Amazon’s Incentives for Lower e-book Prices

Low Prices


Amazon and Hachette settled their months-long dispute over e-book prices.

The agreement includes incentives for Hachette when the publisher chooses to deliver lower e-book prices to customers.

Simon & Schuster reached an agreement with Amazon last month, which also included an incentive for delivering lower e-book prices to customers.

How low? That’s a good question.

Kindle Direct Publishing (KDP) has provided such an incentive for years: e-books prices above $9.99 pay a royalty of 35%, whereas book prices between $2.99 and $9.99 pay a royalty of 70% (minus delivery costs).

The terms are no doubt different for the big publishers. The percentages won’t be the same, for one. But the KDP model offers some idea for what to expect.

Don’t expect bestselling traditionally published e-books to dive down to $2.99 or 99 cents. I’m thinking closer to $9.99.

Who wins?

  • The readers win with more affordable e-book prices. The readers are most important, as the entire business fails to exist without them.
  • The big publishers win with incentives to offer lower e-book prices. In addition to the incentives, it may actually be a more profitable business model; if so, that will be an added bonus.
  • Traditionally published authors win, too. In addition to the publishers’ incentives for lower e-book prices and perhaps reaping greater overall royalties as a result, Hachette titles will now “be prominently features in promotions,” according to a joint statement from Amazon and Hachette.
  • Amazon wins by helping to create more affordable e-books for customers.

There don’t have to be any losers. There is such a thing as a win-win solution, or in this case, a win-win-win-win.

As a reader, I thank Amazon for pushing for this. I realize that not everyone will agree that this is a good thing, and others will question the motivation and the future, but personally I believe this is a good step for the future of e-publishing.

The holidays are almost here. No doubt this timing helped this dispute reach its conclusion.


  • Hugh Howey offers some great insights on this:

  • Yahoo Finance:

  • CNN Money:

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Chris McMullen

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24 comments on “Amazon’s Incentives for Lower e-book Prices

      • Yes! For now the situation is resolved and thats what matters. We can all move on. Thanks for your informative posts!

  1. In the end it is all about having people read our work no matter if it is at a cheaper price or even free. This is what we authors want. To have someone just to read our work. I can only think of it all being a win win when big companies finally concede the fight and give all of us (authors and readers) a cheaper way.

  2. $9.99 is too much for an ebook. I recently paid that much for a book on writing I really wanted, couldn’t get any other way, and plan to use and reuse – it is already marked up the way my books get. I am angry that the author gets so little. I have started to think that way in most transactions: how much is the author getting of the money I pay?

    It’s bad enough paying that kind of money (okay, I know I sound entitled) – but knowing the author gets $1.50 burns. She put the energy in, did the research, wrote the book.

    I wouldn’t have bought it at all if it hadn’t been one of a kind, and highly recommended – it was on my Wish List for almost a year, and I finally gave in because I wanted my own copy.

    I’m not complaining about prices – I AM complaining about how it feels as if I’m stiffing the author. I’ve read her bio; I doubt she writes for the fun of it.

    • $9.99 is the most I’m willing to pay for an e-book, and then it has to be a book that I really, really want. Usually, it would be a book by a favorite traditionally published author or it would be highly technical. There are a few books that I would buy today for $9.99, but, alas, they are closer to $20 and so I refuse. In some cases, I purchase the print edition rather than spending more than $9.99 for an e-book. (Customers will also favor used print editions when both the e-book and print prices seem too high, which cuts out not only the publisher, but the author, too.)

  3. Interestingly enough, I’ve long felt that Amazon has been trying to discourage Indie authors from underpricing, too. Their offering 30% for prices under $2.99 indicates to me that they want all ebooks falling into the $2.99-9.99 bracket.

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