Pricing Kindle Books

Dan Brown had the opportunity to decide how his new book, The Lost Symbol, must be priced (or more precisely when it should be released if it were to be priced at the standard $9.99 price). He decided that it would be better to reach as many readers as possible. Here is what he said to WSJ,

“As an author, you want your book to be available in as many formats as possible,” Mr. Brown says. “I know that some of my readers have e-book readers, and I wanted my book available for them.” He says it was ultimately a group decision.

From the author’s point of view the cost and efforts he invested on writing the book are sunk. There is also the risk associated with  delaying the Kindle version, if for any reason the book turned out to be a flop then the expected Kindle sales could be much lower than what it would be if  released at the same time as hardcover format.

But why would he not want to price it at the same level as the hardcover books or at a higher price point that the standard $9.99? People who prefer reading on Kindle know the trade-offs and prefer the Kindle version over the hardcover version.  If the Kindle owners wanted to read the book at the same time as it was released then it should not matter to them that it is priced at the same level as the hardcover books.

Let us do some numbers. The lowest price  one could pay for the hardcover version was $14.50 at Wal Mart (I am not sure if the price is still good). By choosing $9.99 price, the lost profit per book is $4.51 per Kindle version sold. To make up for the lost profit, the number of Kindle versions sold at $9.99  must be 45% more than it would have been at $14.5 price. Conversely, the sales at $14.50 must be at least 31% lower than it would have been at $9.99 to warrant a $9.99 price.

Either way you look at it, that is large sales increase (or drop) for the lower price to be more profitable. This leads me to believe that there was lost value  (pun intended) by offering The Lost Symbol at the lower price.