Amazon, Hachette, & Underwear!

Amazon Hachette Underwear


In the red corner stands the reigning world champion, weighing in at ninety billion: Amazon.

And in the blue corner stands tonight’s challenger, weighing in at four hundred million: Hachette.

In a nutshell:

  • Amazon would like to see lower fiction e-book prices, i.e. $9.99.
  • Hachette wants to control e-book prices, e.g. $14.99 to $19.99.

For a balanced introduction, see this article.

Imagine that Amazon was a chain underwear store. You could find one in just about every mall in America.

Imagine that Hachette was a popular underwear distributor.

Amazon is where people shop for underwear. Hachette has the underwear that people want to wear.

Suppose that Hachette decides to set its wholesale price at $14.99.

Suppose that Amazon refuses to buy underwear at a price above $9.99.

Should Amazon be forced to stock Hachette’s underwear and sell it at higher prices?

  • No. It’s crazy to think that an underwear store would be required to stock every single kind of underwear.
  • Each store has the choice to stock whatever items it wishes to sell.

Should Hachette be forced to lower the price of their underwear?

  • No. It’s crazy to think that the store should be able to dictate the distributor’s prices.
  • Each distributor has the choice to set whatever wholesale price it wishes.

So who’s right?

  • The consumers, of course.
  • They decide which underwear they would like to wear.
  • They decide where they would like to shop for underwear.
  • They decide how much they are willing to pay for underwear.

In these terms, Amazon is lobbying on behalf of the consumer, trying to get the consumer the underwear he wants at a more affordable price.

But Hachette must decide how profitable that price is and if it’s willing to sell underwear at that price.

Nobody, especially underwear designers, wants to sacrifice the value of art that goes into underwear.

It’s a negotiation:

  • Amazon wants to stock all the underwear, including Hachette’s special brand.
  • Hachette wants to sell its underwear everywhere, including Amazon.
  • Many consumers would like to buy Hachette underwear at Amazon.

Latest developments:

In the meantime, all consumers should run around naked! Send a positive message to the corporations. 🙂

Chris McMullen

Copyright © 2014 Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

  • Volume 1 on formatting and publishing
  • Volume 2 on marketability and marketing

Follow me at WordPress, find my author page on Facebook, or connect with me through Twitter.


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Amazon vs. Hachette—and YOU!

Book Prices

Amazon-Hachette Dispute

I won’t tell you what to think.

  • I will make some points for both sides.
  • I will mention ways that this may impact both authors and readers.
  • I will show you what you can do, no matter which side you favor.

The main point is that Amazon appears to be pushing for more e-books ordinarily priced above $10 to be priced at $9.99. Hachette (and other publishers) appears to want the freedom to price e-books as they see fit, including those in the $14.99 to $19.99 price range.

A little clarification:

  • Amazon openly acknowledged that some books, such as e-textbooks, should be priced $10 and up (see Reference 1 below). Amazon is NOT insisting that ALL e-books should be $9.99 or less.
  • Hachette is NOT asking to price ALL e-books $14.99 and up. The issue arose over specific e-books.

Whether YOU read books or write them, YOU  are affected by this:

  • Obviously, lower e-book prices would be more affordable to readers. Seems hard to dispute this point.
  • A less obvious question is what long-term impact lower prices on traditionally published e-books may have on reading, writing, and the arts in the future. The arguments regarding this vary (we’ll return to this point later).
  • It’s not so obvious where authors fit into this. In fact, authors themselves have differing opinions on this (see Reference 2 below).
  • Later in this article, I will show YOU where and how to express YOUR opinion.

Points for Amazon

Amazon posted an announcement on their website (Reference 1) and also sent an email entitled, “Important Kindle Request,” (Reference 3):

  • Pricing traditionally published e-book fiction at $9.99 (rather than $14.99 to $19.99) would make those books more accessible to readers.
  • Lower e-book prices would make them more competitive against games, videos, movies, television shows, social media, and other kinds of media that may draw the customer’s time away from reading. With so many other interactive options, higher e-book prices can adversely impact reading, writing, and the arts. (Recall that Hachette is concerned that lower e-book prices may adversely impact reading. When considering other forms of media, it may actually be the case that higher e-book prices adversely impact reading. It’s not so clear-cut.)
  • The cost of producing an e-book may be low enough to warrant lower retail prices:
    • no printing costs.
    • no out-of-stock issues.
    • no warehousing or transportation costs.
    • no need to forecast production.
    • no costs of returned books being destroyed.
    • no losses due to resale.
  • Amazon claims to have researched the elasticity of e-book prices (Reference 1), concluding that an e-book priced at $9.99 instead of $14.99 would result in:
    • 74% more readers for authors and publishers.
    • 33% savings for customers.
    • 16% more earnings for authors (more earnings for publishers, too).
  • Amazon cites the debut of the paperback book as a historical example where drastically lower prices (Reference 3):
    • didn’t destroy the culture of reading and the book industry.
    • were fought by bookstores, who refused to stock the cheaper paperbacks.
    • were NOT favored by some prominent authors, including George Orwell, who perhaps didn’t realize that lower paperback prices would actually help both authors and readers more than it would hurt them.
  • Hachette has illegally colluded with its competitors to raise e-book prices and has paid over a hundred million dollars in penalties and restitution (Reference 4). (On the other side, there may be a fear of a huge retailer like Amazon gaining price control.)
  • Amazon made three offers to Hachette (Reference 3).
    • Offer 1: Make author royalties whole during the dispute through joint cooperation.
    • Offer 2: Give authors 100% of all sales during this dispute.
    • Offer 3: Donate Amazon’s and Hachette’s normal share to a literacy charity.
    • Hachette refused all three offers (citing sanctions that were unilaterally imposed, as described in Reference 5).
  • With subscription offers like Kindle Unlimited, Scribd, and Oyster, customers can pay a low monthly fee like $9.99 for unlimited reading. Traditionally published fiction selling for $14.99 and up seems quite high by comparison.
  • Although $9.99 would be lower than $14.99 or $19.99, it’s still a high price for an e-book. It would still create separation between indie books and traditionally published books, as most indie fictional e-books are priced from 99 cents to $5.99.
  • Authors can choose their publishers and can also choose to self-publish, where they can earn up to 70% royalties on e-book sales and where they can be in charge of their own prices. More and more successful indie authors are succeeding in the competitive book industry, and some of the best indie books show very high quality. Many indie authors are among the best marketers in the industry. It’s no longer a slam dunk that traditional publishing is the best route to go. In fact, a traditionally published author with a large following might do very well with self-publishing. How to publish is an option.
  • Authors are NOT united against Amazon. Although some authors stand against, many are also supporting Amazon (Reference 2).

Points for Hachette

The Hachette Book Group posted an announcement on their website (Reference 5):

  • A free market naturally supports better pricing. If $14.99 to $19.99 is, in fact, unfavorable in terms of economic price elasticity, such pricing will naturally hurt publishers who use this price-point and will naturally favor any competitors who use a lower price-point. It may seem unnecessary to impose pricing constraints, when the outcome can come about naturally through economics in a free market. If, in fact, $14.99 to $19.99 is economically favorable to $9.99, then forcing a $9.99 may seem like a mistake. (There is a fear of price control both ways. Hachette was caught illegally colluding to raise e-book prices, as indicated in Reference 4.)
  • Writing is an art form. It’s difficult to put any price on art. Pricing art too low can devalue it. If an author invests years perfecting his or her craft and spends several months perfecting a book, is that book not worth $20 to someone who appreciates that art?
  • Publishers sell a great number of paperback and hardback books. Higher e-book prices may help to sell more print books.
  • The bookstore is one staple of literacy. It’s a great place for readers to visit. Lower e-book prices may drive more readers away from bookstores.
  • Print books also bring publishers helpful word-of-mouth publicity when people see the books on coffee tables, trains, airplanes, etc. From a marketing standpoint, a publisher that can sell print books on a large scale might prefer to sell more print books than e-books, and therefore may not be motivated to lower e-book prices much.
  • Although the cost of producing an e-book pales in comparison to the cost of producing a print book, publishers must look at the combined costs of all editions. A publisher risks losing money by overprinting and from returned print books, for which it may be wise to build some insurance into the price of the e-book. (Note that Amazon claims that a $9.99 price may actually result in greater e-book profit than a $14.99 price. However, this is a forecast, not a guarantee.)
  • There can still be significant costs associated with producing e-books. A traditional publisher may pay substantial costs, which ultimately helps to foster the needs of authors looking for support for their innovative writing:
    • pay a large advance (forecasting).
    • hire extensive editing.
    • pay professional graphic designers to make book covers.
    • pour much money into marketing (advertising).
  • Traditional publishers do not wish to devalue reading, writing, literacy, books, and art. They fear that lower e-book prices may do just this. (Although Amazon cited an example with the debut of low-priced paperbacks, it isn’t necessarily a perfect parallel with the introduction of e-books.)
  • Hachette’s business has been significantly restricted by Amazon during this dispute (Reference 6). It has become more than just a dispute through words, but has entailed action by Amazon, too. Many popular authors are suffering as a result. (It’s unfortunate that authors are suffering, and that authors have been used as leverage. Blame has been placed on both Amazon and on Hachette for this, as each party had opportunities to avoid it.)
  • Hachette claims that books are not like most other consumer goods, and values “audience, career, culture, education, art, entertainment, and connection” in addition to royalties (Reference 5).
  • In regards to Amazon’s proposal, Hachette invites “Amazon to withdraw the sanctions they have unilaterally imposed” (Reference 5).
  • While not all authors are supporting Hachette, some are. You can read about some of the authors supporting Hachette in Reference 7.

Additional Notes

  • Hugh Howey has an interesting article entitled, “Authors United? I Wish it Were So” (Reference 8). Author opinions on this dispute vary (Reference 2). It would be wise for authors to show a more united front.
  • Indie authors may actually benefit by having traditionally published e-books priced as high as possible. One of the major indie advantages is very affordable pricing.
  • Unfortunately, Hachette authors are losing out in the midst of this dispute. It’s easy to blame either side for this, but that blame doesn’t help those authors.
  • Other book retailers may be benefiting slightly during this dispute.
  • Amazon introduced Kindle Unlimited, offering a $9.99 monthly subscription for unlimited reading of 600,000 eligible e-books during this dispute. The big publishers aren’t participating in this (although Houghton Mifflin Harcourt is), but there are 100,000 titles from smaller publishers. There are popular titles in the mix, such as Harry Potter. Kindle Unlimited makes a powerful statement about the value of e-books, regardless of the outcome of the Amazon-Hachette dispute.

Make YOUR Point

What to do if you’re pro-Amazon:

  • Email the CEO of Hachette and cc Amazon. Instructions for how to do this can be found at the end of Reference 3 below, which also outlines a few points that you might consider making in your email.
  • Click here to sign the petition to “stop fighting low prices and fair wages.” Fill in the info on the right column entitled, “Sign this petition,” and then click the Sign button.
  • Tweet using related hashtags to show your support for Amazon. This might include #Amazon or #Hachette. You might want to voice your opinion using #ReadHachette, even though that hashtag was developed in favor of support for Hachette. Unfortunately, Amazon doesn’t appear to have introduced a special hashtag yet in favor of Amazon in this dispute (#ReadersUnited would have been a good one, as that’s the domain name Amazon used to issue their recent letter).

What do to if you’re pro-Hachette:

  • Email the CEO of Hachette, making it clear that you’re supporting Hachette. You can find the email address at the end of Reference 3 below. Many people will be emailing Hachette in favor of Amazon, so if you support Hachette, you want to be immediately clear which side you’re on.
  • Contact Authors United or Douglas Preston to show your support, or contact the CEO of Amazon to express your opinion in favor of Hachette. You can find contact info for Douglas Preston at the top right of Reference 9 (find his email address below the physical address). Ask how you can add your name to any petitions against Amazon.
  • Tweet using the hashtag #ReadHachette to show your support for Hachette.

Regardless of where you stand:

  • Show your support for authors. They are the ones who work hard to make books possible in the first place.


  1. Amazon posted an announcement on their website regarding this dispute.
  2. The Author’s Guild shows how opinions from others differ drastically on this issue.
  3. Amazon sent an email entitled, “Important Kindle Request,” which is also available at Readers United.
  4. The Wall Street Journal has an article citing Hachette’s collusion to raise e-book prices.
  5. The Hachette Book Group posted an announcement on their website regarding this dispute.
  6. The New York Times has an article describing how Hachette books have vanished during this dispute.
  7. Some authors are supporting Hachette in this dispute.
  8. Hugh Howey wrote an article on author unity regarding this dispute.
  9. Douglas Preston has initiated a petition against Amazon. Also see a related New York Times article.

Chris McMullen

Copyright © 2014 Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

  • Volume 1 on formatting and publishing
  • Volume 2 on marketability and marketing

Follow me at WordPress, find my author page on Facebook, or connect with me through Twitter.


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Elasticity of e-book Prices


Kindle e-book Prices

Here are three important considerations that go into e-book prices:

  • What list price to set
  • What the per-book royalty will be
  • What the net royalty will be

These three figures are related by price elasticity.

The general trend is that a lower list price will attract more readers. But more readers doesn’t necessarily translate into a greater net royalty. It depends.

Suppose you price an e-book for $5.99 and would sell 500 copies at Amazon. Assuming a negligible delivery cost, the royalty would be $4.19 per book, and the net royalty would be $2095.

Pricing the e-book instead at $3.99 may reach more readers. The per-book royalty would be $2.79.

  • If you sell 1000 copies at $3.99, the net royalty would be $2793. In this case, the lower price is worth it.
  • But if you sell 600 copies at $3.99, the net royalty would be $1674. In this case, the higher price earns more.

Sometimes, the lower price may still be advantageous, even if the higher price earns more. That is, the larger reader base may pay off in other ways, e.g. more add-on sales of other books, building a following faster to help sell future books, etc.

A lower price doesn’t always attract more readers. Occasionally, an author raises the price from $2.99 to $3.99 and sales actually improve. At the lower end of the price spectrum, the perception that you get what you pay for can have a significant impact on price. Of course, the book has to appear to be higher quality (and have ample content) to command the higher price, but if it does, the $3.99 to $5.99 price range may actually be more profitable for some books than $2.99 or less.

$2.99 is often more profitable than 99 cents for books that would earn 70% at $2.99, since any book price $2.98 and under earns a 35% royalty. You would have to sell 6 times as many books at 99 cents to earn the same royalty as you would at $2.99. Very short books don’t have much choice; they might not sell at all for a higher price. Series authors sometimes use the 99-cent price point to attract new readers into a series. For authors with numerous books, 99 cents can create some impulse buys of several titles at once.

Predicting Elasticity

Kindle Direct Publishing (KDP) actually has a new beta pricing tool to help authors see some actual data.

You can find the new KDP Pricing Support tool on page 2 of the publishing process at KDP. Check it out.

What you see is a graph. There is usually an abrupt change in curvature at $2.99, where the royalty changes from 35% to 70%. Sometimes there are a couple of price points where the net royalty is predicted to be about the same. For example, I’ve seen cases where 99 cents and $2.99 have the same net royalty, or where there is scarcely any difference between $2.99 and $3.99. But other times one price really stands out, like $3.99.

What we don’t know is how reliable the data will be for any specific new title, or precisely how Amazon is determining which titles are similar to your book.

But any data is better than none at all, right? At least it gives you something to go on.

Well, you can always get your own data. Try experimenting with your price and you can see the impact first-hand.

I like the new KDP Pricing Support tool. When I’ve used it, the graph has seemed reasonable; i.e. the data resembled my experience and expectations.

Of course, each book is unique, and won’t necessarily follow the trend.

The Amazon Book Team recently offered some fascinating insight into Kindle e-book price elasticity regarding the famous Amazon-Hachette dispute.

You can check that out by clicking here (it’s an Amazon page).

Keep in mind that the change in price from $9.99 to $14.99 is probably much more sensitive than a change in price from $3.99 to $5.99 or from $2.99 to $3.99. At the lower end of the price spectrum, a lower price doesn’t always result in more sales, let alone more profits. But in the higher bracket, like $6.99 and above, lower e-book prices usually draw in many more customers.

I must admit, some of my favorite traditionally published authors have e-books selling for $7.99 and up, not too different in price from mass market paperbacks I’ve read in the past by the same authors, and there are dozens of such books that I ordinarily would have read in the past, which I’ve declined to read in the last couple of years because I felt that they were unfairly priced. They could have had much more of my business, and probably millions of other customers, with lower prices. But some of my favorite authors’ e-books have been priced $6.99 or less, and I’ve read many of those books.

Note that print books are understandably different, where the publisher invested in materials, distribution, etc. I expect to pay more for print books. In the case of print-on-demand paperbacks, the $6.99 to $9.99 price range is often less sensitive to price changes, while much higher prices, like $25, tend to be more sensitive.

Chris McMullen

Copyright © 2014 Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

  • Volume 1 on formatting and publishing
  • Volume 2 on marketability and marketing

Follow me at WordPress, find my author page on Facebook, or connect with me through Twitter.


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