This week we’ll talk about how to come up with the “right” price for your book in each of the formats in which you plan to make it available (eBook, soft, and/or hardcover). By "right" price, I mean a price that will make more, rather than fewer, people actually buy your book. My challenge will be to convince you that the title you see above makes sense.
But first, let’s cover the basics – how the pricing process works, and the factors that may put a floor under your book price.
The process for applying a price to an eBook is quite easy. If you go direct to CreateSpace, for example, the price can be whatever you want it to be, including zero. And indeed, if you go to the Kindle store, you’ll see that Amazon includes two eBook best seller lists – one of which is for free eBooks, both out of copyright classics as well as new works of authorship.
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The Alexandria Project?
a Tale of Treachery and Technology
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After you get below general statements, though, it starts to get complicated – fast. For example, if you choose Amazon’s Kindle Direct Publishing plan, then there are minimum and maximum prices you can charge, even for an eBook – based in part on the file size (if you set your book price at the minimum, your royalty rate will be zero).
And although in the same program you have the option of selecting a 35% or a 70% royalty plan, you would not be able to get 70% in every country. Details like these, and more, are covered in Amazon’s Sales and Royalties FAQ, and the various click through pages you can access through it. Finally, these rules, percentages and so on have changed in the past, and you can expect them to continue to do so as this still relatively new marketplace – and especially the competitive positions of the various players striving to participate in it - continue to evolve.
If you have brought your book to market through a print on demand publisher (POD), you’ll be almost certain to have a floor on an eBook, since part of a POD publisher’s business model usually depends on making a profit on your book sales as well as through up-front fees.
Let’s turn now to print pricing, which has its own “layer cake” of fees that will always impose a floor on your pricing options. The first layer is the printer’s per copy fee, which in turn is based upon the number of pages in your book, the type of paper you’ve selected, and the decisions that you’ve made about the covers. As you’d expect, hard cover copies cost more (significantly more) than soft cover copies. This is for a number of reasons, including not only the cost of the hard cover itself, but the fact that the dustcover still needs to be printed, but the fact that the binding process is different than for a soft cover book.
But there are variations in soft covers, as well, including embossed text, and fancier finishes (e.g., metallic colors for the title). So if you choose a fancier cover treatment on a soft cover or a hard cover, your cost of goods will increase.
The next major layer is the share that the business that actually sells your book will take (Amazon, your local book store, etc.). You determine how large that share will be at the same time you set the “list” price for your book. In other words, you can decide whether the partner will be entitled to keep 20%, 30%, 40% (or whatever) of the spread between what they paid to order that copy from the printer and what they sell it for.
Theoretically, unless your book is already a blockbuster, you want to give brick and mortar stores a big share, so that they have an incentive to order and prominently display your book. In practice, however, the discount will make little difference unless you’re committed to promoting your book aggressively, since no one is going to order a book that will just be ignored.
In other words, the brick and mortar stores won’t know you exist unless you’ve found a way to bring the existence of your book, and more importantly, market demand for your book, to their attention. So why give a bigger share for the few books that you might sell through book shops locally?
More to the point, Amazon won’t let you give a bigger discount to another channel than you give to it, and Amazon will list your book no matter how you price it, as long as it’s above the Amazon minimum. So why give a huge discount to Amazon, where you really might sell books, to give an incentive to brick and mortar stores, that probably will never order your book anyway? It’s important to note that no matter what share Amazon has, they aren’t going to give your book favored treatment (e.g., the “people who bought this book also ordered…”) unless you already have significant sales, so this truly is a road to nowhere.
If you do create demand, of course, a discount could be a significant factor to expanding the sales of your book through brick and mortar stores, once people start asking about it. But since it’s possible to change the discount you offer at a later date there’s no sense offering a big one in advance, unless you plan on putting some serious time into marketing to physical outlets.
Let’s talk next about your share – the icing on the cake after the layers have been eaten by others. If you’ve gone direct to Amazon or Google to create and sell your books, you keep the rest after they have taken their share of an eBook’s sale price, or they and the printer have taken their shares otherwise. If you’ve decided to work through a POD, however, it will get another layer of the profit cake before you get to the icing, usually in the form of a markup of the cost that the printer charged to print a copy of the book. This is a little disingenuous, since in fact the POD publisher will never even touch a copy of your book – it will be shipped directly to Amazon or your corner bookstore or whoever, without any involvement by your POD publisher beyond setting up the distribution arrangement at the time it sent your files to the printer.
So much for the process. Let’s take a look at how much icing is left for an author on a typical book, like mine (The Alexandria Project), which came in at 286 pages.
For the eBook, I originally set the price at $9.99, to see how that would work out. Given that thousands of people had read the first draft, many of whom are now reading the sequel, it seemed reasonable to assume that some might want to pick up an eBook copy and read it in one sitting, rather than over eight months. After three weeks, I dropped the price to $2.99, to see if it made a difference in how many copies I was selling.
After paying Amazon and my POD print publisher, I made $5.17 on copies sold at the higher price, and $1.55 on those sold at the lower price. So I’d need to sell about 3 1/3 books at the lower price to come out the same as I would selling fewer books at the higher price. So if price did make a difference, the lower price could clearly make more sense.
For the print copies, I’ve decided to initially price the soft covers at $14.95, and the hard covers at $24.95. I came at these prices after taking various factors into account, but paying particular attention to the fact that these prices are typical for books of this length and genre.
I also decided to allow channel partners a 40% discount on the soft covers, and 20% on the hard covers. The difference is because I don’t expect to sell many, or perhaps any, of the hard cover copies, which are more of an indulgence on my part than anything else; it didn’t cost much more to add them to the package, and it will be nice to be able to give hard copies to friends, family and clients in the cybersecurity field. But I do plan to do some promotion to book stores, so that’s why the soft cover discount is larger.
After you work your way up through the layer cake, these prices will generate a $2.29 royalty payment to me on the soft covers, and a $3.85 payment on the hard covers. Not as much as you might think.
If you’d like to see how this works more dynamically, take a look at this page at CreateSpace which includes pricing and royalty calculators, depending on the page numbers and other data that you plug in.
There are a couple of interesting things which you will probably already have noted. The first is that for a self-publisher, eBooks make a lot more sense economically than print copies. You pay less to create them at the front end, and you can make a higher profit at the back end without pushing the price up too high. Another thing is that if you want to sell print copies, keep them short. The longer the book, the higher you have to push the price and/or the smaller the profit you will make.
So let’s return to that seemingly silly statement at the top of this chapter – does how you price your really matter, when it comes to affecting your sales?
Clearly, if you price your book high enough, it will hurt sales. But is there a reason why you should price it any lower than typical trade books of your genre are priced? Normal logic would seem to say yes, if you are an unknown author. But normal logic doesn’t necessarily apply when it comes to how buyers act.
So let’s drill down deeper, and talk sales psychology. One theory you’ll often read on self-publishing sites is that if you price your book at a price comparable to a daily impulse item, that people should be as willing to plunk for a book as they would for some other every day indulgence (the classic example seems to be a Starbucks latte – despite the fact that not everyone goes to Starbucks, let alone drinks latte’s – but whatever). And that does seem to make some superficial sense, until you look at how many smartphone apps are available for free, as compared to for a fee.
So by that logic, when I dropped the price of my book, sales should have spiked, right? But they didn’t. Not only did they not spike, but I sell a book for a week. I didn’t even get more click throughs from my site to the book’s Amazon page, despite the fact that I added larger display ads promoting the sale to all sixteen chapters of the Lafayette Project (the sequel to The Alexandria Project) and Adventures in Publishing, which means that there have been at least somewhere between 1500 and several thousand unique impressions made since I announced the sale on people who have at least some acquaintance with the book and what it’s about.
And no, I haven’t already saturated this market with sales – I’d only sold a handful of books at the higher price through Amazon (I can’t yet tell how many have sold through other channels, but presumably fewer in the aggregate).
So what do we make of that? There are a number of possibilities.
One is that people aren’t inclined to read something they’ve already read once, even if it has been rewritten, edited and spruced up. But that wouldn’t account for the fact that new readers of the sequel haven’t been tempted to buy the original.
Another would be that the book isn’t worth more than, say, $.99. But that seems a little harsh, given that about 3,000 people loyally followed the story for 30 weeks when I was posting it one chapter at a time. So my guess is that if I lowered the price to $.99, there would still be no spike.
A persuasive case can be made, I think, that people are simply not used to paying anything for anything that they learn about through certain channels. By this argument, my real problem is that my book is being lumped in with iPhone and Android Apps rather than iTunes music.
So that takes us here: if offering your work at a deep discount doesn’t result in volume, then what’s the point?
The POD publisher I’m working with made the same argument in a different way when we talked pricing and he asked me this: How much do people you know pay for eBooks? My answer was “around $9.99,” because most people I know probably aren’t reading out of copyright classics, or Indie authors like me. His point was that if people want to read a book, they’re willing to pay $10 bucks for it. And if they don’t want to read it, they’re not going to pay even $.99. So why set the price below what people that want to read it are willing to pay?
Certainly my experience to date bears that out, although you won’t have a hard time arguing the opposite.
One counter argument is that some authors have been able to sell hundreds of thousands of books at $.99 or $1.99, and therefore make some real money a few pennies at a time. Another is that if you give away your first book and build a following, your readers will pay for the next one. Maybe that’s worked for some folks as well. Of course, you have to be willing to actually write another book in the same genre for this to make any sense at all.
Unfortunately, I expect that for every person that’s found success through giving their books away for free, or close to it, there are thousands more that can’t even get people to download their book for free.
So here is where I believe you can find the bottom line: unless you have the kind of social network that can lead to your book going viral (and I’m not quite sure what that network would look like), you might as well charge a market price for your book.
The more granular lessons, I think, are these:
1. Unless you are committed to spending a great deal of time promoting your book – and I mean a great deal of time - it’s unlikely that you’ll move a lot of your books at any price, or at no price. Even if you do a lot of promotion, the odds are still very poor.
2. Consider starting with just an eBook, to limit your up front costs, and then branch out into hard copies if you’re successful in getting sales.
3. Price your eBook in such a way that you’ll make at least a couple of bucks a copy (I’ll probably shift the eBook price up to something like $4.99 when the hard copies become available).
4. If you’re willing to put in the extra work, cut out the POD middleman and use a direct publishing channel like CreateSpace/Amazon, so that your royalty rate is higher.
Last and not least, I’ll offer this advice: self-publish a book not because you think you’ll be able to make money, but because you’ll get a lot of satisfaction out of doing it. Whether that means giving it away or making something on it is up to you.
Which reminds me of a description that once occurred to me to truly define what a writer is:
A writer is someone who has no choice
If that describes you, then self-publishing makes a lot of sense. If you have thoughts or experiences of your own to share on pricing or anything else I’ve been talking about - or whether dropping the price of my book still lower would make a difference to you, why not hit the “comment” button below?
See you next week.
Read the next chapter of Adventures in Self-Publishing here
Read the first chapter of this series here
Read Chapter 1 of The Lafayette Deception (the sequel to The Alexandria Project) here