Pricing

This is an excerpt from Let’s Get Digital: How To Self-Publish, And Why You ShouldIt is available from Amazon and Smashwords for $4.99.

There is a lot of debate about pricing. Here, I want to avoid a discussion of the ethics of various strategies. Instead, I would like to talk about their respective pros and cons for the writer employing them.

This means we won’t talk about whether it is right for authors do give away work or price it low (or high). We won’t get into emotional arguments about how your novel took you three years so it’s worth a lot more than $2.99. In a strict business sense, it’s worth what people are willing to pay for it. Instead, we will discuss what works and what doesn’t depending on your respective goals.

The only firm belief I have with regard to pricing is that you should be flexible, and find the right price for your own book free of ideology or any other such nonsense, depending on what you hope to achieve. I will round off this post by outlining my pricing strategy and the reasons I have chosen it. Not everyone will agree with my choice. That’s fine, you should choose a strategy that suits you.

Maximizing Readers – A Free For All

If your #1 goal is to maximize readers – at the expense of everything else – then the best way to achieve this is to give your work away for free. You can do this in several ways, but for an all-encompassing free strategy, you should upload your work as normal to Amazon, pricing it at the minimum – $0.99. Then, when you upload to Smashwords, you price it at free.

Once your book has entered the Premium Catalogue, the “free” price will be pushed out to all the partners (Apple, Sony, Kobo etc.) and Amazon will then reduce it to $0.00 in a matter of days. They don’t tend to reduce the price if it is only free on Smashwords, so you must get into the Premium Catalogue for this to work (and select distribution to Sony at the very least).

The pros of this strategy are obvious; you get a huge increase in readers. Writers on Kindle Boards have reported going from a handful of sales a month to thousands of downloads. This strategy tends to be used by writers whose goal is not to make money, but to just get readers. That’s fine if that’s your goal.

For writers who hope to make money, their aim is that readers of the free work will go on and purchase other titles. A lot of these writers have written a series, and they are hoping the reader will get hooked on the free title, and pay for the rest. For others, it’s a short story they are giving away, and they hope readers will like their writing and pay for longer work.

The obvious downside is that you don’t get any royalties. On top of that, there are a lot of people out there who will just download anything that’s free so they can say they have 1,000 books on their Kindle. They may never read it. Finally, one thing to keep in mind is that there is a possibility that you are creating a negative value perception of your work in. People may assume that it’s not worth much because you aren’t charging for it.

Unfair? Maybe, but it can happen.

Maximizing Readers – 99 cent

Many authors have success at this price. Some, like John Locke, price all their work at 99 cent. Others, like Amanda Hocking, use the first book in a series as bait, price it at 99 cent, and charge $2.99 (or more) for the rest. It seems that this “baiting” strategy is more effective with a series than having a mixed price range with stand-alone novels.

If you are using 99 cent pricing as any part of your overall plan, you should note that the minimum price you can set in Germany is 0.99 Euro (about $1.40), and in the UK it’s £0.86 (also about $1.40). However, when you upload, if you tick the box that allows Amazon to match your UK price to your US price, this will drop your price down to £0.70 (depending on current exchange rates). This trick doesn’t work for Germany.

The pros of this strategy are that it’s an impulse buy for a lot of people, so you don’t have to work as hard to get them to try it. There are many blogs dedicated to “cheap reads” that will highlight your work, and many Kindle owners exclusively hunt for such bargains.

The cons are that you only get 35c per sale, and to make a living off this strategy, you will need to hit numbers that only a tiny fraction of writers do. If you have higher priced work and this is part of a baiting strategy, you need to get a good portion of readers making the leap to your other work. It doesn’t always happen. Also, once you have set a price in the readers mind – that your novels are worth 99c – it can be hard to get them to adjust upwards. It’s possible, but not easy, and you should keep that in mind.

Maximizing Profit

For novels, the $2.99 price point is favored by indie writers who want to maximize profit. It’s the lowest price point that allows the higher 70% royalty rate, which means you will get over $2 per copy sold.

Many writers pricing at $2.99 test out sales at 99c. However, to maintain the same profit, you need to sell six times the amount of novels. Not all do. In fact, some writers have reported an increase in sales when they shifted to $2.99, or at the very least, an increase in profit. After all, you only need to sell a sixth of the amount to make the same money.

The main advantage, aside from increased royalty rates, is that you have increased flexibility. If your sales drop, or you want to run some kind of promotion, you can drop your price. You can’t do that at 99c, unless you decide to give it away.

Also, at higher price points, you can use Smashwords coupons, which can be a very effective marketing strategy. Smashwords allows you to generate unlimited coupons giving a percentage of your choice off the price of your work, or to sell it at a fixed price of your choice to the coupon holder.

While you can always give your work away for free with a 100% coupon, outside of that the minimum price the buyer must pay is 99 cent. In other words, if your work is priced at 99 cent, you can’t generate a coupon offering 20% off.

However, if you are priced at $2.99, you have a range of options with coupons, and they can be useful when you tie it together with a review, a blog tour, a competition, or other promotional activities.

The drawback of the $2.99 price point is you will probably have less readers than 99 cent, even though you are making more money. This means less people to tell other people they liked your work, and word-of-mouth is crucial for indie authors.

Going Higher

Some authors attempt higher price points. (I’m not talking about deluded writers that price at $12.99 because Dan Brown does and they are way better than him.) This is a tricky proposition, but not impossible either. It’s all about positioning and perception. If you have a poor cover, editing, formatting, opening, or description, then the reader may think that your work is overpriced at $2.99 or even 99c.

However, if you do everything in your power to make your book look like it came from one of the big New York publishers, if you run a clever marketing campaign, if you have professionally designed covers, a great opening that readers can sample, descriptions that will hook people in, and if your work has been professionally edited, you can price your work at higher than $2.99, and not only survive, but thrive.

Nathan Lowell is a great example of this. While he is not a self-published writer, he is one of Robin Sullivan’s writers at Ridan Publishing. She self-published her husband Michael’s hugely successful fantasy series (and priced them at higher price points), and is now using the same strategy with her other authors. To me, Nathan Lowell’s and Michael Sullivan’s books look as good, if not better, than anything coming from a large publishers. Because of this approach, they have been able to price the books at $4.95 (that’s a $3.46 per-book royalty), and they have sold truckloads.

The downside, of course, is that higher price points are outside the realm of impulse purchasing. Also, the Big 6 are experimenting with sales at around $5 and that brings you both into direct competition with them, and the many smaller presses and e-publishers that price around this point. On the other hand, if you have done everything else right, that could work in your favor. It’s all about value-perception.

Flexibility

As I said at the top, the only firm belief I have with pricing is that you must be flexible. By all means, decide on your pricing strategy, based on your goals, before you publish. However, remember that it is not set in stone, experiment with different pricing in different titles, and find your own sweet spot.

Even though Robin Sullivan is reasonably committed to higher price points, she has experimented with some titles at $2.99 and 99 cent price points. It worked for Marshall Thomas, but it failed for Michael Sullivan (who ended up selling lots more at $4.95 than $2.99). The point is, each writer will be different. Each title could be different. Be open to change, and you will find a way to maximize your income.

Another writer who has benefited from experimentation is Vincent Zandri. While he is also published with a small press, self-publishers can learn lessons from what StoneGate Ink did for his titles. They priced one of his titles at $0.99, and then after he cracked the Top 10, they jacked the price up to $4.99. Sales dropped, but he held on in the Top 100 (selling 800 to 1000 copies a day), a royalty of $3.49 per copy.

If you are willing to be flexible, it could bring you great rewards. Don’t change price too often, Robin Sullivan recommends a minimum of a month at a certain price before you can measure its effectiveness.

My Approach

I have decided on the following price structure (as adapted from Dean Wesley Smith).

Short Story Singles – $0.99 ($0.35 royalties)

5 Story Collections – $2.99 ($2.09 royalties)

10 Story Collections – $4.99 ($3.49 royalties)

Full-length Novels – $4.99 ($3.49 royalties)

If I write anything that falls outside those categories (e.g. a short novel, a novella, or non-fiction), I will decide on a case-by-case basis, but this is the general structure. Why?

First, I am a short story writer as well as a novelist, and I like to release my shorts on their own. I believe there is a market for it, and my first two titles are doing well.

Second, if you have stories on sale for $0.99 and collections of five for $2.99 (or 60 cent per story), there is perceived value there for the reader in the collection, which taps into the much higher royalty rate (and the same logic goes for collection of ten).

Third, if I build up enough anticipation, and enough of an audience, through the short stories, I might be able to catch enough sales at $4.99 to make it worthwhile. If I get the story right, and the covers, and everything else, it may seem like a bargain.

Fourth, this strategy allows a lot of flexibility. It’s far easier to run a sale for a month and drop your price to $2.99 or even $0.99 from a higher starting point than it is to go in the other direction.

But the key component is flexibility. I don’t expect all of my titles to stay in those ranges permanently, that’s just the starting point. I will experiment with all sorts of prices (and some free titles) in the future.

That way, with hard data rather than hunches, I can find my own sweet spot for each of my titles, which is what this is all about.

I recommend that you define your own strategy, but don’t be too rigid. Be prepared to adapt as circumstances change.

Ready To Launch

Your e-book can take up to 72 hours to appear across the various sites. Sometimes Amazon can approve books remarkably quickly (one of my titles went on sale after an hour), so be prepared. More usually, it takes a couple of days. Before you announce it to the world, I recommend downloading it yourself and making a final check for any errors. The first time you will probably catch one or two.

Once your story appears, congratulate yourself. You are now a self-published writer. But, under my mother’s definition at least, you’re not an author yet. To earn that title, you need to sell some copies.

Be under no illusions. This is where the hard work begins.

This is an excerpt from Let’s Get Digital: How To Self-Publish, And Why You ShouldIt is available from Amazon and Smashwords for $4.99.

40 Responses to Pricing

  1. Pingback: Sunday Roundup: Blog Anniversary, New Releases, and a Link Party | David Gaughran

  2. Thank you for this post. I loved reading about your thought process for pricing. And I love your mother’s definition of an author.

  3. Chris Bauer says:

    David: Sent your way by Scott Nicholson. Excellent post. Just moved into self-publishing after my micro-publisher Drollerie Press closed its doors and returned all rights to authors, Re-launch of my debut novel SCARS ON THE FACE OF GOD (horror) took less than a week to get out there (Amazon, Smashwords) once I made the decision. Very gratifying. You’re doing good work here. I will continue to pay attention. — Chris Bauer

    • Hi Chris,

      Sorry to hear your publisher closed its doors, but I’m glad you got your rights back without any difficulties. Best of luck with your book – I’m sure you will enjoy the experience of going it alone.

      Dave

  4. Thank you, David, for this informative post. I really enjoyed your ideas on the pricing strategy and I hope I’ll learn from them.

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  8. raine132008 says:

    I’m starting to love your site :)

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  12. Ana says:

    Hi David, thank you for sharing your knowledge. I wish I knew about you a year ago. I published my Ebook with Amazon and Smashwords, however can’t get my hands on money that is coming from smashwords sale, because I don’t have ITIN number. I am not sending my UK passport, if I am to send a photocopy will they accept it? Your advise will be greatly appreciated. Thanks. Ana

  13. Ana says:

    Hi David, I just received my first cheque from Amazon, of course they kept 30%, however I never received anything from smashwords. They can keep 30% for now. Is it possible that they don’t send any money unless they have tax number? Thanking you in advance.

  14. Ana says:

    Thanks David, I read about it. The information you have provided is priceless!! I am so grateful to you. Just… I thought , maybe they’ll do the same as Amazon?

  15. Jamie says:

    Thanks David, I would love to setup an interview and have a chat with you. Lets connect! @jamieleger

  16. Ross Ellis says:

    Hi David,

    Just want to say a big thank you. My brother Scott Ellis is friends with your sister and he persuaded me to avail of your book ‘Lets Get Digital’. I devoured it and quoted from it often, using it as my self publishing bible and because of you I have now just published my first book. I`ll be purchasing ‘Lets get Visible’ as soon as its out. Thanks again David!

    Ross Ellis

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  19. BD Crowell says:

    Hello David,

    Thanks for all the great data and ideas you’ve shared with the rest of us. Dean has since updated his pricing strategy. Just wondering what your take on it is.

    • It looks a touch high to me, especially for shorter work, and especially with some stuff from large publishers coming down in price. I’ve experimented with prices above $4.99 and there was a huge drop off in sales. This tallies with the recent Smashwords data, which said that income tended to be maximized at $3.99 or $4.99 – which has also been my experience.

      Genre can change things. Erotica authors can get away with $2.99 for a short, but sometimes romance authors have to cut prices savagely to get any traction. That aside, $3.99/$4.99 looks like the sweet spot right now for maximizing income (which is what I care about).

  20. sknicholls says:

    Before I invested in professional cover image and did the final editing I had my 97,000 word work on a free site and found that it was being downloaded by the thousands and resold all over the world on other sites at higher prices than smashwords or Amazon. The sites pulled it at my request, but that was a lot of work. I will never do the “free” thing again, but use coupons to give away certain numbers for certain time periods. I moved my price to $4.99 recently and actually saw an increase in sales. Now part may be due to improved image, but part may be due to the “Don’t yourself short” mentality of people who read Indie work and don’t want an author who has devalued herself. Amazon still lists it for $2,99 even tho I have asked to be rest to $3.99, and with the royalty I receive I am entitled to that much. Guess they see it differently.

  21. Ramon says:

    Thank you for this post. It was very well done! I am still wrestling myself on what to do. I sell quite well on barnes and noble, but next to nothing on kindle, and I have seven books! The first in my fantasy book is 3.99 and the others are 4.99. I was thinking of either dropping it to 2.99, or raising it to 4.99 with the others. 3.99 is doing nothing for it.

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  24. Mickey Wyte says:

    Hi David, I read both of your Let”s Get books before running my recent sale for my only novel and had very good success. I ran a Kindle Count down, reducing my price from $3.99 to .99 cents. I had made it to #1 or 2 in several categories. Now after 3 weeks back @ $3.99 I am still in the top pages of my categories, yet I’m selling only 1 book per day. My question is, Do you think my sales will increase if I drop my price to $2.99 now while I’m still doing well in my categories?

  25. Mack says:

    Hi David, if I do the free strategy (free on Smashwords) and wait for Amazon to price-match and reduce the price to free, should I opt out of the Amazon publishing option on the Smashwords channel manager?

    • You should opt out of Amazon via Smashwords anyway – for all your titles. Smashwords only distros a handful of titles to Amazon, most don’t get delivered. And anyway, you wouldn’t want two separate listings at Amazon for the same book – you don’t want sales split between them. (& You should always upload directly to Amazon, never via a third party.)

  26. danc1026 says:

    I want to be an author but I find it very intimidating on how hard it is to get a book published and all the costs.

  27. Hi David, You write amazing posts. I’m so glad I discovered you!

    You mentioned that one can charge .99 on Amazon and change it to free on Smashwords and the other stores. We are a small publisher not participating in the KDP select or KU program because we sell on our website and other places. When listing on Amazon, the lowest price we can list for is $2.99. Can you provide any insight into this?

    Thanks for all of your valuable information.

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