This is the first in a little series of posts on why Amazon, Macmillan, and everyone else are all wrong about ebook pricing.

The myth of devaluation

If anyone ever tells you that low prices for ebooks are devaluing books, you can be sure of one thing – what you are about to hear is not a logical argument on ebook pricing.  Either this person is lying to you, or this person is making an emotional or psychological appeal to you to pay more.  You can not “devalue” an ebook by lowering the price.  You can undermine the leverage the seller has to charge a higher price, but you can’t make a potential buyer value the book less.  People like to confuse value and price.  They are related, to be sure, but are very different concepts.

Let’s look at an example.  Let’s say you and I have each written a book.  We have an imaginary consumer who likes your book twice as much as he likes mine.  If both books are priced at $10, he will certainly buy yours.  If I drop the price to $9, he’ll still buy yours because he likes you that much better.

But what if I drop the price to $1?  Have I devalued your book?  No, absolutely not.  He still values it twice as much as he values mine.  But my price is 10% of yours.  He’s probably going to buy my book, and he’ll do it because he’ll get half the enjoyment of your book at 10% of the price.  This is, for most people, a good deal.

Now, if we pretend that collusion and price fixing aren’t illegal (and let’s do that, just for the sake of argument), you could call me and we could agree to both charge $10.  This would work if we were the only two games in town.  But we aren’t.  We have to compete with not only all the other authors out there, but all the other things that people might possibly do with their free time.

And there will always be cheaper alternatives to your book (well, there’s maybe a case or two where that’s not exactly true, but we’ll get to that another day).  Movies, music, walks in the park, the internet, the list is endless.  Blaming me for “devaluing” your book is just silly.  You might as well blame the beach for all the nice sand there is to walk on, and the cool breeze coming in off the water.

So what can you do?  First of all, the only reason that what I’m doing matters to you is that I might be doing something you hadn’t thought of, and you can learn from me.  Beyond that, don’t worry about me.  Worry about making your book the best it can possibly be, and worry about how to get more people aware of it.  There are a million ways to do this, and none of them start with accusing your fellow authors and publishers of “devaluing” your work.

See part 2