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Monday, January 17, 2011

eBook Pricing - Redux

Hello all.

A few months ago, this blog discussed the issue of eBook pricing of novel-length works. At the time, I didn't have lots of comparative data from my personal experiences. I asked others to share their thoughts on bargain ($1 or less) eBook pricing and got a few comments from readers (Thank you). No one who commented said lower prices had helped their sales.

Since then, I've been doing quite a bit of research and "field testing" concerning my pricing theories. This post will share what I have found out.

Theory

We have to begin with a bit of marketing theory here, so you can see the logic behind my price testing.

As most of us know, sales are controlled by the laws of supply and demand. In most circumstances, the number of units (books) sold is a factor of pricing vs willingness to pay the asking price. The lower the price, the more books sold. This is how typical product pricing is determined in our economy, and how competition keeps product prices in check.

There is an exception to the "lower price equals more sales" paradigm in the area of "luxury goods." In the case of luxury goods (such as prestige watches - Rolex- fine jewelry and gems and luxury automobiles - Mercedes/Ferrari) sales actually DECLINE when prices are too low. This is because either: 1) buyers of luxury goods want everyone to know that they possess these luxuries that others cannot afford. Lower prices mean more people can afford the items; or 2) buyers perceive that higher prices mean higher quality (and conversely, lower prices mean lower quality).

Artistic creations often fall into the category of luxury goods. Buyers assume that if the price is too low, the art is no good. Since buying art is a very subjective purchase decision, buyers rely--to a degree--on the pricing of the product to assess its value.

What about books?

What I have found is that, in the venue of book sales, buyers act more like purchasers of "luxury" goods than they do buyers of "normal" goods. The market value of a book, like the market values of many other artistic creations, appears to be driven more by luxury buying principles than ordinary supply/demand economics.

That is a very cool finding in so many ways!

If you consider your book to be a "good" book with a target market that can afford "good" books, charging more for your book (within some parameters) will actually stimulate sales! You can earn a decent sales margin and not have to worry that buyers will think you are pricing yourself out of the market. Of course, this thinking won't work if your buyers don't care if the book is any good. They'll happily pay $.99 for a book they expect will be worth only that amount.

What have I done that leads me to this conclusion about books being luxury goods?

First of all, I've done a lot of asking among book buyers. "What do expect to pay for a quality eBook?" Responses have almost universally been that any price under $10 is considered a good deal.

Not coincidentally, many NY Times Best Sellers are currently being released at a price of $9.99. Apparently the market research of these mega-publishers coincides with my own, much smaller, sample.

Secondly, I tested my theory over the last six months. I currently have two novels that have been listed for sale as eBooks for more than six months. During that time period I have re-priced each book at different points and observed sales results.

-- at a price of $6.99 -- sales are okay.
-- Drop to $2.99 -- sales drop off dramatically
-- Raise to $8.99 -- sales approximately same as at $6.99
-- drop to $6.99 -- sales remain steady
-- drop to $2.99 -- sales drop off again
-- raise to $8.99 -- sales increase to previous levels again

Conclusion

If you have a book that you want to market as a quality work of contemporary commercial literature, or as a quality non-fiction work, I recommend pricing it at $8.99 (just under the NY Times books, but still high enough so buyers perceive the quality of your publication).

Okay . . . I'm sure many folks will disagree with me. And no one can ever say for certain what the total sales of their specific book would have been had they sold it at a different price.

So . . . if you have your own well-reasoned pricing strategy that you'd like to share, please feel free to comment. I'd love for my readers to benefit from it.

For now, my eBooks are for sale at $8.99. I certainly need sales to increase to make significant money in this writing endeavor. But as I mentioned in earlier posts, marketing books is a marathon, not a sprint. I'm only about 7 months into my initial 18 month marketing strategy. (And 18 months is the average time that a traditional publisher will market a book BEFORE releasing it. So I think my timetables are reasonable here.)

That's it for today. Thanks for stopping in.

Cheers!

John

21 comments:

  1. Interesting, John...and I've heard of others having the same sort of results. I'm not a luxury buyer or seller, so I'm at the other end of the spectrum. :-)

    For myself, I have a hard time pricing over $2.99 simply because I personally won't normally pay more than $5.00 for an ebook. This means I don't even buy NY ebooks unless they're on sale. As a very fast reader, I can make my book-buying funds go much farther sticking to lower priced fare.

    I started Tempest off at $1.99, and it sold 5-6 copies per month. After dropping it to .99 cents, it's been steadily inclining in sales from around 30 in November to over 70 this month. It's my first book, so that may have something to do with it, and I'll bump it back to $1.99 in Feb. to experiment. It's a novella, so only 30k words.

    My second book (50k) will start at $2.99, and we'll see how that goes. Later on when I have a larger backlist I might experiment with raising prices as high as $4.99, but I won't price higher than I'd buy, so that would be my limit, personally.

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  2. Thanks for your input, Jamie.

    And I just got a Tweet from @QuixoticKatie saying she is also a fan of the $2.99 price point. I believe Zoe Winters has long advocated the "buck a book" concept.

    So it is a strategy that has appealed to other authors as well.

    I just like the above approach for my market for the reasons stated.

    Thanks for commenting and thanks for stopping by.

    John

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  3. I think price also equates quality. I had good reviews until I lowered my one novel to .99. Then i was told it wasn't worth that, yet no complaints when it was 2.99. I won't charge .99 again.
    I think what we charge is a direct statement about how we value our work. I'm at 1.99 and may go back up in the future to 2.99.
    Thanks for the info John it's always helpful!!!

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  4. Thanks for commenting, Jodi. I believe we need to price our eBooks competitively with other QUALITY eBooks in their markets.

    Some markets call for lower prices. Some may require higher pricing (eg. academic books). But you get the idea.

    Thanks for stopping by.

    John

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  5. John, great post. I've been contemplating raising the price of Haunting Miss Trentwood by a dollar (so it's 3.99 instead of 2.99) just to see what would happen. I've gotten good reviews so it wouldn't be a crazy idea just to see if it would increase demand.

    Anyway, I'm commenting because I just wanted to let you know you’ve won the Stylish Blogger Award! Check out my latest blog post to learn more.

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  6. Thank you, Belinda for including me as a "stylish blogger." I'm honored. And you are very cool! I'll have to get going on my obligations as an award recipient. :)

    John

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  7. Has anyone tried using whole or round prices? Like $3 or $4.50.

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  8. Good question, Raven. Anybody . . . ?

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  9. Really interesting, John. Thanks for this post. I'm getting ready to release my first full-length novel, "Ravenmarked," and I've been really hesitant to go with $2.99 because 1) the book is 160,000 words long, and I think that should count for something, even if it isn't in print, and 2) I've seen other fantasy works priced at $4 - $5 or more that are selling fairly well. I have a hard time thinking of going about $5, but now that I've read this post, I might consider $4.99 or $4.50.... Hm....

    Amy

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  10. Hi Amy,

    I encourage you to find out what your competing titles from the traditional publishing world are selling at. Then undercut them by only $1.00.

    I know you think I'm nuts. But that's my recommendation.

    Thanks for stopping.

    John

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  11. Interesting results, and good discussion going on as well. I think this will be a hot topic for some time yet, as the publishers, self-publishers and retailers (to say nothing of consumers) are all still really feeling out the market, looking for leads and models to follow and trying to make sense of it all.

    For the moment I must admit I'm mainly opting for cheap books, not because I'm unwilling to pay for quality but because of the rapid changes still occurring in the ereader and ereader app/software markets. I don't want to spend a fortune building up a library on whichever happens to be my favourite ereading platform today, only to find a great new one comes along tomorrow which does everything I really want except allow me to read the ebooks I've already bought. So for the time being I'm limiting my purchases and doing a lot of test-driving... one day I suppose I'll have to bite the bullet, but I'm hoping (against the odds) that somehow there will be more flexibility built in down the track that will allow readers to switch between platforms without losing their beloved libraries.

    Anyway, once again it's great to see discussions like these taking place, and thanks for the great information.

    Cheers,
    Andrew

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  12. Hi Andrew,

    Excellent comments!

    I'll add one note that Amazon has a Kindle firmware upgrade in the works that would allow Kindles to read ePub format, and thus eventually borrow library books.

    But you're right. We're in the middle of the storm right now. My advice is as stated above. I can certainly understand your approach as a buyer as well.

    Thanks for stopping in!

    John

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  13. I think it is key to keep in mind the genre you write in. In the genre I write in (Romance), I would be sneared at to price a novel more than $5.99. Beyond that, and you're mocked by the readers/reviewers.

    However, I firmly do not believe in the 'buck a book' theory, as I feel it devalues the work. It also, IMO, does speak to the quality of the book.

    I have a firm pricing structure. Short stories are sold at $0.99, novellas at $2.99, and novels at $4.99. I've grossed about $2,000 in the six months I've had my three titles out. It might not seem like much, but it's a big deal for me. :) I've sold well over 500 copies, and so I feel I'm priced about right for the genre I publish in.

    I've a new novel coming out in about three weeks, so we'll see if the sales keep steady. I'm a huge believer in backlist and new material (QUALITY material) published every two to three months. Those new releases help sell the older ones. :)

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  14. Dear slarmstrong.

    All very good points. I'm not familiar with the Romance pricing structure. You may well be correct that $4.99 is a good price level.

    And you also make a great point about backlist books. The more books you have, the greater synergy you will experience in sales. So the faster you can publish QUALITY work, the better.

    Robert B. Parker used to write about a book a month and was hugely successful.

    Thanks for contributing. Come back soon.

    John

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  15. It's nice to hear different viewpoints on ebook pricing, especially when there are so many indie authors focusing on the $0.99 and $2.99 price points.

    The best thing an author can do is test, test, test. What works for one won't always work for another.

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  16. Caethes,

    You speak the truth, Ms. Faron. JA Konrath is at $2.99, I believe. But he has some kind of deal with Amazon for extra $$.

    Different genres, word-lengths, competing prices from traditional publishing, and many factors play in to this decision.

    For my books, $8.99 is the sweetest spot so far!

    Thanks for commenting.

    John

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  17. I've experimented too. With my e-books, 99c brings in three times as many sales as any other price. I price my short fiction at 99c. For novels, I publish $9.99 omnibuses - several novels in one e-book. It's less work for me and a bargain for the customer.

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  19. Hi Dusk,

    It doesn't surprise me that books sell at $.99. I'm just not willing to consider selling at the buck-a-book level because there is no hope of any reasonable monetary return, and in my opinion, doing so would devalue my writing and make it harder for other writers to get fair value for theirs.

    That having been said, I fully support your right to sell your material at whatever price you choose.

    Thanks for stopping by and commenting!

    John

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  20. Hi John, thank you for this post.

    I am currently writing a non-fiction, first-person book detailing personal experiences that I believe can help others in my situation (and entertain).

    I will be self-publishing, as this is my first book. I will print the book in paperback at a price point around $12-$13, which seems to be about right for this style of book per my research at Amazon, etc. This leaves me with about $4-$5 profit per book. Of course, in today's publishing environment, I feel I need to release an e-book version as well. However, I cannot imagine selling it for $2-$3. In part, because of the perceived diminished value, because I fear it might destroy any value for the printed book and because it leaves such minimal earning potential.

    Honestly, I'm shocked that a writer would put all the time and effort into a book then price it anywhere under $10. I'm not saying you or anyone else is wrong for doing so - you clearly know much more about this than I. But frankly, I find it a little depressing and can only imagine the number of copies that would need to be sold to earn anything substantial.

    So, my question is this: Do I publish the paperback version and release it into the wild for about 6 months, then offer the e-book at $8.99 while keeping the print version the same price? Or, do I cut the price of the paperback at the same time - and to the same price - the e-book is released? Am I way off-base here?

    I also found this article interesting to read about e-book pricing:

    http://www.nytimes.com/2010/02/11/technology/11reader.html

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