Sunday, January 23, 2011

Pricing - What to do...what to do.

Okay,

Here it is—my long awaited post on book pricing. Considering how much time and effort I’ve put into the research required to make this post, I’d love this to be the definitive dissertation on the subject, but unfortunately markets shift and a good marketer tracks trends and adjusts, so much of what I say here will be obsolete in six-months (maybe sooner) but here is what I’ve concluded for now. Hopefully I’ll have time to update as new information becomes available.

The three rules of real estate are “location, location, location” and for books (and all consumer purchased products) nothing is more important than the right price.

First off, let’s talk about control. Especially since I’m sure there are authors here in various varieties of publishing situations (self, subsidiary, small press, traditional). Some of the decisions you make in regards to your path to publishing allow you to control the price and some choices will mean you have no say. That fact alone could be a “deal breaker”. Let’s cover the ones where you have no choice first, because that is the easiest.

If you go with a large traditional press or even small press – they set the price. Period. No they are not interested in your past experience or your ideas – they pay a lot of people to “know the market” and right or wrong they are going to believe they will be better than you at picking the right price. For a large traditional press you can be pretty sure that they have data to back up their decisions. You may not agree with their choices, but at least they have people who they pay a lot to study and determine this on yours (and all other authors they represent) behalf. The contract you’ll receive won’t say what price they’ll price your book at. Nor will it tell you what the print run will be. But if you look at similar works they’ve put out you can get a good idea of what to expect.

For small presses the most important thing to be wary of is inflated price. Michael was very fortunate with regards to the small presses he was first published through. It was a company called AMI (Aspirations Media Inc) and they “competitively priced” their books to those standard in the market (i.e. bookstores and Amazon). They sold his first book (a 300 page traditional paperback for $11.99).

Ridan routinely prices our authors print books from $9.95 - $14.95 depending on length. Again this is competitive in the marketplace. But I know of many small presses that price their books at $18.95. Personally, I wouldn’t even submit to a small press with this pricing model because it is outside of “what the market will bare.” Before submitting to a small press check to see what their other works are selling for…if they compare with similar works (same genre, format and page count) then you are good to go.

If you are self-publishing it is ESSENTIAL that you can dictate your own price. Some subsidiary companies let you do this, others set the price for you (many times based on page count as that relates to their price). Others will put provide you with a “range” or “floor” and you are free to price higher at your discretion. In most of these cases even the “minimum” you can charge is above that marketplace price – if this is the case you can’t consider using them.

In general, if you are self-published you can’t beat the Pro-Plan of CreateSpace (many will argue for Lightning Source but CreateSpace beats them hands down. I’ll do a post some day about the differences and why I say this but for now just trust me on this fact). With their prices you can easily produce a work and get a good return. I’ll use one of my author’s as an example. Nathan’s Lowell’s Quarter Share costs me $3.82 to print. I sell it on Amazon for $9.95 and after they take their 40% Ridan receives: $2.15 which may not sound like a lot but compared to the $0.99 of traditional publishing it’s a good deal.

Now to the juicy part…ebooks. First let me start off by talking about the various tiers.

  • > $9.99
  • $6.96 - $9.98
  • $4.95 - $6.95
  • $4.00 - $4.94
  • $2.99 - $3.99
  • $1.99 - $2.98
  • $1.00 - $1.98
  • $0.99
  • Free

I’m going to restrict my comments on ebook pricing to Amazon because that is where I have the most experience (and success). Let me start out by saying a few of my personal beliefs on pricing a book:

  • $9.99 should only be attempted by the most sought after books released by major publishers
  • $6.99 - $9.99 is a pretty standard price that most traditional big-six publishers price at. It “works for them” though some in the self-pub industry will argue that they are overpriced and sales will suffer because of this.
  • $4.95 is, IMO, a great price point for a small press trying to position their books against “the big boys” this puts them “under $5” and about ½ of the big boys higher end and several dollars below their lower end. Not surprising this is the price point for most of Ridan’s books.
  • In general, I think the “top end” for an ebook should be ½ the print list price
  • $2.99 is generally agreed upon by most “indie” authors as the “sweet spot” this is the “minimum” price that you can use at still receive 70% royalty and there are many books priced at this level – Personally I think it is WAY TO LOW. I’ve never put one of my author’s books at this price (except Michael’s, and only as an experiment). I think many new authors who are insecure pressure themselves into believing that they have to price here and I think that is unfortunate.
  • To me the $1.99 price point is a “dead zone”. I don’t think anyone should be there as it still is at the 35% royalty rate which means $0.70 per book but is not too low to be really compelling and twice as high as the lowest so lives in a strange “never world” between two legitimate prices ($0.99 and $2.99).
  • $0.99 is a price I hate. It puts only $0.34 in an authors pockets. It says “I don’t value my work”, and I intellectually can’t justify that a book that takes months or years to produce, provides hours and hours of enjoyment is “worth” less than a candy bar.
  • Authors (especially indie authors) think too much about price in regards to “other authors” and not enough with regard to their “reading audience”. I fear there is a bit of a lemming effect at work here. (I know I’ll take flack for this but if I think it is important for me to be honest with my opinions in the context of this blog)

Now let me give you some opinions on ebook buying habits:

  • Many ebook readers are opposed to > $9.99 and will actively boycott books who price there
  • $7.99 - $9.99 is a pretty “standard price” most ebook buyers expect to pay
  • $5 is generally considered “a bargain”
  • Many people only by low price books ($2.99 and less) and buy many of them – almost like collecting pebbles off a beach. Many of these purchases are impulse buys and will never be read so a purchase at this level does not necessarily equal a reader.
  • Some people look at low price books as not worth their time – and wouldn’t buy them.These people assume a low quality product produced mainly by self-published authors.
  • Everyone likes free books and again will collect them but that does not mean they will read them. (I myself have 20 – 30 free books on my kindle that I have no time to get to)
  • A book that is “higher priced” ($4.95 and above) is generally not an impulse buy and has a higher chance to make it higher on the TBR pile than a low priced or low price read

Now that I’ve given my opinions I can say the following: I believe there are two legitimate pricing models for someone who is self-publishing:

LOW PRICE ($0.99 and $2.99)
As much as I hate to say it (because I don’t think it is good for the indie business) the $0.99/$2.99 price point CAN BE VERY EFFECTIVE at gaining an audience. I’ve done extensive research (much of which I’ll save for the next post) but the data is compelling that this is a model that can work well and provide a nice income into the self-publisher’s pockets.

That being said…I think many of these authors leave their prices there WAY TO LONG. I’ve argued this point many times with several authors but fully respect their right to make what they feel is the best decision for their books. I personally believe that if you adopt this model you should do so to reach a goal (high rankings = following) and once obtained adjust to a more “reasonable price”. This is particularly important for those who have a series of books. You can use first book as a “loss leader” but if your work is good, and the reader wants to read the second books and beyond, they won’t begrudge you a few more $’s to continue enjoying your work.

For those that use this technique and are able to get into the top 100, you’ve already proven you have an audience. Sales in this range are in the tens of thousands per month especially if you have multiple titles there. It only makes sense to raise your prices – at the very least to $2.99 or $3.99.

Even people who use this price point to get to the 100 – 1000 ranking are still selling a substantial number of books a month and again can adjust books higher, and if they are really uncomfortable, leave one as a loss leader.

MEDIUM RANGE MODEL
This is the model that Ridan has used since day one—and to great success. This price point was selected by analyzing not the “indie/self published market” (that I DO NOT WANT to position Ridan against) but rather the more traditional NY presses. It represents a “bargain” to the reader and provides a substantial profit that makes it possible to make more selling less books. The beauty of this pricing strategy is that as an audience is developed the rewards can mean some striking income numbers to the author that would dwarf those of major traditional publishing.

Currently two of Ridan authors are doing VERY well with this model. Michael is selling 10,000 books a month (over 5 books) and Nathan Lowell is selling 6,000 (over 2 books). Both of these authors have taken a substantial spike since November but even before that they were both routinely selling 1,000 books a month.

There are many that say you can’t achieve “substantive” sales in a price point above the $0.99/$2.99 price point and Ridan’s authors are proving this is not true. I wish more indie authors would get the courage to abandon the $0.99/$2.99 comfort zone and price their books more competitively to the “overall” marketplace instead of lumping themselves in the “self-published/indie” masses. And then I could have more successes to point to. For now, I really only know of a handful of other authors who are showing the courage to try.

CONCLUSIONS
I really think there are two distinct markets and one or the other may work for you. There is no doubt that there are substantial number of people who will buy the low-price point books (tens of thousands) but I’m not sure how many of these convert to “lifelong fans”. These people buy many books (and there are many at this price point to choose from) so there is a ready market that will sustain authors at this level.

But the “cheap seats” are not the “only game in town” and you CAN price competitively and both receive a following and enormous financial rewards. I personally think this is a “better” choice on a number of levels.

MORE TO COME
This post is already getting long, and I’m sure it will provide me with quite a bit of “heat” for some of the things I’ve said, but I’ve done the research, and the testing and I have data to back me up. In my next post I’ll provide that data and further insight.

19 comments:

Annie Bellet said...

I can't wait for the next post, thank you for this one! I did my own rough research and I think that many people are pricing too low. If you look at the "also bought" lists for .99-2.99 books, they are usually populated by other cheap books. I think there is a demographic of reader that only buys cheap books. If I look at a traditionally published 5-9 dollar ebook, the "also bought" is usually populated by other books in that price range.

It's my worry that 2.99 will become an obvious indie "ghetto", since it is, for the moment, a price mostly used by self-publishers and makes them easy to identify and, like it or not, there is still a stigma against self-publishing, for all that it is slowly fading out due to the new distribution options.

I find the 4.95 price interesting, because my own looking at the numbers showed a gap of books on bestseller lists on Amazon in the 3-5 dollar range price-wise. So maybe you've hit the top range sweet spot on that "deadzone"?

The Daring Novelist said...

Thanks Robin for all the great work.

I would only point out that 99 cents and 1.99 are appropriate prices for novelettes and mini-short story collections.

And, of course, that everyone should do their research on their genre and audience.

Camille

Robin Sullivan said...

@Annie - It's interesting I've used the same "indie gheto" refence and I think it is bad because it is self-enforced.

Robin Sullivan said...

@daring novelist - GREAT POINT! I don't do short stories or novellas so I did not even think about posting on that - thanks for bringing it up.

K.C. May said...

This is such great information, Robin. I agree with you about the lemming effect. Too many authors are presuming they must price their books at 99c to be competitive, without analyzing their audience. I'd rather have readers than buyers, and my audience isn't generally attracted to cheap books. I toy with raising the price of my debut novel to $3.99 or $4.99 because a) it gets great reviews, b) it's 122,000 words long, and c) fantasy readers expect to pay more than a buck for a good story.

Gerald Hornsby said...

Hi Robin

Great post, and thank you for so openly sharing your commercial information. I currently have two collections of short stories out at the $0.99 price point, and I have 3 novel length works in the pipeline.

I was being swayed by the "has to be cheap to gain an audience" argument, and for me, as an unknown, there is still some of that feeling. However, your argument for the higher price points are compelling.

I did some rough research amongst non-author, ebook readers, and concluded that £2-£4 UK was a legitimate price for someone to pay for a book by a relatively unknown author. £4 - £5 was the figure for a "big name".

I guess what I'm trying to say that, as you say, putting yourself in the place of the reader means that you get a more reader-orientated view of pricing. The ebook market is in a state of flux, and ebooks published by the big houses have dropped in price from over £10 over here (and more), down to a reasonable £5 or so. At this level, there is headroom for new authors to show [i]some[/i] price advantage.

Great authoritative post.

Leigh Saunders said...

Camille beat me to the punch, but I mostly agree with her - $.99 is a very reasonable price for short stories, $1.99 an excellent price for novelettes, and $2.99 is perfect for novellas.

However, I do think you can justifiably price collections higher ($2.99 and above), depending on how much content you're including in the collection - if you've gathered a novella's worth, price it like a novella (at least $2.99); but if you've compiled a full book's worth of short stories, why not price it like a normal book?

az said...

Thanks for your informative post, Robin. You make a compelling argument for the >$2.99 price bracket.

Daring Novelist mentions novelettes (novellas?) and mini-short story collections. Do you think length ought to impact the self-pub's price at the other end of the scale, e.g. with a novel approaching 100K words?

Robin Sullivan said...

I don't represent any novellas or short stories so I didn't cover that in my post. This blog tends to be reflective of areas that I have first hand experience with.

I do think that if you have a novella or short story you must CLEARLY state so on the cover (not just the blurb) and price it much less than a full length novel.

A collection of short stories that comes out to about the same number of words as a novel (80,000+) can be priced the same as as a novel.

Ebook buyers get really upset if they think they are getting something "full length" and it is really really short. So make sure you set expectations appopriately or they'll be a backlash.

Suzanne said...

Excellent post, Robin. I'm awaiting completion of new cover images for my novels. When I have the images, up the prices will go to position my books with comparable titles in the genre.

Suzanne Adair

Leigh Saunders said...

Robin said:
"I do think that if you have a novella or short story you must CLEARLY state so on the cover (not just the blurb) and price it much less than a full length novel."

I absolutely agree. All of my short fiction is clearly labeled as such on the cover - can't think of a better way to annoy a reader than to not let them know what they're getting up front.

Jim Johnson said...

Great post, Robin. Thanks for having it here. I've been following your posts elsewhere as well, and a lot of your advice has founds its way into my draft business plan.

I agree that 2.99 feels too low for a novel price, if only because I respect my own time/level of effort and work more than that.

Robert Marda said...

I am following with great interest the different sides of the best way to price books and doing my best to learn about marketing.

Thank you for this informative post and for your insight.

I haven't published anything yet but plan to.

wannabuy said...

Robin,

You know I like numbers

This file (click 'download' for pdf) has the data:
http://www.pwc.com/gx/en/entertainment-media/publications/future-of-ebooks.jhtml

See figure 12:
Below $2 is only 17% of the market and not very profitable. Above $8 and the market starts to dry up.


Note: I disagree with figure 20. Then again, that link's data is already behind current ebook market share. ;) Warning... it takes a long time to really absorb that link.

Neil

David Wisehart said...

Robin:

Thanks again for the great info. I've tried my first novel at $0.99 and $2.99. Now that I'm publishing more short fiction at $0.99, I decided to raise the price of my novel to $4.99.

But I noticed that you use $4.95 instead of $4.99. Why is that? Did you experiment with both, are is that part of positioning the price against traditionally published books?

I've also noticed some traditional publishers discounting their ebooks to a flat $5.00.

Interesting.

David

Cathy Keaton said...

I'm curious as to why you believe CreateSpace is a better way to go for print books than Lightning Source. I hope you do blog about your opinion on this in the future.

Robin Sullivan said...

@David,
I use $4.95 because it might showup a "smidge" lower than $4.99 when people are searching based on price. It makes little difference in the "overall scheme of things" but gets you a bit higher - kind of like naming your company Acme Plumbing to be first in the phone book.

I've also seen A LOT (mainly mainstream publishes) using $5.00 I totally don't underand this "very round number" - The only thing I can think of is at a "corporate level" they feel they would be diminshing perceived values if they were under $5.00.

Robin Sullivan said...

@Cathy - I'll definitely make this my next post. When Lightning Source came out - there was NO ONE that sang its praises higher than me. But CreateSpace has beat them at their own game and is the hands down winner - More to come soon.

Jennifer Becton said...

Thank you for the post, and I look forward to seeing the data you consulted to reach these conclusions. I'm thinking of releasing my next book at a higher price point. Maybe I can be a success you can track. LOL I hope. :)