With my revised novel in place and ready to go, I decided to review its price. On the print side of the house, the price is pretty much setting for me. Lulu, the print on demand service I'm using, tells me the cost of the book to print it and lets me mark it up from there. Other print on demand services I've looked at do the same thing.
But on the electronic side of the house, I can go as low as zero because it costs very little for Smashwords to convert my book in all the formats they support since the process is automated and used by thousands of other writers.
And since I only have flexibility on price for the e-book, I've been considering dropping the price because it does not seem to be selling at $4.99. As an informal test, I asked the question on Facebook if the price of the book matters. And some people confirmed they are reading free e-books, partially to see what is out there and partially because they are free. Others confirmed they purchase fewer books these days because money is tight. I have no idea as to the percentage of folks who fall into each category but it does bear considering, especially for the self-published writer who can set his or her own price.
And it also confirms my experience. I've got a lot of free downloads for the e-book on Smashwords but only 10% of those result in sales. Part of that is undoubtedly because I'm an unknown writer, or they didn't like the book, perhaps. But I think the majority of downloads are from people who want to see what is out there and have no interest or desire to pay for anything.
This has been happening in software for years. The whole shareware/freeware business. Once upon a time, I would try shareware or freeware and if the program is good I would pay for it. These days I only look at freeware because the cost to upgrade commercial software runs in the hundreds or thousands of dollars depending on what upgrades are available in a given year. The end result is I only upgrade one program at a time and then wait a month of more until my budget permits me to make another purchase.
If other people are doing the same thing with books, this explains a lot. They are saving their money for the next book from well-known writers and in the meantime, read the free stuff because they are avid readers.
In such an environment, I don't see how can new writers can compete.