One of my favorite oldie-but-goodie articles that is worth a read is a post written by author J.A. Konrath, who explain the conundrum beautifully. If he prices a book too high, he loses sales. If he prices a book to low, he may receive an increase in the sale of books, but his royalties are much lower. While he identified his “sweet spot” at $2.99, I think a bit more goes into the thought process of pricing books.
It’s all about the royalties!
Amazon has a two-level royalty structure that is solely based on book price. One of my favorite articles on the how and why of e-book pricing including such things as loss leaders is another oldie-but-goodie written by The Future of Ink. Take a deep look at this article when determining the genre of the book being priced. I think there are several great points that this author makes that determines price points, as well.
What are your peers’ prices?
This includes doing research into indie authors who write in the same genre and are at the SAME point in their career and the SAME level of visibility as a recognized author name. For example, an indie author who has achieved status as being an award winner or is on one of the big bestseller lists is going to be able to price their e-books higher than someone who is just starting out or has not yet achieved that status.
I will never forget a client that I worked with several years ago when I first started Author CEO. She had written a memoir, wrapped up in a pseudo true crime story. My mouth hit the floor when I saw that she had priced her book at $9.99 on Amazon. When I discussed this topic with her, she became flabbergasted and insulted that I would even suggest that she sell her book for less money than what she had priced it for. I asked her how much her peers were charging for their books. She told me the $10 range. Now, I knew that wasn’t true because I had done my research prior to sitting down with her.
When I asked her which authors she was referring to, she mentioned Gregg Olsen, M. William Phelps, and Ann Rule. I gently had to remind her that she wasn’t those authors—yet—and that this was her debut novel. I encouraged her to revisit the price. I can still remember the appalled look on her face. She then started to argue with me about the blood, sweat, tears, and money that went into the production of the book and couldn’t imagine how I could even suggest such a thing. She chose not to follow my advice. When I checked her book ranking for the purpose of this article, she still had basically the same number of reviews on both Amazon and Goodreads that she had the day I sat down with her three years ago.
Patience and strategy are key!
The price of your book must remain competitive in the market where it is currently placed. Let me give you another example. I have an author friend who priced her books in the less-than $3.00 range. At the time, she was really just starting out and beginning to develop her brand and portfolio. As more and more people were reading her books and her ratings on both Goodreads and Amazon remained high, she was able to slowly start increasing the price of her books without seeing a blip in her sales. Eventually, this author started to get recognized for the true talent that she is and her books started to win awards. At the same time, she was hitting several national bestseller lists. This allowed her to take all of her books to the next level in pricing comparable to what some of the traditional publishing houses are selling their books for. Her method: Patience. She developed a strategy and even though she and I had many discussions in which she told me that she wanted to bump up the price, she didn’t do it until the right time. Her royalties are now paying off for that nail-biting patience.
How about dem sales?
There will be occasions to put books on sale. For that reason, unless a specific book is considered a loss leader that is intended to introduce readers to your higher priced works, it is critical to be careful with the pricing of e-books. If a book is priced too low, there is only one way to go and that is free. This approach is fine if that is the desired outcome. I know authors who use sites such as BookBub as a regular part of their marketing plan with fantastic success. They have identified this scenario prior to identifying their pricing structure and can take this into account when determining the ROI of BookBub and similar sites, yet they still make a profit during the sale.
As you can see, there are numerous factors to take into account when determining the sweet spot, as J.A. Konrath calls it, for the price. Price a book too low and royalties are affected. Price a book too high and sales are affected. Don’t be like Carnac the Magnificent (why yes, I am showing my age) in pricing e-books. It is much more strategic than that. As you can see, it is also critical to keep ego in check.
Next in the Publishing and Selling eBooks with Amazon series: KDP vs. KDP Select.
What pithy tips or great articles have you heard or read when pricing your e-book?
About Naomi Blackburn:
Naomi Blackburn, owner of The Author CEO, a consultation firm dedicated to helping independent authors navigate the development of strategic business plans and the marketing world, holds an MBA and has worked in the field of business development, sales and consulting for 12 years. A former social worker, she has helped hundreds of clients meet their life goals. A top 1% Goodreads reviewer, she comes to the world of books from a reader/reviewer’s perspective. She strives to help authors achieve their goals by teaching them to think of themselves as CEO/entrepreneur of a small business and helping them negotiate the business side of selling books.