Amazon spells out why e-book prices should be lower

Amazon has officially explained its reasoning behind trying to lower e-book prices, claiming that lower prices will end up being more beneficial to publishers, authors and retailers.

In an update on its Forum, the Amazon Book store team said:

“Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there's no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market — e-books cannot be resold as used books. E-books can be and should be less expensive.”

The team even did the maths, showing that a book would actually sell more and make more money in the long run if it was priced a bit lower:

“For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000”

By lowering an e-book's price from $14.99 to $9.99, companies will theoretically gain 16 per cent more revenue, which is good for everybody involved- including Amazon.

Amazon proposes that 35 per cent of book sales should go to the author, an additional 35 per cent should go to the publisher and finally, Amazon should get a 30 per cent cut.

As it stands at the moment, Amazon takes its 30 per cent cut and the remaining 70 per cent split is decided on by the publisher, which means Authors are often not getting a fair wage.

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KitGuru Says: It seems like Amazon is trying to do the right thing here by fighting publishers trying to raise the price of e-books. There are legitimate reasons as to why a digital product should be cheaper than a physical one and if lowering prices actually means more money in the long run then I don't see why publishers shouldn't get on board. What do you guys think? Is Amazon making valid points here? 

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