the sneaky SOB’s they are (I am one, after all), know how this works. They know that no one, simply no one except high-end boutique bookstores who don’t give a darn, sells books at list price. Who’s going to shell out almost $20 for a book they may read once, and if they’re a fast reader like me, it will last about 2 hours? So publishers set their initial price knowing there will be a discount, and knowing if their initial price is high, they will still make a pretty profit.

This was actually the second thing I ran into last night, I’ll address the first one below, it was a simpler problem, and this one was the more troubling. You see, I saw a post in my FB feed, a friend sharing a friend’s concerns that his books had been removed from the discount program and had jumped in price $10 overnight. Almost immediately I saw a couple of problems, when I looked at the books. One, the ebooks were reasonably priced, and usually Indie authors make far more sales, and money, from their ebooks. Second, the prices of the books made no sense. One book, if it were discounted $10, would have been $4.28 new. I looked, it wasn’t a pamphlet. If Amazon was really selling at that cost, they were losing money straight from production costs. The prices he was claiming were oddball, too, one at $19, and the other at $14.28, supposedly non-discounted. Most people don’t price like that. Then I found out he wasn’t the author, had no idea what the list prices were…

And I realized what we had here was an Amazon troll. He was deliberately trying to create a malicious rumor, to create a more unsettled feeling in Indie Authors toward Amazon. Look. If you’re an Indie Author, the one thing you have going for you is control. If you don’t want to sell on Amazon, don’t sell on Amazon. But stop running around like chickens with your heads cut off just because Hachette, a huge corporation who treats their authors like dirt and expects them to like it, is fighting with Amazon.

The second issue I ran into is only obliquely related to Amazon. The author in question was panicking because she had checked her listing, and Amazon had raised her price $10, and so much for Amazon being a friend to the little guy and she was going to pull all her books and only sell them through her website…

Now, here’s the thing. Amazon isn’t the only seller who sells on Amazon. You know this, you’ve seen the listings for the used, refubished, collectible, and what-have-you items listed with the new ones supplied by Amazon. It’s one of the things that makes Amazon so much fun to shop with. What you may not realize is that third-party sellers can create a separate line listing that doesn’t lump with your book. Why do they do this? Well, in this person’s case, the third party seller listed her $20 book at $30. Now, this is a legitimate sale. The 3rd party seller will buy her book, so she makes her money. What that seller is hoping to do is to trick a consumer into paying $10 more, and shoop… they make a tidy profit. It’s a scam. There are a ton of them on Amazon (and everywhere else) so always be a savvy shopper. And if you’re an Indie author, pay attention to the listing you’re worried about. If it says third-party seller, or you see odd brackets around the title and author name, it is not an Amazon listing.

Um. My hands are tired. Basically, I’m saying to pay attention, do your homework, and above all, don’t panic, keep publishing.

 

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18 thoughts on “Amazon and Pricing

  1. Boy were we on the same page today, Cedar. Only real difference is you opened fire with a rifle and I did with a shotgun — hit more issues. Great take on this particular one.

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      • I understand and feel the same way. My added frustration is when they buy into the rumor without actually contacting Amazon or their publisher to see if there is a reason for what they are complaining about.

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        • And part of the reason for that is they are primed to go off with all the buzz over the Hachette thing, with Hachette playing the ‘sympathy card’ to get media attention.

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  2. i am commenting as a book purchaser not as an author in the hope it might provide authors some insight. As a user, Amazon is the next thing to sliced bread. It is easy to maintain an account; in fact, i do not even have to log in to use the easy pay system to buy ebooks for my account.

    Amazon stores all my books online and even can store some third party supplied ebooks. It also provides me with a lot of ways to access and read my book–iPhone, Kindle, Windows tablet, laptop and home desktop. Because of this, I buy my ebooks almost exclusively from Amazon. I bought from Baen when that was the only oource of Lois McMasters Bujold, but now that she is selling on Amazon again , that is where I will buy in the future. Yes, there are a few authors i will go to great lengths to obtain their ebooks, Ms. Bujold is one and now Cedar is another, Terry Mancour and Honor Raconteur are two more but i found all but Ms. Bujold on Amazon. If your are a new author, or new to me, you will not gain my my interest if you are not on Amazon. It just won’t happen.

    On the other hand, since buying my first Kindle in 2009, i have purchased over 1,000 ebooks.which is 4 to 5 times what i previously bought in paper books. That is good for authors who, if I understand correctly, make as much or more on an ebook as on a publishing house paper book. In short, Amazon allows me to buy more books for the same cumulative amount but does not reduce what an author makes. It only cuts out the middle man.OF course, you don’t get the p.r. and advertising efforts of a publishing house, but those efforts do not affect my buying because i now do all my books surfing at Amazon and not at Barnes & Noble.

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    • Yes, I agree it’s a great service on both sides, for authors and readers. Maybe not perfect, and the future is uncertain… but the future is always uncertain. Enjoy it while we’ve got it.

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    • Don’t panic, it will slow your writing down. Unless you need a character to panic, in which case, channel the panic and use it! (By the way, I’m an adrenaline Junkie, and I’m terrible about deadlines. So take my advice for what it’s worth. 😉 )

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  3. This might be tangential, but I’ve not been able to figure it out from just reading the references to it. Does Amazon ever discount below the cost of creating the book? That wouldn’t seem very useful. Also, does Amazon unilaterally make the decision to discount? I haven’t gone to POD yet, and am asking questions as a procrastination device.

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  4. Cedar –

    You wrote: “Amazon doesn’t have to offer the discounts. They do it for their consumer, not to benefit authors or publishers.”

    This is incorrect – or at the very least does not tell the whole story. Amazon is a publicly traded company. It does not do anything for the benefit of the consumer, it does everything for the benefit of its shareholders.

    It does not discount prices to let consumers buy more books, it discounts prices in order to gain market share and it seeks to gain market share in order to acquire the leverage needed to reduce its over all costs – by squeezing suppliers and competitors alike.

    Yes, what Amazon does benefits indies and consumers, but it comes at a price over the long term – the elimination of viable alternatives.

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    • And by maintaining a high level of customer satisfaction, they make their shareholders happy. Look, I have never claimed that Amazon was perfect, or that Indie Authors should rely on it as their only outlet. Amazon seems to be run by some very smart people, who realize the last thing they want is a monopoly. Which the government would have to step in and interfere with.

      And as for the not discounting to let consumers buy more books? No, perhaps I ought to rephrase that it discounts to encourage buying more books, to allow consumers who are pinched by the economy to consume more reading material; leading to bigger profits for their shareholders. Barnes and Nobles offers the same thing, heavy discounts. Only the boutique bookstores offer books at list price, and we see how it affects their business. But the publishers know this, big and small. The person I was talking about in the first half of my post was transparently gaming the system, as Hachette is attempting to do.

      Amazon is the 800 lb gorilla in the room. It’s not going anywhere for now, so I’ll make use of it. But I’m also keeping my options open.

      And I’m certainly not going to attack it, while using it. I’m not a hypocrite.

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  5. Reblogged this on The Worlds of Tarien Cole and commented:
    Really, Amazon is not the enemy. They are not a monopoly. And unlike the Big 5, they’re not afraid of choice. Are they ruthless? Sure. Guess what? That’s the world of retail business. Nothing new there. Be a smart shopper, and you’ve nothing to worry about.

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