Monday, February 27, 2012

How Do You Price an E-Book?

$2.99 $0.99
Alternate Title: Open Minds is on sale!
(two days only)

One of the agonizing great things about self-publishing is that you get to set your own price. And not just once! You can change your price as much as you like (whether this is a good thing to do, is another matter)!

When I first published Open Minds, I had to decide how to price it. One of the attractions of self-publishing over my previous small publisher, was that I could offer readers a lower price, so I already knew that I would price the ebook under $5 (compared to $6.99 for my small press ebook). (Paperback pricing is a different topic, which we will ignore for today.)

Pricing of Traditionally-Published E-Books
Trad-pub e-books are usually priced close to the paperback price (and sometimes above!).
#1 Bestseller Children's Action&Adventure
Hardcover: $17.99 $9.46
Kindle: $7.49
paperback: $5.39







#85 Bestseller Children's Action&Adventure
Hardcover: $16.95 $11.53
paperback: $8.99
Kindle: $6.29





Pricing of Self-Published E-Books


#86 Bestseller Children's Action&Adventure
paperback: $12.99 $9.35
Kindle: $2.99







Pricing self-published books under $5 gives them an advantage over trad-pub books on price, which helps make up for the disadvantage of being a relatively unknown author. But how to decide the best price point for your book? There are lots of arguments back and forth on this, but the advantage for indies is that 1) you can experiment, and 2) you don't have to always stay the same.

$2.99 price point - popular because it's the lowest price where you earn the full 70% royalty.
$0.99 price point - popular as an "impulse buy" price point, but royalties are only 35%.
$2.99 to $4.99 - gaining popularity for more established self-pubbers, and those who want to ensure their self-publishing business supports itself.

If you look at the Kindle bestseller list on Amazon for my category (Bestsellers for Children's Action & Adventure Literature), this is what you see:

(snapshot: will vary with time)
(on this particular day, Open Minds was in the top 100 at $2.99)

Things to note:
1) Most trad-pub titles are priced over $5 (most popular price = $7.99)
2) Trad-pub titles under $5 are all short chap/picture books.
3) Most self-pub titles are priced at $2.99 or $0.99, with one title at $5.99
4) 8 of the top 100 are indie titles

Income vs. Sales
At $0.99, an author makes ~$0.35 per sale.
At $2.99, an author makes ~$2.09 per sale.
At $4.99, an author makes ~$3.49 per sale.
(For comparison, a traditionally published author makes ~6-8% on a $7.99 paperback for $0.47-$0.68 per sale, and 17.5% royalties on ebooks for $1.39 per sale )

So, when a self-pub author lowers their price, they are definitely leaving money on the table. But (hopefully) the lower price will bring more sales. Do you have to price your book at $0.99 to get on the bestseller lists as an indie? I think the answer is clearly no. Two-thirds of the indie titles in this top 100 list are priced $2.99 and above. When I originally set the price for Open Minds, I chose $2.99 because it was the lowest price I could set and still get the full 70% royalty. I hoped that price would encourage people to try a new author, while still allowing me to make back my investment. (One reason some indie authors are raising their prices is because they have experimented and found that for their fan base and their particular book(s), the higher price did not reduce sales.)

So, why put Open Minds on sale for a couple of days?

Jumping the Divide
One of my fellow Indelibles authors coined a term jumping the divide to describe moving beyond your immediate social circle to a larger readership for your book. Many authors work to expand their social network (which is great!) but once you're self-published you should also consider ways to jump the divide, to get your book out to people who will love the book first, author second. Ways I've seen authors try to jump the divide:

1) let a book go free (temporarily or more permanently as part of a series)
2) participate in KDP Select (Amazon's lending program) for more exposure
3) dropping price to $0.99 (temporarily or permanently)
4) building word-of-mouth through book bloggers
5) buying ads
6) many others I've probably forgotten

Up until now, I've mostly used #4 (and had great response, not to mention enjoyed getting to know book bloggers). Today I have a Pixel of Ink ad running, and next week I have a Kindle Fire Department ad. These ads will (hopefully) help Open Minds jump the divide to a wider audience, but my observation has been that these ads work best at an impulse price ($0.99 or free). So, I'm trading income for sales during the ads by dropping the price and hoping that Open Minds will find its way into many more hands. The temporary boost in rankings that will (hopefully) come from the ads isn't as important as jumping the divide to get the book to people who haven't heard of it before.

Do people download a $0.99 book on impulse and then not read it? Yes (I've done this myself). If it intrigues them, will they read it? I hope so. If they really like it, they might tell their friends or leave a review on Amazon. #WIN They might even read it by the time the second book Closed Hearts comes out in late May, and come looking for more. Which would make me a very happy author.

Will it work? Who knows. That's what experiments are for. :) #wishmeluck

24 comments:

  1. This is an interesting post. I have a friend who is going to self pub her women's fiction book, but is looking at charging around the $7.99-$9.99 mark. She figures people will still buy it because they won't realize it's self pub. Many non writers only know the difference after they read the book. They don't pay attention to who the publisher is. When your ebook is priced in line with traditionally published books, readers might think it's traditionally published (at least that seems to be the latest line of thinking I've been seeing lately).

    Me, I won't buy a self published book that cost that much. When I pay that price for a traditionally published book, it's because I know the book has gone through several round of editing with an editor. I'm paying for that. With self publishing, even if you hire a freelance editor to give you feedback, that doesn't mean your book is of the highest quality after you make those edits. It might still need more help.

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    1. I'm not so much in favor of trying to "pull one over" on the readers when it comes to self-publishing. This, I think, is a writer's viewpoint, not a readers viewpoint. First of all, as you say, I think most readers don't care if it's traditionally published or small press or self-pub. They care if they like the story. You know the insides of the business, and so have some sense of editorial processes, but most readers will go by the pleasure of their reading experience, without knowing the nuts and bolts behind why.

      My small press book was priced higher (both ebook and paper)- people who knew me would buy it, but there was some price friction for people who didn't. For Open Minds, I'm not seeing the same price friction (at $2.99) and just my brief experience (so far) at $0.99 is showing even less friction.

      I'm afraid your friend will be disappointed in the sales she gets at the high price mark. But there's no reason not to try it! She can always lower the price later.

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    2. p.s. I don't think the divide is self-pub/trad-pub (which few people know) or even edited/not-edited (which fewer people know) but know/unknown. If you look at the top 100 bestsellers, there will be the authors you know and the ones you don't - if the ones you don't are low-priced, it's easier to take a chance on purchasing.

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    3. Well said. I love to troll the Kindle books, and I'm much more likely to try someone new if the price is low. Once they've proven themselves, I'll pay more. You can't always trust the reviews when a book is brand new. I've gotten burned a few times and was glad it was only 99c.

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  2. Seems like the opinion on this varies widely between writers and readers. Not sure there is one right way. I've purchased self pubbed books at 4.99, after reading the sample, and being totally impressed. I've not purchased books at 99 cents. Or have and never read them.

    Dean's article of late made some good points. At a higher price point, authors might not get the rush of impulse buys, and the buys will build more slowly, instead of spiking. But he and Kris are not about the small spikes in sales but the long term sales and word of mouth.

    I think each author has to experiment with what price point works best for their book, their sales goals, and what the market can handle.

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    1. I agree there's no one right way - each book will have it's own audience and price-elasticity. Dean has some good points, and I think pricing for long term income and slow word of mouth building is essential. But markets change and authors evolve, so I can see a more established author with many titles (like Dean or other established self-pub authors) pricing higher. The one $5.99 self-pub book in my top 100 chart above has been on the bestseller lists for a while, but just recently shifted to $5.99. There are other established self-pubbers doing similar things (not all). But I think a relatively new author will not be able to drive the sales necessary for word-of-mouth to build at such a high price right out of the gate.

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  3. Thank you for being so open and informative with your experimentation! I'm with you on the thought that readers will be more likely to take a chance on an unknown author when the price is below that $5 mark. If I had freedom of pricing I'd mark my eBooks down a few dollars, for sure.

    Ninety-nine cents I only like for temporary sales - or for short stories. And I think you're so smart to time it with the ads. I look forward to the results of your experimentation. ;)

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    1. Thanks so much for stopping by Nicki! (Nicki is my publishing-sister at Omnific - check out her adorable 80's romance The Three Daves) I agree about 99cents really being only a sale-price point, not a permanent price point ... unless it's a loss leader for a series (I've seen some authors have great success with this as well). The sales vs. income debate is a tough one for authors to navigate through! (Small publishers too.)

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  4. Informative post, Sue. I can imagine it's nerve-wracking and exciting to set your own price and see how that affects sales. I'm psyched for you that word is getting out about Open Minds!

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    1. Thanks Jennifer! I certainly have to put a lot of thought into pricing - more than when you have a publisher who does that for you, for sure! But, like with all things indie, I like having the choice.

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  5. You are a superstar! for sharing this. Following your journey is so educational, I hope everyone's doing it. It seems to me the $2.99 price point would be the way to go except for doing the quick short-time 99-cent with ad deal.

    You are seriously doing well, and I hope it just continues on. Best! <3

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  6. this is fascinating stuff. I've always wondered about stuff like that when it comes to e-publising.

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  7. Thank you so much, Susan for sharing this info with us! Very interesting! And I love that 8 indie authors are in the top 100! (and even more love that one of them is you!)
    I like the temporary sale of 99 cents. In fact, your book was on my TBR list and I thought I'd buy it when it was next to read, but I might as well buy it today. See, your pricing strategy already worked! (Well, sort of. I was already going to buy it, so you just have a more immediate sale instead.) I'm excited to read it. I've heard FABULOUS things about it!

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    1. Thanks for buying Open Minds! And yeah, I figured it would accelerate a few sales, but that’s okay! It would only be the people who heard about it in time (like you!) that were already my besties!  Just to see what would happen, I actually put it on sale yesterday (so it would be in time for today’s ad), without any tweeting/FBing/blogging, just to see if the price alone would make a difference. It about doubled my sales over a normal Sunday, so YES the price definitely makes a difference. But I don’t see 99cents as a viable long-term strategy, just as a short-term thing to see if it could boost sales, get the word out. Just one of many ways to feed the word-of-mouth engine.

      I hope you like the book! That’s the part that makes all the difference. 

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  8. Holy Cats! Open Minds just cracked the top 1000 on Amazon! *squees*

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  9. Baby needs new shoes. So, you know, I'm in favour of whatever price point covers some nice little Adidas sneaks.

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  10. Just finished Open Minds that I picked up in your pixel of ink sale. Great read, looking forward to the sequel. Will be happy to pay full price for it if it's anything like the first book.

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  11. Just finished Open Minds that I picked up in your pixel of ink sale. Great read, looking forward to the sequel. Will be happy to pay full price for it if it's anything like the first book.

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    1. Thanks for buying Open Minds! And for sharing ... it really helps to have feedback like that!! :)

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  12. I've been agonizing over this lately myself, trying to get my novel into broader notice. One thing I think that is worth considering is branding. What does my price do to my value as a brand? What kind of self-publishing impression do I make on the readers?

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Erudite comments from thoughtful readers