The Pricing Scheme

Hey guys! I hope that you enjoyed Tuesday’s post, or that it at least made you think a little bit about the company that we work with so often. It’s hard to find anyone these days who doesn’t shop with Amazon, or who doesn’t at least check their prices before buying something in store. But that’s part of the reason why we need to gain some knowledge about this business and about what they’re doing to the industry that we so love.

Let’s get to it.

Amazon sets their own prices for everything.

And I do mean everything. They do their level best to have the lowest price available on every product they have, to keep people coming back to them time and time again. But that means that they’re not always working with the people behind those products, to make sure everyone involved is getting paid. (and if you're an author on Amazon, thinking "but they let me set my own price!"—they gave you price parameters, didn't they?)

See, like I said on Tuesday, Amazon is only out for Amazon. Their primary goal is to make money. They’re a big business, so of course that’s the way it is. Really, that’s the way every business is. Amazon has developed a system that gets them a lot of sales. A system of low prices and free two-day shipping, which is really hard to ignore. Thing is, on the vast majority of those products, Amazon sets the price. At the very least, they define how you have to set your price, to make sure that they’ll still be making a decent cut off your sales.

Here’s the real thing though: although Amazon is known to have competitively low prices, they’re not pushing low-priced sales anymore. I’d be willing to bet that there aren’t very many people who noticed when Amazon started pushing higher prices, because a lot of us stopped looking anywhere else in our shopping. Amazon has what we're looking for, so we’ll get it from them.

Bad idea, anymore.

Here’s an example, from my own experience:

I want to buy a game. It’s called Dominion, and it’s a lot of fun. Look into it if you don’t know what it is. Anyway, I found Dominion on Amazon, and it was a good price, so I put it in my cart and I left it there so I could buy it in a couple days. By the time I got to it, the price had gone up. Except that when I wasn’t logged into Amazon, seconds before, the price was lower that what my cart now showed.

That’s only one example. I’ve seen it happen a lot, in several people’s experiences. Amazon is quietly pushing higher sales by slightly bumping the price up on a product that they know you want, since you put it in your cart.

But I’m sure you’re thinking that that’s just for regular products, and not for books. Sure, they might be pushing higher prices for things, but wouldn’t that mean that authors would be making a larger portion?

Nope.

Because Amazon is known for having the lowest prices on books. They very specifically price their book products to be around fifty cents less than the same product at the Barnes & Noble website.

So, though Amazon is raising prices on products, they’re not raising prices on books, which means that the royalty earned on books is still as low as ever.

Let me explain a little bit.

If you’re a self-published author, and you’ve published through Createspace, you have options on how much royalty you want. So let’s say that you’re in the 70% royalty program. Okay, so that means you’ll get 70% of what Amazon makes off every sale. But here’s the thing: if you’re not a Createspace author, you still have to go through the same system. So instead of getting that 70%, you’re getting a percentage of that 70%, because publishers can’t pay you what they didn’t get paid in the first place.

And I’m sure this is making some of you see Createspace in a good light, but it really shouldn’t. Createspace is dangerous.

The big name authors that you know and love are being pushed out of their royalty by this company. New authors with amazing books are being prevented from earning what they should be earning, because of this company. Authors who didn’t settle, authors who went through a traditional publishing house, suffer because of the way Amazon runs their business.

But Amazon is smart, you see, because they made you think their system was a good one.

Here’s what it all really boils down to:

As a reader, and as a writer, you have to support the industry. If you don’t, then you’re a hypocrite. Yeah, I said it. You’re a hypocrite if you won’t support the industry you claim to be a part of.

The only way to support that industry, however, is to buy books (and read them, obviously). If publishers don’t make money, they close their doors. If they close their doors, thousands of authors lose their pay. Books end up collecting dust or being burned rather than getting into the hands of people who would love to read them.

And here’s the crux:

By buying through Amazon, instead of through bookstores or direct from publishers, you’re taking money from authors and the publishers who back them. You’re contributing to the collapse of the industry and the rise of an Amazon monopoly.

We cannot have that happen, friends. We can’t. If Amazon is the only company left through which we can publish, then there will be billions of authors on only one site, with no way for anyone to find them except to scroll through endless pages of books.

If you’re on page fifty, how many people do you think will even see your book?

That’s the problem. That’s why we need to find a way to do what we do without resorting to giving all our time and effort over to Amazon.

That’s why I no longer buy books from them.

That’s a big part of why I’m doing this series, this month.

[love]

{Rani D.}

p.s. I had some questions yesterday, about whether this means my books will be leaving Amazon, and RAD will no longer be working through them. Let me assure you, my books won't be leaving Amazon. As always, whatever views I express in Too Many Books to Count are solely my own, and have nothing to do with RAD Writing.