Are you someone put off by online eBook overpricing? Or are you someone happy to pay a higher cost for specialized eBook information. There are always going to be two camps. I do want to know if the overpricing of many independent eBooks is due in part by affiliate marketing.
When I mention the term eBook, I mean the electronic book. I do not mean that an eBook is an information product. The moment you introduce the term “information product,” you’ve got something completely different than an eBook. The $200 information product does not normally consist of a simple e-Book filled with writing. If the information within an eBook was worth $200, I would assume a publisher would want to pick that thing up. When you get into such a high price range, you’re looking at something that has become a multimedia information product. The high price tag can easily make sense when you’re receiving the content in written, audio, and video format. In a published piece of content the media is split up between book, audio book, workbook, video. Some authors even offer workshops and web courses based on their books. Add these different forms of media into one package and you can see the cost would easily go up.
Why do I still see a single, independant eBook costing $47? I want to look at the very low end product that is simply eBook content. Even a published book available for the Kindle is $9.99 – $19.99 with the majority I’ve seen being at $11.99.
Reason to justify eBook Overpricing:
- A highly targeted niche topic – This is an e-Book that is highly specialized and could solve the pain experienced by the reader. The chance of finding something like this on amazon is even difficult and may require waiting.
At this point in time I cannot think of another reason that could be used to justify a higher price eBook.
This brings me to my original question: Does affiliate marketing overprice the eBook?
Think about this question for a little while. Think about all of the affiliate marketing programs out there on the internet. How many do you belong to? Many affiliate programs will seduce you with offers of 33-50%. These entrepreneurs are willing to pay 50% of the eBook cost for you to promote it. This potential coin sounds enticing! Is that the true cost of your marketing service? More importantly, is that 50% markup to benefit affiliates instead of customers?
Not all customers want to become affiliates within a program. Many people simply want the information contained within the eBook and move on within their field of interest. I believe a great number of people that do become active affiliates are simply seduced by the possible easy income that comes with promoting what they just purchased.
Do many customers become seduced and manipulated by the affiliate income potential? Does this help them justify the higher price because they could ‘make their money back’ as an affiliate?
What if you offered a 30% discount and 20% commission within an affiliate program? Could this help out the majority of the customers that never make an affiliate sale? I believe we can do more for our customers and still maintain a sufficient affiliate marketing program. Adopt this model to other information products and you could see a greater value for customers too. Essentially you, as the entrepreneur, are still making the same amount of income. You’re only paying out less to the affiliates; however, could this price reduction help sell more volume? Would the lower affiliate commission cause your product to be overlooked by the affiliate marketing community and lower your true reach?
Price Perception
The volume question is interesting because of the advice I’ve gotten recently within the Empire Building Kit by Chris Guillebeau. This blog post has been me asking a lot of questions and I never envisioned the Empire Building Kit coming into play. I will share a portion of the information from today’s e-mail because it does relate to my exploration within this topic. The information basically says that within a price range of $11-$19, the reasoning behind the $19 purchase is the same as the reasoning behind the $11 purchase. When this is the case, the best business decision would be to price the product at $19 because there is no change in the customer’s perception of the product.
If the majority of a customer base is willing to pay $19 before their perception of the product changes, you are essentially playing on perception and I don’t believe you’re manipulating. Perception is highly linked to your branding as well. Loyal customers, early adopters, or people that are simply aligned with your branding and values are willing to accept a higher cost. Perhaps the ‘overpriced eBooks’ have nothing to do with affiliate marketing at all.
Does Chris kill my entire thought here? Just maybe.
Let’s relate this back to affiliate marketing and price. Perhaps we’re benefiting all 3 parties with a 50% affiliate program.
$11 eBook vs $19 eBook & 50% Affiliate Marekting Program
$11 eBook
The customer pays $11 and the affiliate makes $5.50 and you make $5.50.
$19 eBook
The customer pays $19 and the affiliate makes 9.50 and you make $9.50.
Chris did not provide a source for this information he gave within the e-mail, but if there is no change in perception on the part of the customer, it would seem like poor business to not go with the $19 price point. With a 50% affiliate marketing program, you’re likely to have more people opt-in and promote the product for you, and you still make almost double than what you would have made at the other price point.
This price level receives the biggest impact related to revenue though. As you go higher, you’re not going to see such a large jump. Perception of a $159 product can only be pushed to $179. Again, I don’t know the source of this information but you can see that as the price gains, I start to see that an e-Book becomes quickly overpriced. You must start to include some multimedia content or added bonus.
Let’s take a totally different look at an affiliate marketing program paying out a more reasonable commission of 15%.
Affiliate Marketing Program Offering 15% Commission
With a program offering 15% affiliate commission, you’re probably not going to gain massive attention from bit affiliate players. From the information I’ve seen, it’s as if they don’t provide a big enough margin worth their time. I’m pretty confident in saying this because I don’t see a huge amount of people talking about the e-Books of Trey Ratcliffe. Trey has 3 eBooks related to photography and HDR Photography. The work Trey does is top notch and he does fill specific pains of photographers interested in organization and HDR photography. His website is insanely popular and he’s priced his eBooks really well (in my opinion).
Let’s look at his $19.97 eBook. The customer pays $19.97 and an affiliate may earn $3.00 and Trey earns $16.97. If he makes the same number of sales as the guy with a 50% commission program, he comes out way ahead. The people that talk about his e-Book’s are serious evangelists because they won’t earn much from a sale. If someone were to talk about this product and I know the potential affiliate income is so minimal, I’ll probably trust the opinion much more. The product must have been awesome! Is a low commission sustainable in markets offering much better rewards?
With this model, I start to see that customers become inspired to buy in the future instead of manipulated. Trey could offer an affiliate program at the 50% mark and possibly sell triple the amount of eBooks. I’d actually love to talk to him about his pricing and affiliate program. I begin to align myself with his affiliate program commission level because I would want customers to talk about the product because it is remarkable. The reward for the customer is within the product and not the money to be made from the product. The pricing and low commission allows Trey to offer 2 low priced eBooks and a customer may pick up both of them and actually spend a few dollars more than the person pricing at $19.
There is no denying that a product can still be remarkable even within a 50% affiliate marketing campaign, however I start to see manipulation creep into the scheme. I start to see people promoting the eBook even if they are not 100% happy with it. Manipulation goes on behind the scenes too as entrepreneurs pitch to get big fish to link to their products. It becomes hard to know what people really believe in.
Sell Your Own E-Book
You may think that an e-Book is overpriced until you go to sell your own. Imagine wanting to have a program that offers 50% commissions and trying to sell your eBook at $9.99. Once you get thinking about selling your own e-book, you can start to see where the price for an independent product comes into play. I’m still not sure I’m comfortable with the $37, $47, $97 e-Book though.
Does a lower affiliate commission promote positive and trustworthy reviews? Would products that are truly remarkable rise to the surface? The only people that actively promote the book via affiliate marketing would be the ones that were inspired by the content. Doing it for the money becomes non-existent.
Still Too Many Questions
I still am left with a bunch of questions. Branding and customer experience aside, I start to lean towards a lower affiliate commission structure to keep money in the pocket of the customer. Everything comes down to experimentation, values, and meaning though. I believe everything is linked back to your beliefs as an entrepreneur and company. They must connect or there is a loss of trust from the customer.
I have to leave this post with a bunch of questions. Without questioning the current systems, I may not be able to justify my own pricing in the future. We may also never create something better for everyone. I ask you to question this post and my thoughts. I know I am! Consider the multiple questions below and either leave some comments, e-mail me, or write your own blog post and link here so that I see it.
Here are the questions I’m still left with:
Are most eBooks overpriced due to possible added costs of affiliate sales?
Is the key learning to never offer an information product that only consists of an eBook?
Do you always offer a number of audio recordings with each eBook to bump the price tier?
Perhaps you skip the eBook all together like in the Question the Rules product (all audio content)?
Would you shop in an eBook store where you knew all of the inventory was below $20?
Is it the added cost of affiliate marketing commissions that cause the higher pricing or is it the branding of many writers? Do these sellers offer something especially unique that justify the higher price? Do they still have a high percentage affiliate program?
I’ve pretty much talked myself in circles. I believe there is great value in keeping your eBook priced under $20. Anything higher should include value added material such as worksheets, audio, video, case studies, consulting, etc.
I hope you feel comfortable leaving some comments on this topic. I left a comment over on Charlie Gilkey’s Blog called Productive Flourishing and I was prompted to write out more thoughts here. I recommend checking the article out over there too. I haven’t seen anyone factor in affiliate marketing when talking about pricing products like eBooks. I’m curious to hear what you think.
Man, how much I’d love to know the answers to your questions, but they are the same I am asking myself, too… I’m especially interested also in the question you raise earlier in your text: “Is a low commission sustainable in markets offering much better rewards?” – Only way to find out seems to try, but the risk is high, of course…
I agree it looks like it could simply come down to trying it out and seeing what happens.
Low commissions really drop the amount a product is promoted. I don’t see a mass number of people trying to pitch an sell affiliate products that offer 15% commission. But imagine you could offer customers a 35% discount. That 35% is factored into the price because if affiliates make sales, the actual seller can still earn decent income.
where is the sweet spot?
Maybe you go outside the model entirely.
The eBook is not within the affiliate marketing program at all. Your affiliate program starts with your information products. These include the eBook and value added recordings/video/worksheets. This is where you build your tiered product offers and buckets.
Great post here, Scott, and though I haven’t written a lot about affiliate marketing recently, I can tell you there’s more to the “inflated” price of ebooks than affiliate marketers, but the third party promoters definitely have a role in the accepted price of ebooks.
I haven’t done extensive research on it quite yet, but many of my friends and partners have commented that affiliate sales don’t make a dramatic difference in sales volume, with post-launch affiliates selling in the range of 5-20% of the products. Obviously, that’s a high range, but it’s hard to have split-testing since individual audiences and promoters have different effects on this.
That said, I think the impact of affiliates promotion is far larger than the sales that they get recorded. It’s not about buggy technology or scams as much as it is about building awareness around the product.
My point here is that, though affiliate payouts are factored into the cost of the product, they’re not the sole justification for the price of the ebook. And the payout is also often not the justification for the 50% – one idea is that affiliates should get a better cut on an ebook precisely because it costs the creator nothing to sell a product once it’s produced, but it does cost an affiliate something to promote when you factor in their time, energy, and attention. Chris G. takes it a bit further and offers 51%, but that seems to be based on the principle more than the payout – that 1% doesn’t make much difference.
Having produced low-cost info products – I know you ruled out info products instead of just ebooks – and having produced higher-costs ones, I can tell you that customer perceptions are stronger than a lot of people give credit. I’ve had online entrepreneurs explain to me in person that they didn’t buy one of my cheaper products because they thought it would be crap and not worth their time based solely on the price. I’ve also produced more expensive products and had people tell me that they didn’t buy it because it was overpriced. From my POV, I try to create products of a high caliber, whether they’re $10 or $129, and unless you make the false assumption that more content = more value, a bigger variable than the quality of the product is the perception consumers have about the price:value ratio.
Market dynamics are determined by the inter-related actions of consumers, producers, and promoters. I really do wish it were as simple as pointing to one of the three, but it’s not. And, like you and Fabian, I wish I had better, more determinant answers.
Hey Charlie,
Awesome comment because of the factors you pointed out. This is why I started to talk myself in circles. And this is something I might even urge people to start doing.
I started the post with the idea to simply question if independent ebooks are overpriced due in part to the affiliate marketing commissions. Upon initial glance it could seem like that. While writing and trying to answer some questions I asked myself, I started to find cases for the higher affiliate commissioning.
I also started to think about business and personal branding, company values and beliefs, and the costs associated with other factors. In my response to Kevin, I started to note a cost shift from physical factors like warehouse, shipping, inventory, and distribution to convenience, portability, environmental, and ease of use (highlighting, notes, search, sych, multiplatform).
Market dynamics are also interesting. As I got deeper into the post, I started to notice that there are so many dynamics at play in pricing a simple ebook and other information products. I didn’t want to simply accept how other products are priced and wanted see if I could figure out what was going on.
When I started to compare Trey’s products at 15% to Chris’ at 51%, I said that the higher commission is totally beneficial due to the amount of talk or awareness that is built because of it. Trey has a massive following and so does Chris. I start to feel it’s a good comparison. A debate between the 2 of them would be internet gold. Trey’s niche is highly focused though.
I mentioned branding and perception before and I believe this is something you could get into when you mentioned creating high caliber products. Over time, I could see you not having a product below X$ because the perception of everyone is that Charlie puts his heart and soul into everything and you can ‘trust’ that it’s worth far more than X$. I mean we see this effect at Apple right? I could go buy a PC for half the cost of my iMac but I don’t.
Here I am getting onto polarization and a higher cost does push a group away but it also attracts another group. So much psychology at play.
I get down to this – Principles, Values, Beliefs, Cause, and your ultimate hungers should align with everything you do. 10% commissions or 80% commissions, it doesn’t matter to me as long as its aligned with why you’re doing anything at all. This is why I started to question current models and thinking.
I definitely agree that most customers just want the information within the e-book and doesn’t want to become active affiliates within a program. Affiliate marketing programs aren’t all that bad — you just have to keep looking for the right one that would still keep “you” interested, not only for money, but also for the useful information it contains.
I agree that affiliate programs aren’t all bad. I’m a member of a number of programs from amazons 0% to Chris’ 51%.
I just started to wonder if the affiliate program didn’t offer 51% could the product become 40% or 35% cheaper for customers? Is the premium pricing part of the branding and perception of the product or is it to buffer any potential affiliate sales made?
When I ask the ebook question I am particularly interested in traditional print books that also have a digital counter part.
I can fully justify paying $20+ for a physical copy of a given book, it makes sense. I am being provided not only with information but with a product that I can handle and hold. I understand that there are costs involved in producing the physical book and thus there is a cost associated with it. What I don’t get is how ebooks can cost as much as they do.
I’ve been looking ar a couple of books lately who’s physical copies are $19.97 and who’s digital copies are $15.97.
I don’t get it.
Personally I would rather buy the ebook version, to save on space, save the environment, portability etc but at that cost I am more apt to purchase the physical copy, if I bother to purchase it at all.
At the prices mentioned there is a good chance that I don’t by either copy and just wait to find it in a used bookstore or a bootlegged digital copy. However, if the ebook version were 1/2 the price ($10) (considering it is a one time conversion, no printing, formal shipping costs etc.) I wouldn’t think twice about it, I would just buy it up.
I do work for a small (very small) book publishing company that is currently under going the transition to make more of their works digital. The general manager of this copy sent me this link offer a little bit of insight:
http://www.guardian.co.uk/books/2010/jul/12/ebooks-publishing-deals-fair
(paragraphs 4 & 5 in particular)
I totally know what you mean. I ‘ve been looking at an eBook version of a printed book that is the same price as it’s hardcopy on amazon. I’m surprised and I don’t usually see 19$ eBooks.
I haven’t bought it yet. I would have if it was $11.99 probably.
Is it convenience?
Do companies make a few bucks on shipping?
I’d start to say that they can get away with these $11-$20 costs even for ebooks right now because it’s so convenient. Getting the ebook means I can save space, help the environment, and it’s portable. This is very convenient so there is a perception shift from a regular book. Suddenly these factors become selling features that books don’t have.
Hence they now have a fee to charge the public for the ebook version. Sure, don’t want to spend that on the eBook, get the printed version but you don’t have all those extra features.
There is a shift from warehouse, distribution, and printing costs to the cultural focused issues of saving paper to help the environment, portability and ability to take your books everywhere, and the highlighting/syching/benefits that come with a digital version.
I am starting to see the cost is for different reasons than before.
It’s a very interesting issue and there are big people talking about it. I take it within the independent market, you’d never pay $27, 47, 97 for an ebook then? Imagine amazon trying to charge that!
Found your blog here from dofollow.info. Looking good, very nice design. To comment on your article, yeah I’m sometimes put off by ebook overpricing. I understand to a certain extent, but sometimes it is a bit much…
E-books are great – they save space, its portable and saves the environment. Of course, we must not forget that there are other costs to consider regarding normal books such as production, promotion, distribution, copyright, etc, which adds value to the overall costs of a typical printed book. If the e-book has been set to a price wherein it is less the price of its printed version, then I guess it is worth buying especially if the content is deemed unique and valuable to the buyer.
I suspect that the price of the e-books is probably related to a few factors;
1) the price of limited or small runs of physical books
2) special subject matter (more likely to be technical, scientific or research as opposed to slushy novel)
3) positioning of e-book quality or quantity (comparison of e-book to conference materials, where conference might cost hundreds of dollars).
It is also interesting how these factors are counter to the following; distribution cost preceptions of digital publishing and the long tail effect of commitisation. As the end of the day as you have said it is probably a case of suck it and see.
I think it’s all about perceived value.
My affiliate coach raised the price of his membership by $10 because from his original measly $27/month because he was receiving emails from people who literally told him that for his service couldn’t be any good for the price.
Interestingly enough, when he raised the price, more people started to join, and the freeloaders left.
So do I get mad at overpriced ebooks? No. Not if the information I paid for worked for me and got me ultimate success. That’s why some people are happy to say it was worth paying $5000 for a real estate flipping course. They saw the value in it, and felt it was worth it.
Think of it this way. Suppose you pay $6 for a course, and it turned out to be complete rubbish. You think to yourself, “You get what you pay for”. But if that same course was $100, and it was just as rubbish, then you claim it was overpriced.
It’s all about perceived value.
Hey Gina,
Awesome points in your comment. Perceived value is right on the money. Perhaps its the book publishing model that is the issue and not the ebook model. We could see millions of dollars of research go into a published book and cost $25. It could help someone earn millions of dollars. When we look at books, even non-fiction, do we see them mainly as entertainment? I’m only asking because of the published costs vs many independent book costs.
I plan on writing more about the ebook pricing and some ideas I have for the release of my photography ebook. I wonder how it would be perceived with the ideas I have. Hope you come back and give a critique :)
Thanks again for taking the time to comment!
I think the important things driving ebooks at the moment are the perceived value and branding behind them.
As far as affiliates–my promotions range from a few percentages to 50% or more. When I placed my book in an affiliate marketplace the veterans said that the best way to get picked up by the better affiliates were by making sure the percentage was over 51%.
I know that I am picky about what I promote and so although percentage is nice, I look for something I can feel good about promoting.
In the book publishing world, the model is ridiculous. I know my first publisher budgeted $25,000 to promote plus the publishing costs and staff salaries.
It made back the royalties and their investment but the price point was a bit low and many bookstores believe after 3-4 months that the books are outdated.
What people pay for is the immediate availability due to instant access and niche specific topics (which book publishing has moved away from in general) that can help them solve a problem or teach them something they can use.
Personally, I hate electronic books because I am online so much that the last thing I want to do is read an ebook.
However, I ordered one recently because I wanted the instant access and updates that I am sure will be provided on the topic due to fast changes in the market.
It cost about as much as the hardcover book. Would I do it again–probably not.
Also, I think a lot of products are way overpriced and driven by the Internet marketing crowd instead of normal folks.
When it comes to fees for things I don’t think twice about a price point under $50 and wonder sometimes about the quality and value of those under $20.
It will be interesting to see what else you uncover or explore related to this topic.
Almost everyone that makesmoney on the internet (even the millionaires) do so through affiliate marketing. Being successful in affiliate marketing involves knowing the formula that makes other affiliate marketers successful. For instance, autoblogging. Autoblogging is one of the least well-known forms of making money for quite some time… particularly because it’s quite difficult to make a good auto-blog. Yet, when done right, it can provide you with a perpetual passive income with the only real work required being the setting up process. Video Marketing, and several other marketing strategies are all designed to drive traffic to your site, can be incorporated steadily in order to raise the position your site appears in the search engine results page when any one searches for a term related to your site. And yet, even this can be totally automated.
I’d love to know the answers to your questions, too. I think you make some great points about affiliate marketing driving up the price… I think that’s completely true. However, I also think right now they are more expensive because they’re relatively new and “exciting” to the consumer, so they are willing to pay more. Just an idea.