I read a lot of different blogs about ebooks, writing, self-publishing, the publishing industry in general, etc. and there are several that are quite popular. Kristine Kathryn Rusch on anything to do with the business side of being an author; Dean Wesley Smith, her husband, on churning out new copy and generating revenue; Konrath et al on the wild west of self-publishing; ThePassiveVoice on an overview of just about everything newsworthy (a curation service); and then people like Mike Shatzkin if you want the view of big publishing. None of those descriptions are entirely fair, they’re not one-trick ponies, but Shatzkin often is on the opening tail of self-publishing as a viable business model. So it was interesting to see him last September talking about pricing with a bit more “indie-cred” than he would normally show (eBook pricing resembles three dimensional chess):

Amazon doesn’t need big publisher books to offer lots of pricing bargains to their Kindle shoppers; they have tens of thousands of indie-published books (many of which are exclusive to them) and a growing number of Amazon-published books, that are offered at prices far below where the big houses price their offerings.

That probably explains why Amazon can see its Kindle sales are rising while publishers are universally reporting that their sales for digital texts, including Kindle, are falling. (Digital audio sales are rising for just about everybody, but that is not an analogous market.)

This is putting agency publishers in a very uncomfortable place. It has been an article of faith for the past few years that there is revenue to unlock from ebook sales if only the pricing could be better understood. […]

High ebook prices — and high means “high relative to lots of other ebooks available in the market” — will only work with the consumer when the book is “highly branded”, meaning already a bestseller or by an author that is well-known. And word-of-mouth, the mysterious phenomenon that every publisher counts on to make books big, is lubricated by low prices and seriously handicapped by high prices. If a friend says “read this” and the price is low, it can be an automatic purchase. Not so much if the price makes you stop and think.

An unpleasant underlying reality seems inescapable: revenues for publishers and authors will be going down on a per-unit basis. This can most simply be attributed to the oldest law there is: the law of supply and demand. Digital change means a lot more book titles are available to any consumer to choose from at any time. Demand can’t possibly rise as fast and, in fact, based on competition from other media through devices people carry with them every day, might even fall (if it hasn’t already).  […]

So what might be worth a try from the big publishers now would be “promotional ebook pricing” on launch. Make the ebook $3.99 until date X, and then raise it to the “normal” level (which for major publishers, when the hardcover is in the marketplace, would be $12.99 and up.) This is a very painful experiment to try because it will compete against the hardcover at launch, when the publisher is trying to pile up sales to make the bestseller list. It will annoy print booksellers as well.

But uncoupling the ebook pricing completely from print pricing, which seems to be where we will inevitably go, may also mean — it certainly can mean —all ebook pricing becomes dynamic. All of this definitely raises the bar for publisher knowledge of how consumers react to prices in different situations. It has been a widespread article of faith that retailers “understand” this behavior and publishers don’t. To the extent that retailers do understand it, they see it through a different lens; they almost never care about the impact of price changes on the overall sales curve for a single title. Titles are interchangeable for retailers and not for publishers. So while it is true that publishers have a lot to learn, it is probably not true that retailers already know it.

There are some really good points in there, and the article is decent overall. I think if he had written it 3 years ago, it would have been considered cutting-edge; after all, indie authors have been doing this for years. Konrath and Smith have written about their experiences playing with price points, as have lots of other authors.

But seeing Shatzkin suggest big publishers do it too is unusual, and worthy of sharing.