Irish Times has an interesting discussion of the price of ebooks. Should they be cheaper than traditional books? Certainly, due to the reduced costs to publishers. But how low should they go? The article says:
“I’ve noticed people tagging the US Kindle edition of Stolen Souls with ‘$9.99 boycott’ and similar at Amazon.com,” says Stuart Neville, the bestselling author of The Twelve, about reader-led demands for lower prices. “I’m amazed that people are that cheap. Do they think a year of my life is worth less than $9.99? Do they really believe that 10 to 12 hours of entertainment isn’t worth the equivalent cost of two or three coffees, or less than two beers? “I think it’s the sense of entitlement that bothers me,” he adds. “It’s particularly common with those who believe they have some sort of right to download music and movies for free.”
“I think they are entitled to expect a lower price,” says Eoin Purcell, commissioning editor with New Island. “For one thing there’s no printing cost, no delivery cost and, in some cases, a much lower retailer discount. On the other hand, design costs still exist, and marketing costs may be higher. In Europe, VAT is an issue and the authors demand a higher royalty. If a publisher is to retain the same margin they have come to expect, then a modest discount is to be expected. Something in the region of 30 to 40 per cent discount on print seems reasonable.”
Many authors think the way to build a following is the offer their first book for something like 99 cents, in hopes that readers who like it will then be willing to pay more for the authors' other books. That worked well when there were not too many titles competing for the readers' attention but not everybody agrees on how effective it is these days.
Publisher John Mooney of Maverick Press told the Irish Times, “Ebooks written by authors who are not so popular or well known can be discounted to boost sales, but it’s my experience that such discounting doesn’t generate a spike in sales.”
He added, “Maverick House does offer some ebooks at low prices if we feel the author needs support, but this does not guarantee sales. We have digitised our backlist, and the books that sell in large quantities on Kindle and in other digital formats are those offered at full price. People will not purchase books which they do not wish to read just because they are cheap."
Alan Guthrie, co-owner of ebook-only publishing company Blasted Heath, is more sanguine: “The outcry against cheap books has been around for a long time. Ebooks are just the latest to be targeted. If you look back to the 1950s, for instance, the advent of the mass market paperback original caused panic and outrage in the rest of the publishing world. They believed it wasn’t possible to make any money from cheap paperback originals as the profit margins were too slim. And yet, somehow, here we all are.”
There's no clear answer and, as usual, the marketplace will decide. But if you are contemplating writing an ebook my advice is to consider from the start what is going to make it stand out in a crowded marketplace in which many of your competitors will be pricing their offering low.