Thursday, January 27, 2011

Crunching Some Numbers

As some of you (especially those from Kindle Boards) may be aware I've recently tried a few promotional pricing tests. Today I'll share my results with you.


First let me start out by telling you about the books in the test. I used Michael Sullivan's Riyria Revelations (5 books released, first four normally $4.95 and the last one $6.95). Before the test I had a post holiday steady sales state of 270 per day.


Below is a graph showing my sales during the promotion:


Through a fluke of a promotion I did in November Avempartha became unexpectedly free in January for a period of time. This "moved" a lot of books (866 per day). But produced a pretty substantial hit to monthly income.

After Avempartha was returned to its normal level I found sales had reached a new base level of 314 books. I then took the first book Crown Conspiracy to $0.99 to make it a loss leader to the series. My intention was to try and see if I could get this book into the Amazon Top 100.

My hope was that the people who actively look for $0.99 would buy in droves and I felt a 200% increase in sales could drive it into the Top 100. To my surprise the sales increased only 10% !Far from the 200% increased I needed to become firmly planted in the Top 100. Rank did improve (from 600 to 300) and the "other boats" did rise as well - but even so another substantial hit to the monthly income.

The above tables shows the price and sales volume during each of the tests. To see the impact into the bottom line monthly income please refer to this table:

CONCLUSIONS:

  • Adding a $0.99 loss leader results in approximately 10% increase in number of books sold but a loss of income of $9,665 a month!! Okay, probably not a worth doing for an extended period to try and get to the Top 100.

  • Using a free book results in a significant number of books getting into the hands of the reading public 275% and results in an income loss of $7,072 per month. Not as drastic as the $0.99 but still leaving a lot of money on the table.

  • The current pricing model $4.95/$6.95 is working well and seems to be producing the best income ratio.

  • Sales levels rebounded to almost identical steady state income levels although the distributions of books shifted to provide a nigher number of the first book.
Please keep in mind that this is the results of my test and your mileage may vary substantially. A lot has to do with how you have positioned your books, what the volume of sales are. How long from the last book's release and whether people are looking forward to the next release etc.

So...I'm not sure you will come to the same results with your book(s). Each book has its own sweet spot and the $4.95/$6.95 may not work for you. That being said I encourage you to do your own testing (change only 1 variable - price (don't change promotion etc)) to help you determine what pricing technique will provide you the best results.

26 comments:

Gerald Hornsby said...

Hi Robin
Thanks for posting your fascinating results. I was one who took advantage of the $0.99 promotion. Michael's books aren't in my normal reading genre - I've been aware of them through KindleBoards, but at $0.99 it was too good an opportunity to miss.

Will I buy more of Michael's books? I don't know. I haven't read Crown Conspiracy yet. And, I think, this is another issue when offering a special promotion. There will be others like me (but, from your numbers, not that many) who will take advantage of the promotion, and who might, in future, buy some of the other books at the higher price. I don't know when that will be. I have a backlog of books to read, and it could well be a number of weeks or even months before I read 'Conspiracy. So maybe, the promotion will have a lag in boosting sales, especially in the relatively early days of Kindle.

I know many people who bought readers recently, and their first instinct is to 'start at the bottom'. It's like they're saying "look at all these free books I can get!" Then, having downloaded the complete works of dead authors, they start collecting 99 cent books.

On the other hand, this may be just people coming back to reading, and not the hardcore readers who know what they like, and only buy what they like.

To conclude: I would say (as you have) that having a promotion puts your books on the devices of an increased number of people. Are they read? Will they ever be read? And if they are, will that be translated into increased sales figures at the higher price? I confess to not knowing.

But thanks again for sharing the numbers.

Robin Sullivan said...

Hey Gerald, Thanks for the post and for buying the book. You make some great points and I've long believed that many of the cheaper books never getopened so many of the sales are potential readers not readers.

Thea Atkinson said...

this was a fascinating study and it was incredibly generous of you to post it in such depth and honesty. i tried a .99c sale for my book, One Insular Tahiti, and while it did increase sales for a bit, they quickly went back to the initital level when the sale was over. Result: loss of income but better temp sales. I'm not sure it's the best policy for all genres to price low with a low leader. seems to show even at small levels what you are saying through this post at larger rankings.

great great read

thanks again

Thea Atkinson

Mel Comley said...

Thanks for sharing Robin, the information you have gathered is very important to us Indie authors who are flummoxed by knowing how much to charge for our books.

Good luck and continued success with your novels.

L.C. Evans said...

Thanks for sharing this, Robin. Interesting post. Gerald made some nice points in his comment, too. I've been following the topic on forums and other sites. The whole issue of pricing as is relates to sales seems to be different for each author. I'm still trying to find what works best for my books, but I know I'll get there eventually.

Free books for Kindle said...

Those are interesting results, Robin - and thank you for sharing them.

Personally, I think promotional prices on their own aren't enough to move the market in the direction you'd like. Prospective readers have to know about the book and that it's on discount.

Gerald also has it right in that you are probably storing up sales for the future.

Freebies may sit around for a long time before being read. I have hundreds of them because I tend to grab any book which looks interesting in case it is no longer free later.

Suzanne said...

Very interesting post, Robin. Thanks for sharing your findings. These results do suggest that free and $0.99 are price points for consumers who "collect" but don't necessarily read; thus these may not be good loss-leader strategies.

I wonder whether this makes fiction priced at the $1.99 and $2.99 price points "invisible," in a kind of no-man's land that separates the collectors from the readers/loyal fan base. As I've mentioned, as soon as I have my new covers, I'm raising my prices into the next tier, where the comparable historical novels of mystery and suspense reside.

Suzanne Adair

ModWitch said...

I love pricing experiments. I will say this.

1) I think you saw an effect that seems to be lasting on the first book. That may eventually trickle through to the rest of the series - Michael's books aren't a really short read.

2) Because they aren't a really short read, and because people take longer (we think) to get to cheap books, I suspect you'd need to run the loss leader longer to see the impact on the other books.

Not saying you should, at all - I get that it's expensive. But I think your numbers say more about a short $0.99 promo than they do about a longer term loss leader strategy.

Thank you very much for posting the numbers - very interesting!

RandomizeME said...

Hi, I was under the impression that when Amazon makes a kindle book free, the author still gets paid for the books (I recall some indie authors reporting that on the Kindle Boards after a whole bunch were made free by Amazon last year)?

So shouldn't you have gotten paid for when Amazon made book 2 free?

Tara Maya said...

Thanks, Robin.

I sold 12 books in November at $2.99. I lowered the price to $0.99 for January, and sold 102 so far. BUT... I have reasons to believe that the rise in sales was NOT because of the lower price, but because I started getting reviews, (I have 6 5-star reviews on Amazon so far, and a couple of reviews and articles that have appeared elsewhere). I suspect those buyers would have bought anyway, in which case, I lost money by pricing too low.

I raised the price again for February. Just to $2.99 for now, but I am thinking of experiementing with the $4.99 price.

Tara Maya
The Unfinished Song: Initiate

Suzan Harden said...

Thanks so much for the breakdown, Robin!

The last thing I want is my e-books collecting the proverbial e-dust.

Robin Sullivan said...

@RandomIZEME - it depends. Awhiel back AMAZON lowered the price on f a few indie books (on their own, I belive). These were people already at a 35% model and yes they paid royalties based of of their list prices.

In my case, I was in the 70% model. Where Amazon clearly states, if we lower the price because it is cheaper someplace else - we will pay you based off the lowered price, not your list price.

I hope that helps to clear things up.

Robin Sullivan said...

ModWitch - Yep I agree with you that if I had kept the $0.99 price for an extended period of time it might show different results. At the present time I'm in a VERY steady state with sales. I want to let this run for a bit to make sure that it is a good bench mark then I MIGHT take the gamble to leave it at $0.99 for a good 3 months (realizing that it is a test that MAY cost me $27,000 or so) but...it could produce some interesting results. We'll see.

www.lalacorriere.com said...

I've had some people question my reasoning behind a Kindle price of 4.99 for Widow's Row. It seems to me that you can ALWAYS lower the price of goods, but boy oh boy, it's not giving your fans a thank you when you go and raise the price on them. Just another thought.

ICYroad said...

This is such a hot topic it is good to see some real numbers. Especially from someone who did not 'go cheap' from the outset.

I got an RSS email from a small publishing company where they are selling 10k short stories for $2.99.

The 'short story' market appears to be moving into the lower price range.

I'm getting together a collection of my short stories. Some we will price in the lower brackets, others by length (novella) and smaller collections dpending on where prices are at that point.

I'm hoping that short stories will fill the $.99 market along with 'pulp fiction' novels.

Jenny said...

Thanks for the breakdown of your results, Robin. I am experimenting with a $.99 blitz right now, and the first day, sales were fantastic. I thought about doing a free day on Monday, as part of the promotion is "Celebrate with us!" because my fiance and I are getting married on Valentine's day.

I do love seeing what everyone else has to say, to really get into their results and compare notes.

Thanks so much for this!

Moses Siregar III said...

Robin, if I'm understanding these numbers, it shows that you made less money while the books were either free or at 99 cents, but then more noticeably money afterward.

So the way I'm reading the results is that a short-term low price promotion can produce short-term losses, but result in increased long-term sales perhaps over a much longer period of time. It seems like this was a good thing. What do you think?

Anonymous said...

As a first time reader here, I can't tell who you are talking about: You or Michael Sullivan. I'm guessing you are related . . . or what?

Do I have to be a Kindleboards regular to understand this?

Robin Sullivan said...

Anon -- Read my profile that should help to explain. I'm Robin Sullivan, my husband Michael is an author that I represent - I hope that clarifies things a little.

Robin Sullivan said...

Moses, the long term sales depends on whether people buy the follow on books. I did see a bit of a wave from what I'm accounting for as "voracious readers" that came thruogh following the first free promotion of Avempartha. Since others may take a VERY long time to get to later boooks in the series it will be really hard to predict that data.

Moses Siregar III said...

Yep, that makes sense. My guess is that you'll make up those short-term losses and then some.

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