Tuesday, December 20, 2011

pricing ebooks--conflicting advice

Pricing of ebooks seems like a tricky proposition.  Amazon encourages pricing ebooks at a certain level by offering higher royalty rates on ebooks prices between $2.99 and $9.99.  They pay 70% royalty on such ebooks, whereas ebooks between $0.99 and $2.98 only earn an author 35%.  This ends up being a lot less money earned.

But of course, the question is: will a cheaper ebook sell a lot more copies, and thus even out the price differential, while at the same time reaching a broader audience (and increasing future sales of future books)?

I've read lots of conflicting advice and opinions on this one.  There was a great article in the Wall Street Journal about author Darcie Chan and the success she's had publishing the her ebook, The Mill River Recluse.  In the article,

She noticed that a lot of popular e-books were priced at 99 cents, and immediately dropped her price from $2.99 to 99 cents. The cut would slash potential royalties—Amazon pays 35% royalties for books that cost less than $2.99, compared with 70% for books that cost $2.99 to $9.99. But sales picked up immediately. "I did that to encourage people to give it a chance," she says. "I saw it as an investment in my future as a writer." The strategy worked. Several reviewers on Amazon said they bought the book because it was 99 cents, then ended up liking it.

She took some other interesting and smart marketing steps for her book (some of which I might try), and also got some positive mentions on web sites that helped her start to sell a lot more books.  Sales started to grow fast.  So far she's sold more than 400,000 copies, earning more than $130,000.

Sounds nice.  My sales of Tornado Siren have not been quite that strong.  Not even close.  (Yet.) (Says the perpetual optimist.)  And sales have actually dipped quite a bit since the end of the summer, and now they're getting very, very slow.  (I've seen NO holiday season boost.)

Hm.  So, I wonder, should I lower my price to see if that will help boost sales?  It's been at $2.99, but is that making it hard to attract readers who have never heard of me?

And then I read this post on Joe Konrath's blog, a guest post by Elle Lothlorien, who writes about the opposite effect.  She found that raising her price on her ebook, Sleeping Beauty, from $2.99 to $5.99, helped boost sales, and made her a lot more money at the same time.  Her theory being that people don't value things that they don't have to pay as much for--so you enjoy your expensive cup of coffee from Starbucks partly because you paid more for it.  
For authors with one book, it’s worth considering creating “imputed value” first with higher pricing. With a decent novel, this will “prime the pump” with positive reviews from readers who are invested and who want to like your book. This in turn will lead to more sales.

I'm not exactly sure what to do.  The nice thing, though, about ebooks is that it's pretty easy to change the price.  I've been reluctant to do so, but it feels like I should try something.  So I'm going to experiment a little.  I'm going to try lowering the price to $0.99 for a month, and then try raising it to something above $2.99, maybe $4.99, and see what happens.

8 comments:

Claudia said...

I read the Mill River Recluse - I had a limited amount in my gift certificate account from the holidays and one winter night just browsed through the .99 cent books for fun and picked it and enjoyed it. Hard to say which is better. Maybe go with your gut?

Patrick Gabridge said...

Glad to know Mill River Recluse was worth reading. I'm going to try out this experiment and see what happens. So far it's been at $0.99 for only a day or so, with no great effect. But I'm curious to see if Kindle sales pick up after the holidays, when people have new devices that need content.

Marissa Martinez said...

Here are some things one should consider when pricing:
- target audience. Who is your target audience? Is it a small niche market? or broader? Should it be more narrowly focused? What do you know about the buying patterns of this target audience? How do they equate price with value?
- what is your goal? Is it to sell as many books as possible to reach the widest audience (say in preparation for a second book or as a primed audience for other work?) Or is your goal to maximize your profit?
- Are you offering enhanced content as part of your book?

Experimenting can certainly provide you some data. But there are other factors that will influence the numbers like season, marketing tie-ins, etc. I know you know all this. Just stating it explicitly for completeness.

It's been interesting to watch your progress this year. I'll be helping two writers in the new year to create ebooks--one for knitting patterns and one for non-fiction. And of course, eventually I'll be figuring out these things for my own book(s).

Patrick Gabridge said...

Thanks for the comment, Marissa. It's interesting how much harder it is to quantify some of the market size and focus for fiction as opposed to non-fiction. (At least that's how it seems to me.) My sense is that it's a lot harder to predict which people will or won't buy a novel, though with genre fiction, it might be a little easier.

Good luck with those book projects next year.

Mark Landen said...

Just pointing something out here: if she were to price her book at $4.95, which many, MANY people believe to be the optimum price for an eBook, she could have sold 1/10th of the number of books she did and reap the same profits. $4.95 * .70 = $3.465 per book. $130,000 / $3.465 = 37,518 copies instead of 400,000!

But, as someone said earlier, for her _next_ book she has 400,000 people that know her name, versus only 37,518 at the higher price.

My final thoughts are that selling 400,000 copies of a single eBook makes it an outlier in sales figures, not the norm and not easily attainable by any book. Amazon makes it very easy to test different marketing strategies very quickly, but I wouldn't rely on the Mill River Recluse sales figures as a metric for your sales plan.

Mark Landen said...

Just pointing something out here: if she were to price her book at $4.95, which many, MANY people believe to be the optimum price for an eBook, she could have sold 1/10th of the number of books she did and reap the same profits. $4.95 * .70 = $3.465 per book. $130,000 / $3.465 = 37,518 copies instead of 400,000!

But, as someone said earlier, for her _next_ book she has 400,000 people that know her name, versus only 37,518 at the higher price.

My final thoughts are that selling 400,000 copies of a single eBook makes it an outlier in sales figures, not the norm and not easily attainable by any book. Amazon makes it very easy to test different marketing strategies very quickly, but I wouldn't rely on the Mill River Recluse sales figures as a metric for your sales plan.

Patrick Gabridge said...

good points, Mark. It's definitely easy to get caught up in the hype around the exceptions, rather than trying to understand the reality of typical ebooks. I'd really like to see what the median sales numbers are for ebooks. I seem to recall somewhere that most self-published books sell fewer than 100-200 copies, and it's probably fewer than that.

Derek said...

This is an interesting post and I look forward to seeing the result of your experiment.

I starting to write an ebook and while I still have a ways to go to get it done I have already jumped the gun thinking about what would be the appropriate pricing for it. Marissa makes a good point about the target market and so does Mark re establishing your name. On the book that you have published is this a one time book or are you planning to write another one?

My initial thinking with what I have researched so far is publish my first one with a low price to establish a following and then with following attempts increase the pricing to get some more profit.