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One of the most pressing questions for indie publishers is, “How much should I charge for my ebook?”
Ebook pricing is a fluid topic that depends on many factors. However, there are fundamental principles you can apply year after year in every genre.
Pricing is one of the fundamental Ps of marketing, so it’s important to price your ebook with a strategy in mind. The following principles will help you understand the fundamentals behind pricing, so as the market changes, you’ll know how to change with the market.
With a little research on pricing in your genre, you’ll be equipped to devise a strategy to achieve your sales goals.
How do I price my ebook?
Short Answer: All ebook pricing is an ongoing, never-ending experiment.
The Long Answer: Pricing is driven by supply and demand. They pull against each other to determine the product’s price, whether it’s petroleum, milk, or your ebook. Within the tension between supply and demand, there are elastic and non-elastic prices.
The classic example of non-elastic demand is electricity. Regardless of the cost per kilowatt, you’ll use about the same amount of electricity. If the price of electricity takes a jump, you’ll probably try to turn out lights when you leave a room, but you’ll still use your heater and your refrigerator. Most of your appliances will keep using electricity.
The non-elastic equivalent in publishing is textbooks. College professors require you to buy certain textbooks, and the price of the book doesn’t determine how many copies sell. It’s relatively inelastic, which is why textbooks sometimes cost several hundred dollars.
You’ll find elastic demand in genre fiction. When someone reads hundreds of books in a specific genre, they generally want the lowest price per book.
If you’re wondering how to become less elastic and create a non-elastic demand for your books, you’ll need to build a strong brand. My demand for Brandon Sanderson’s books is relatively inelastic. I want his next book, and I’m willing to pay quite a bit to have it. I’m a huge fan of his writing, and if another author offers me a cheaper book in the same genre, it won’t change my mind. I want Sanderson’s book.
Top-name authors can charge more for their books because they have strong brands. If you’re a fan of Stephen King, you don’t want a book that’s $5.00 cheaper by another author. You want Stephen King’s book.
For our purposes in discussing pricing, we’ll assume you’re playing the pricing game along with all the other ebook sellers.
Price Determines Unit Sales
In general, the pricing determines the number of unit sales.
- Higher Prices Lead to Lower Unit Sales
- Lower Prices Lead to Higher Unit Sales
If your price is too high, lowering the price may allow you to earn more profit because you’ll sell more units at the lower price.
In other instances, raising the price will be more profitable because you don’t even have to increase your expenses. I’ve talked to authors who’ve raised their ebook price from $2.99 to $3.99 and saw almost no decrease in demand. Suddenly, they made a lot more money without spending more on advertising.
You can find a scientific sweet spot somewhere in the middle where you get maximum profit and maximum unit sales.
What is the sweet spot for my book?
It depends on your book and genre. The better question is, “What is your objective?”
Some authors want to maximize profits and make a lot of money. Others want to sell a lot of books to increase awareness about their brand.
Is your goal to sell a lot of books or make a lot of money? Your approach will depend on your objective.
Objective 1: Sell Lots of Books
At the beginning of your career, you’re probably more interested in selling lots of books because you want your book in the hands of as many readers as possible. In our episode on piracy, we said that for beginning authors, the biggest problem isn’t piracy. Your main problem is obscurity. If someone distributes your book to more people, you’re still getting that exposure, even if it’s without your permission. New readers are discovering that you exist.
Additionally, more unit sales make Amazon “smarter.” They know who will buy your books, and they want to sell as many books as possible because Amazon’s goal is to make a lot of money. Consequently, Amazon helps you by sending an email to potential readers saying, “Based on the books you’ve purchased from us before, we think you’ll enjoy this new book from Obscure Author who seems to be selling a lot of copies right now.”
When you gain traction and exposure by selling a lot of books, your career takes off. You’ll get more reviews and email subscribers, and your book will move up in Amazon’s rankings.
How do I price my ebook to sell lots of copies?
It depends on your genre. Many people who teach pricing assume that you’re writing Romance or Sci-Fi because that’s what they write. Their recommendations are based on their experience in a single genre.
Price Within the 70% Royalty Window
I recommend that indie authors stay within Amazon’s 70% royalty window, which means pricing your book between $2.99 and $9.99. If you price your book for less than $2.99, your royalty rate drops to 35%, and that’s a significant decrease. You’ll make less money on a $10.99 book than you would on a $9.99 book. That’s why you’ll rarely see a book on Amazon for $10.99 unless it’s by a traditional publisher. Amazon has different price structures for traditional publishers, and the agreement varies from publisher to publisher.
If your goal is to distribute as many copies as possible, the $.99 price point can be a great marketing strategy. Over time, the $.99 copies will sell twice as many copies as they would at any other price, but it’s not a good long-term strategy.
If you want to distribute even more copies, you can make your book free. I worked with one author who had 700 Amazon reviews on the first book in his series. When I asked how he’d done it, he said he’d priced the book for free on Amazon for three years. When your book is free, you get a lot of reviews.
Offering your book for free is not a great strategy if you’ve only written one book. But if it’s the first of seven in a series, you might make more money on subsequent books by making the first in the series “permafree.”
The permafree strategy became popular several years ago, but some authors say it doesn’t work anymore. I believe it still works, but now there are so many permafree books, discoverability becomes an issue.
When people were first buying Kindles, they had lots of storage space for free Kindle books. Now those Kindle owners have hundreds of free books taking up space on their devices, and they aren’t necessarily looking for dozens of free books like they were in 2010.
The $.99 price can also be considered an “impulse buy.” Even if the reader doesn’t know the author and isn’t sure they’ll like the book, $.99 isn’t a huge risk. On the other hand, if the book from an unknown author is $4.99, the customer will think about the purchase a little longer, and often they won’t buy.
Objective 2: Make Lots of Money
In general, you’ll need a price of $3.99 or more, but again, it depends on your genre. Of all the genres, Romance is one of the most competitive and least expensive. But the sweet spot price is fluid, and you should always compare prices in your genre.
Whether you price your book at $3.99 or $4.99, you need to account for reader acquisition costs. How much does it cost you to acquire a new customer?
Many authors are eating their own seed-corn, so to speak. If they make $100 on their book, they’ll spend that $100 on groceries. But that is a mistake, in my opinion. Authors should set aside a percentage to invest in acquiring more readers the next month. You might use a percentage to buy advertising on Amazon or Facebook. You could spend it on a better email service provider or buy promotions for your book. If you’re wondering what kind of promotions you can buy, be sure to check out Episode 61—Where to Spend Your Marketing Money.
Different methods work for different authors and books, but you must do something to bring in new sales. Make sure you’ve built enough margin in your price to attract new readers. Profitable books continually acquire new readers and make money every month because there’s enough left over to buy the next month’s readers.
This is the tried-and-true strategy of Chris Fox. In our Novel Marketing interview, Chris said he spends $3,000 on Amazon ads every month, and he can do that because he makes $5,000 in sales every month. But you must price your book higher if you want to employ that strategy.
You can’t make a profit with ads if you’re selling your book for $.99. At that price, your royalty is $.35 per copy, and you can’t even buy a click, much less a new customer, for $.35. Even if 100% of the people who click your ads buy your book, you still won’t make a profit. If you want to make money, you’ll have to explore the higher price points.
What about pricing for nonfiction?
If your nonfiction book answers a specific question, the demand for your book is less elastic, and you may find you can charge more. People are willing to pay more for a book that answers their specific question.
Many authors think they have to decrease prices, but sometimes increasing your price will give you better results.
These strategies only work if you have a great cover and a good number of reviews. If a reader sees your book for $5.99, but you only have two reviews, you’re probably not going to get that sale. If the cover is a turn-off, that’s another strike against you. You need a great cover, so beware of the common mistakes authors make with book covers.
Reasons to Discount Your eBook
If you don’t have a great cover or great reviews, first fix your cover, then sell your book for $.99 for a while to see if you can get some more reviews. KDP Select allows you to do Countdown Deals and Limited-Time Deals for $.99. You’ll want to combine that discount with a BookBub Featured Deal or other promo sites like EReader News Today. Those sites will email hundreds of thousands of readers and notify them of your book’s limited-time discount. The sense of urgency will send customers your way and often drive up the number of reviews.
Example of Discounting: The Apparel Industry
The potential for discounts is another reason you might want to keep your price high.
Think of the apparel industry. It costs a retailer about $1 to buy a t-shirt. They hope to make a $4.00 profit on every shirt they sell. But they don’t price the shirt for $5.00. They price it at $20. Then they put the t-shirt on the rack for several weeks and sell very few shirts for $20.
But, after a few weeks, the shirt goes on sale for $5.00, and customers get excited. Suddenly t-shirts are flying off the rack because customers believe they are “saving” money. In truth, they are spending $5.00, but since it was originally priced at $20.00, the customer feels good about “saving” the difference.
Setting the price high at $20.00 is called price anchoring, and it’s a powerful marketing phenomenon we’ve talked about in a previous episode.
If you plan to employ this “price pulsing” strategy, it’s important to anchor your book’s regular price in that higher range. People get more excited about an 80% discount than they do about a 20% discount, even if both discounts mean they are paying $2.00. The belief that you are saving money is a powerful motivator.
How does discounting affect my brand?
Some brands never discount. Apple and Rolex never run sales because luxury brands don’t go on sale. Their customers aren’t trained to wait for a special discount on their products. Keep this in mind when building your own brand.
You will train people to want the prices you offer. If you’re always discounting your books, you may be training your readers to wait to buy until you run another discount so they can pay you as little as possible.
Conversely, it’s easy to get into a price war with other authors as you try to undercut each other by offering the lowest price. But as Seth Godin says, “The problem with a race to the bottom is that you just might win.”
However, the only thing worse than being the cheapest option is to be the second-cheapest option. You either want to compete on price or quality, but no one wants to buy the second cheapest option.
The problem with being the cheapest option is that it’s extremely hard to get out of that hole. Your readers will come to expect cheap books, and if you decide to raise your prices, you will anger readers. Be careful with this strategy because people will always see you as a cheap read, not as a great value.
If you’ve written ten books that sell for $2.99 and you want to price your next book at $9.99, you’ll be facing an angry readership. In their minds, you’ve positioned yourself as the discount option.
On the other hand, if you’ve priced all your books at $9.99 and your next book is $8.99, they’ll be thrilled. It’s easier to lower prices than to raise them.
There is no one-size-fits-all method. In any given market, people make money as the cheapest option, as the bang-for-your-buck option, and as the luxury option. Choose your pricing tier on purpose rather than stumbling into one.
What price should you choose?
You can price a book based on a combination of any of these factors:
In general, you can charge more for longer books, but here is a general guide based on length:
- Flash Fiction: Less than 1,000 words – $0.00 – $0.99
- Very Short Story: 1,000 – 5,000 words – $0.00 – $0.99
- Short Story: 5,000 – 10,000 words – $0.99 – $1.99
- Novelette: 10,000 – 20,000 words – $1.99 – $3.99
- Novella: 20,000 – 40,000 words – $2.99 – $5.99
- Novel: 40,000 – 120,000 words – $2.99 – $7.99
- Epic Novel: 120,000+ words $5.99 – $12.99
These aren’t in concrete, but you can use them as a starting point when deciding how to price your book.
Get familiar with your own genre. Pay attention to similar authors and how they price their books. If you’re an indie author paying attention to traditional publishing prices, you may be missing out on an opportunity.
Ebook sales have been increasing annually, but all the growth has been in the indie market. Traditional publishers have not seen the same ebook growth, so if you listen to their data, you’ll be misinformed about the realities of the indie market.
Indies are so competitive on pricing that they are taking business away from traditional publishers. That’s why traditional publishers say, “Ebook sales are flat.” That’s what their data says. At the same time, indie authors report ebook growth because that’s what their data shows. Indies have a lot of room to be competitive on pricing.
To find out what other similar authors charge, visit the “also bought” section on your book’s Amazon page. You’ll get a feel for what your customers are willing to spend based on the other books they’ve purchased. If you have multiple books, check the “also bought” section for each of them. You’ll get a good feel for where you should be.
Tips on Finding the Right Price for You
Run Simple Pricing Experiments
Change your price at the beginning of the month and see how it performs over the next 30 days. It’s an easy way to see if you made more or less money at that price. If you sold your book for $3.99 in January, increase it to $4.99 in February and compare the total sales. If it went up, try raising it again. Experiment with your book.
Just because gurus on a podcast said you should price your book at $4.99 doesn’t mean that’s the right price for you and your book. Find out what works and what doesn’t.
Nonfiction can generally be priced higher because people are willing to pay more for an answer to their specific question.
Price Anchor with Your Print Book
Price your physical book higher, so people feel they’re getting a good deal on the ebook.
Use your Backlist
Your backlist helps sell your frontlist. Your best marketing tool will always be your other books, so keep writing.
If you ask another author how you should price your book, they’ll almost always say you should charge more. If you charge more, then their book looks more competitive and attractive. Take that into account when you’re asking for advice, and then run your own experiments.
When I was at Enclave Publishing, we released new books at $7.99, and we never ran price promotions during the first six months. We wanted people to know that if they wanted to read the book when it came out, they’d have to pay $7.99. After six months, we’d discount to $4.99, but we didn’t want to discount too early because we’d risk making our first readers feel like idiots for paying full price. People who preorder or buy during your launch period are your core fans, and you don’t want to make them feel silly for paying full price.
After a year or two, if the series was completed, we would offer the first book in the series for free or $.99. Our profit came from the increased sales of the second and third books in the series.
Whatever pricing strategy or experiment you use, track your method and your results with a spreadsheet. Pricing is a fluid topic, and the market is constantly changing. Keeping detailed records will provide you with data that will help you achieve your goal of making money and selling books.
Jennifer Lamont Leo author of You’re the Cream in My Coffee
In 1928, small-town woman Marjorie Corrigan travels to Chicago and thinks she sees her first love–believed killed in the Great War–alive and well. Suddenly everything in her life is up for grabs.
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Good guide. Most of the ebook prices are driven by supply and demand.
Good guide. Thanks