Book prices are going to continue to fall. That's my big prediction for the next decade in publishing. There are millions of Kindle books out. Millions more in amateur works are on the way. Millions more again are coming from the huge back catalogue of still-in-copyright but out-of-print titles owned by both authors and publishers.
Simple economics says the greater the supply, the cheaper the price. Of course, books are not a true commodity. They aren't fungible, and they are not easily comparable (on anything other than a very basic level).
The truth is, the general public won't pay for something they can get legally for free. Amazon have moved free titles from a side by side comparison on bestseller lists to a separate page. I expect they have good reason for this. I expect that the reason is, free offerings reduce paid sales. The extent of that reduction is not something Amazon make public, but I'd guess it isn't insignificant.
Indie authors used to have one huge advantage in terms of pricing - they could undercut or go free more easily. They still have the ability to price competitively, but publishing houses know that free (and 20p) can be a solid way to steal market share. Back catalogues are almost a freebie for some publishers. The costs of editing etc have been covered or written off for years, so a re-release is like finding change down the back of the sofa. Even independent authors can't compete with that level of cost base.
Indies also compete with each other. Perhaps this isn't competition for sales, at least not directly. But they do compete to be heard. Twitter, Facebook and other social media is a veritable yelling festival for some authors. Even the less aggressive tweeters still mention their work every now and again.
Readers are tired of it. They want quality reads at the lowest possible price. Most will pay for quality, but finding quality is hard work. Amazon tries to help with also bought recommendations, reviews etc but all this does is incentivise authors to try and game the system. One look at the success of e.g. John Locke after buying a thousand reviews (and selling a million copies) shows that authors are not competing on a level playing field.
For some, that means sticking to bestseller lists. For others, it means avoiding unknown and independent authors. Both are a shame. Bestseller lists polarise the system by making those already selling sell more, at the expense of those not on the lists. Avoiding independent authors makes it even harder for someone to break out.
Going free is often cited as the solution. Free is the one price where readers don't have to think. They just say 'yes please'. They may never read the book, but they will have the rights to it and so may come back to it one day. In the past this has had a huge knock on in terms of 'on site' promotion at Amazon due to the way Amazon algorithms work to display popular titles.
But if you give away your book 50,000+ times for free, that leaves a lesser audience left to buy it. A shrewd author might therefore think 'How can I monetise free?'. It's not easy to make money out of giving stuff away, but publications like The Metro show it is possible. Free books still retain sub-rights so we might sell foreign translation rights, movie rights etc. I assume most savvy authors are exploiting those revenue streams already (or trying to).
Realistically, that leaves advertising. We can't put direct adverts in Kindle, not without feeling Amazon's wrath (and getting a load of negative reviews).
But what about more subtle product placement? What if Eleanor wore Sweaty Betty jogging shorts, stopped for a sip of Evian and left her Reebok trainers unlaced?
How about local restaurants? Got a dinner scene? I'm sure a few restaurants would pay for the novelty value of having a book set there; "Morton edged past the karaoke machine as they wound towards the table in the corner. Bunga Bunga was unusually quiet, but they were eating at 5pm, and the Battersea crowd rarely descended before nine."
Do it right, and you could sell space in every chapter. The £3500 figure we calculated as the minimum required to pay minimum wage plus production costs seems eminently doable if we charge a few hundred pounds per mention. No one has really done it yet, so I'm sure some businesses would happily cough up. £500 for a mention in a book distributed to 50,000 plus readers is a bargain, and a gamble most proprietors would take.
So my question to you is, would you do it? Or would you advertise your business in such a way? If so, how much would you charge/ pay?