In an interview, (link below), nonfiction author Seth Godin talks about ebooks and publishing. He's a proponent of free ebooks to sell paper books, but in this interview he suggests that ebooks be priced between one and two dollars each.
As someone who's watched the ebook industry for a number of years, here's my reply to his impractical suggestion.
Cheap ebooks are a lovely thought, but if a publisher wants to sell their books through the major book venues like Fictionwise and Amazon/Kindle, they must price the book with that in mind.
The vast majority of buyers only buy through the big venues instead of through the publisher website so most publishers can't break even if they don't have their books at places like Fictionwise.
I know that for every book I sell through one of my publishers' sites, I sell 50 or more at the big venues.
Here's why books have to be priced more expensively if they are to be sold through the big venues.
Fictionwise makes 50% on each ebook sold so even if the publisher prices the book near cost, he would have to increase the price by 50% just to break even. Amazon/Kindle takes 66% of the cover price. The same problem.
What's left is usually divided evenly between the publisher and the writer if it's an epublisher, 15% for the author for major publishers.
And if the publisher doesn't put the book's price high enough, the middleman venues where a majority of ebooks are sold aren't interested in the product because they can't come out even after they do their usual price markdown.
If the publisher wishes to keep his books at the big venues, he can't undersell the books at his own site so he can't lower the price there, either.
In the best of all possible worlds, the reader would pay a few bucks, but readers want the simplicity of buying at one site, not many, so the prices go up. Sad, but true.
LINK TO GOLDIN'S INTERVIEW:
EDITOR INTERVIEWED: On November 6th, Novelists, Inc., interviewed Peter Senftleben, an editorial assistant at Kensington. He talks about what he's looking for.
NETWORKING SITES PROMOTIONAL VALUE: Author Courtney Summers discusses the value of various networking sites for book promotion.