HarperCollins, the publisher of TELEGRAPH AVENUE from Michael Chabon, recently settled with the government. Now all HarperCollins eBook consumer prices will be set by the retailer (Amazon, Apple, MS-BN Nook, Kobo, Google). The price at which these retailers buy the eBooks at is still set by publishers. The discounts are negotiated.
The discounts are generally between 40-60% for the Wholesale model and 70% under Agency.
Under Agency (publisher-set), the publisher’s revenue went up and down as the retail price.
Under Wholesale (retailer-set), the publisher’s revenue is the same regardless of the retail price.
So, taking TELEGRAPH AVENUE…
- HarperCollins has it priced at $17.99.
- Amazon, MS-BN Nook and Apple iBookstore are selling for $9.99.
- HarperCollins receives 40-60% of the publisher price (not the end-users price) – or $7.20; $8.10 or $9.00 per sale.
- Retailers make approximately $2.00 per book (assuming 50%).
Under the old Agency pricing method:
- HarperCollins sets the retail price at $14.99 but it would have gone down to $12.99 when it hits the NYT list.
- Amazon, MS-BN Nook and Apple must sell at $12.99 (or $14.99).
- HarperCollins gets 70% under Agency – $9.10 per sale (or $10.49).
- Retailers make $3.89 per sale.
Publishers make less per sale.
Retailers make less per sale but not at a loss as long as the eBook retail is $17.99. When the publisher price starts to go up, it comes out of the retailer because they will still probably sell the bestselling books at $9.99.
I didn’t discuss Author cuts in this piece for that worthy of it’s own post. But there are also many excellent articles on the author issues already written.