Smashwords study: What do readers pay when they set the price?

anurag · 02-11-2010, 05:23 PM

From http://blog.smashwords.com/2010/02/w...customers.html

Quote:

...

We looked at a small sample of 353 recent "purchases" under this pricing option at Smashwords. Of the 353 purchases, 299 customers selected to take the book for free and 54 paid money.

Next, we looked at the breakdown of the voluntary payments. The payments ranged from the lowest minimum of $.99 to a high of $12.42. The average price paid was $3.20, and the median price (for you statistic geeks out there) was $3.20. As you can see from the chart, the distribution of payment amounts was fairly even.

Interestingly, when we compute the average yield per book "purchased," including the zero dollar purchases, it averages out to $.49 per customer.

...

Sparrow · 02-11-2010, 05:34 PM

"a small sample of 353 recent "purchases""

Why use recent purchases? If people haven't yet read their 'recent' purchase they are unlikely to have paid anything over for it, since they can't have assessed it's worth to them. And a lot of us have huge TBR piles.

Maybe it's too early to say what the final figures will be.

Ben Thornton · 02-11-2010, 05:36 PM

The "you and yours" interview had a chap on from faber&faber who said that in their similar experiment, with a book retailing normally at £14.99, most people chose to pay 0, but for those who paid, the mean was about £5 - about a third.

The study above is about a third of the $9.99 benchmark price, which is interesting.

I suspect that people are used to a 1.99/2.99 price on smashwords, though, so in a way I'm surprised that the mean is so high.

ondabeach · 02-11-2010, 06:12 PM

Not surprising at all really, people appreciate fair pricing. Given the choice between paying the price of a cup of Joe for a novel, knowing that the lion's share of the proceeds goes to the author, and stealing it, they will do the right thing in the vast majority of cases. Provided that the purchasing experience is simple and hassle free of course.

I know that the above survey appears to indicate otherwise, the difference being that the choice gave was the real world choice of stealing or paying $3 for a novel.

Smashword's survey essentially asked "how much would you like to pay for eBooks" with an option of getting legally for free.

Vary useful info has come from it but make your decision in the real world. Not surprising that the mean and average numbers would turn out the same. They would remain very similar regardless of how your survey question was worded. Because those that paid took it as an opportunity to help find answers, not just get a freebie.

Keep up the good work smashwords.

Support fair sits like www.smashwords.com and www.zuluexpress.com and give the Amazon's and McMillan's of the world the flick

fugazied · 02-11-2010, 06:16 PM

I'm not surprised consumers want to pay that much, so if publishers want us to pay $15, we do some dodgy maths ($3.20 + $15) / 2 = $9.10.

That's close to where I think it should be. $5-$8 for older books, $9.99 for new releases.

lilac_jive · 02-11-2010, 06:20 PM

Quote:

Originally Posted by ondabeach

Support fair sits like www.smashwords.com and www.zuluexpress.com and give the Amazon's and McMillan's of the world the flick

I do often

I love smashwords. I can't believe some of the great books that I've gotten on there. I actually just finished one and now have started another.

kennyc · 02-11-2010, 06:35 PM

Very interesting. MacMillan should see this.

lene1949 · 02-12-2010, 03:30 AM

Quote:

Originally Posted by anurag

From http://blog.smashwords.com/2010/02/w...customers.html

Wow! I'm quite shocked to see this... I love getting free books, but when I can set my own price, I never select to pay nothing... Last time I got a book this way, I felt bad for only paying $1.50...

Ben Thornton · 02-12-2010, 04:23 AM

I think that one of the issues here is that the content is typically unknown until you download it, so it's difficult to value.

One idea to get a fairer price for the author would be this:
- set the price at $X
- allow download of a significant first chunk for free
- as part of that download, let the customer know that if they read that, and like it, they can have the whole book for whatever they think fair
- set the price to <what the customer will pay> (for that customer only)

Of course, people could cheat - hoarders who just want to gather books would still pay 0 - but readers would, I'm guessing, follow the rules of the game as intended. They would either decide against the book and stay away, or come back with a different view of fair value. My guess is that most of them would pay $X because you've already set that guide price.

Just a martketing idea, but it would be interesting to try it out if someone has a book that they would be putting up at <what the customer will pay> in any case.

llreader · 02-12-2010, 05:36 AM

Quote:

Originally Posted by Ben Thornton

I think that one of the issues here is that the content is typically unknown until you download it, so it's difficult to value.

One idea to get a fairer price for the author would be this:
- set the price at $X
- allow download of a significant first chunk for free
- as part of that download, let the customer know that if they read that, and like it, they can have the whole book for whatever they think fair
- set the price to <what the customer will pay> (for that customer only)

Of course, people could cheat - hoarders who just want to gather books would still pay 0 - but readers would, I'm guessing, follow the rules of the game as intended. They would either decide against the book and stay away, or come back with a different view of fair value. My guess is that most of them would pay $X because you've already set that guide price.

Just a martketing idea, but it would be interesting to try it out if someone has a book that they would be putting up at <what the customer will pay> in any case.

Well, Smashwords does have a preview function, which the author can set to whatever they like (15%, 50%, whatever). Of course, that doesn't really work with a sliding scale price, because you can just read the whole thing for free. It would be interesting to try setting a price range, say $0.99 to $4.99, then people would actually use the preview function.

I also posted a comment to ask them to put up information on downloads. It is almost certain that letting the user set their own price increases downloads, but I would like to know by how much (and if 85% of them are for free, whether the number of people who actually pay increases at all).

Also, now that I think of it, it would be interesting to see if any of the people who get the book for free later come back and buy it, to give some money back to the author. Hmmm...

GhostHawk · 02-12-2010, 07:49 AM

Absolutely right on the money!

Try to charge me 10$ or more for an ebook and I'll laugh as I walk away.

Bring the price down to 3$ and I'm interested, I'll buy a few.
Give me some for free, and I'll even buy more. You give me a break, and I'll reward you.

If I can get 2 free books, pay under 3$ for a third, that brings my price per book down to a dollar or so. At that price you've got me hooked. Give me book 1 of a series for free, book 2 for 1-2$ and book 3 for 3$ chances are I'll go for it. I LOVE reading all 3 of a series back to back.

At 10$ or more apiece I'll put on the pirate hat and give you the universal middle finger salute as I walk away.

PKFFW · 02-12-2010, 02:31 PM

Whilst the sample size can not be considered statistically significant it is interesting that 85% chose to pay nothing.

Guess it tends to indicate that people just want free stuff. If they can get that free stuff legally all the better for them.

Cheers,
PKFFW

Ben Thornton · 02-12-2010, 04:03 PM

Quote:

Originally Posted by PKFFW

Guess it tends to indicate that people just want free stuff. If they can get that free stuff legally all the better for them.

I'm not so sure. I think that, until they've read a good chunk of it (or unless they have confidence in the author from previous experience or a recommendation), people don't know what value they would place on a book. That's why I suggested a model where it starts free and then you decide whether to pay to complete it.

kovidgoyal · 02-12-2010, 04:55 PM

The way to make this model really work is to have links to pay the author money inside the book itself. You shouldn't have to go back to a website to make the payment.

Hopefully, this will become possible in a couple of years.

BearMountainBooks · 02-12-2010, 05:07 PM

Quote:

Originally Posted by Ben Thornton

The "you and yours" interview had a chap on from faber&faber who said that in their similar experiment, with a book retailing normally at £14.99, most people chose to pay 0, but for those who paid, the mean was about £5 - about a third.

The study above is about a third of the $9.99 benchmark price, which is interesting.

I suspect that people are used to a 1.99/2.99 price on smashwords, though, so in a way I'm surprised that the mean is so high.

I don't know that most books are in the 1.99 to 2.99 range. When I was shopping on there, I saw an awful lot of books in the 10 dollar range (to my surprise actually.)

Maybe smashwords needs to do a study on how things are priced...

02-12-2010, 07:49 AM	#11
GhostHawk Data Privateer! Posts: 586 Karma: 62887 Join Date: Oct 2009 Location: Fargo ND Device: Ectaco Jetbook& Jetbook Lite	Absolutely right on the money! Try to charge me 10$ or more for an ebook and I'll laugh as I walk away. Bring the price down to 3$ and I'm interested, I'll buy a few. Give me some for free, and I'll even buy more. You give me a break, and I'll reward you. If I can get 2 free books, pay under 3$ for a third, that brings my price per book down to a dollar or so. At that price you've got me hooked. Give me book 1 of a series for free, book 2 for 1-2$ and book 3 for 3$ chances are I'll go for it. I LOVE reading all 3 of a series back to back. At 10$ or more apiece I'll put on the pirate hat and give you the universal middle finger salute as I walk away. Last edited by GhostHawk; 02-12-2010 at 07:51 AM.

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02-11-2010, 05:34 PM	#2
Sparrow Wizard Posts: 4,395 Karma: 1358132 Join Date: Nov 2007 Location: UK Device: Palm TX, CyBook Gen3	"a small sample of 353 recent "purchases"" Why use recent purchases? If people haven't yet read their 'recent' purchase they are unlikely to have paid anything over for it, since they can't have assessed it's worth to them. And a lot of us have huge TBR piles. Maybe it's too early to say what the final figures will be.

02-11-2010, 05:36 PM	#3
Ben Thornton Guru Posts: 900 Karma: 779635 Join Date: Jan 2010 Location: UK Device: Kindle 3, iPad 2 (but not for e-books)	The "you and yours" interview had a chap on from faber&faber who said that in their similar experiment, with a book retailing normally at £14.99, most people chose to pay 0, but for those who paid, the mean was about £5 - about a third. The study above is about a third of the $9.99 benchmark price, which is interesting. I suspect that people are used to a 1.99/2.99 price on smashwords, though, so in a way I'm surprised that the mean is so high.

02-11-2010, 06:12 PM	#4
ondabeach Groupie Posts: 193 Karma: 192 Join Date: Apr 2009 Location: Vanuatu Device: HTC touch Diamond, Ipaq 3115	Not surprising at all really, people appreciate fair pricing. Given the choice between paying the price of a cup of Joe for a novel, knowing that the lion's share of the proceeds goes to the author, and stealing it, they will do the right thing in the vast majority of cases. Provided that the purchasing experience is simple and hassle free of course. I know that the above survey appears to indicate otherwise, the difference being that the choice gave was the real world choice of stealing or paying $3 for a novel. Smashword's survey essentially asked "how much would you like to pay for eBooks" with an option of getting legally for free. Vary useful info has come from it but make your decision in the real world. Not surprising that the mean and average numbers would turn out the same. They would remain very similar regardless of how your survey question was worded. Because those that paid took it as an opportunity to help find answers, not just get a freebie. Keep up the good work smashwords. Support fair sits like www.smashwords.com and www.zuluexpress.com and give the Amazon's and McMillan's of the world the flick

02-11-2010, 06:16 PM	#5
fugazied Wizard Posts: 1,305 Karma: 1958 Join Date: Jan 2009 Device: iPod Touch	I'm not surprised consumers want to pay that much, so if publishers want us to pay $15, we do some dodgy maths ($3.20 + $15) / 2 = $9.10. That's close to where I think it should be. $5-$8 for older books, $9.99 for new releases.

02-11-2010, 06:35 PM	#7
kennyc The Dank Side of the Moon Posts: 35,872 Karma: 118716293 Join Date: Sep 2009 Location: Denver, CO Device: Kindle2; Kindle Fire	Very interesting. MacMillan should see this.

02-12-2010, 04:23 AM	#9
Ben Thornton Guru Posts: 900 Karma: 779635 Join Date: Jan 2010 Location: UK Device: Kindle 3, iPad 2 (but not for e-books)	I think that one of the issues here is that the content is typically unknown until you download it, so it's difficult to value. One idea to get a fairer price for the author would be this: - set the price at $X - allow download of a significant first chunk for free - as part of that download, let the customer know that if they read that, and like it, they can have the whole book for whatever they think fair - set the price to <what the customer will pay> (for that customer only) Of course, people could cheat - hoarders who just want to gather books would still pay 0 - but readers would, I'm guessing, follow the rules of the game as intended. They would either decide against the book and stay away, or come back with a different view of fair value. My guess is that most of them would pay $X because you've already set that guide price. Just a martketing idea, but it would be interesting to try it out if someone has a book that they would be putting up at <what the customer will pay> in any case.

02-12-2010, 02:31 PM	#12
PKFFW Wizard Posts: 3,681 Karma: 28297636 Join Date: Dec 2008 Device: BeBook, Sony PRS-T1, Kobo H2O	Whilst the sample size can not be considered statistically significant it is interesting that 85% chose to pay nothing. Guess it tends to indicate that people just want free stuff. If they can get that free stuff legally all the better for them. Cheers, PKFFW

02-12-2010, 04:55 PM	#14
kovidgoyal creator of calibre Posts: 43,942 Karma: 22669822 Join Date: Oct 2006 Location: Mumbai, India Device: Various	The way to make this model really work is to have links to pay the author money inside the book itself. You shouldn't have to go back to a website to make the payment. Hopefully, this will become possible in a couple of years.

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