The Business Rusch: Pricing (Discoverability Part 7)
I dread writing this blog. Every time I discuss price, free, or discounts, I get carpet-bombed by people who treat price like a religion. Whether that price is free, a 99-cent e-book, or a $45 hardcover, writers seem to “know” what price is too much and what the market will bear. They base this knowledge, not on a study of pricing, but on their gut or their friends or their own price prejudices.
In addition to the fact that I get carpet-bombed when I discuss this topic, I’m also traveling this week to a place with a marginal internet connection. I’ll be able to put up comments, but the last time I was at this particular place, I wasn’t able to answer e-mail or work for a long time on the website.
So, if you have questions, they’ll probably go unanswered. Honestly, that’s probably the best for me, but not so great for you. And I’m sorry. Also, if you’re going to comment, please see the assumptions I’ve listed at the end of this piece. It is Part 7 of a series, after all, and you need to read the rest of the series to know where I’m coming from.
Whew. That’s a heck of an introduction. Okay, here goes:
I promised last week that I’d discuss methods to get your work discovered, moving from passive techniques to active ones. Passive techniques are, essentially, ones that work whether you know the customer or not. You have to do initial work, as in designing and branding your covers (last week’s topic), but after that, your effort is more or less done.
Pricing is similar. You need to make initial decisions, and occasional changes, but for the most part, once you make your decisions for your business, you are done until something major happens.
Pricing is not something you do by gut instinct or what your best friend tells you or how the people on your Facebook page react to the price you set. Nor is it something you should just trust to your friends on writer boards.
Pricing is a major field of study in both economics and in business. There have been more scientific studies on price and the impact of price on the consumer (on the business, on an industry) than anything else in retail. Price is extremely complicated, and people’s reaction to it even more so.
Remember, price is at the heart of the Department of Justice case against Apple and the traditional publishers. Price is important enough that parts of it are regulated, and regulated differently in different industries, and in different countries.
If you don’t believe me, just go to Wikipedia and start down the “price” rabbit hole. If you read all the links related to pricing, just on Wikipedia’s site, not the footnotes, you’ll lose the better part of an evening.
With that in mind, I’m going to discuss only those aspects of price that will bring more consumers to your work. I’m going to do this without linking because of the rabbit holes and because this information is out there. Much of it is basic economics.
If you’re in business, and you don’t understand basic economics, that’s like being a writer who has never read a book, but believes they know everything there is to know about storytelling.
Forget your economics classes from college. If they were anything like mine, the professors were hired after a search for the dullest presentation possible. Economics truly isn’t dull, and believe it or not, neither is pricing. Go forth, read. Learn.
That said, here we go on pricing and discoverability.
Here’s how you get discovered:
1. Set the right price for your work: As I mentioned above, this is harder than it looks. If you’re traditionally published, this has little to do with you—except that you need to remember this: the longer your book, the higher the purchase price will be. If you want an affordable mass market paperback for your readers, then write three 70,000 word novels instead of one 210,000 word novel. Yes, your readers will pay more in the end than they would if they only bought the big honkin’ book. But price is a factor only at purchase. Which means this: a consumer will hesitate before buying a fat fantasy priced at $12.99 in mass market paperback, but won’t hesitate to buy a single mass market one-third the size at $7.99.
Once the purchase is complete, and the reader is hooked on the novel, she’ll buy the next two at $7.99, because she wants them. Which means she will spend more in the end than if she hadn’t balked at the $12.99 mass market (which, you can now see, was an actual bargain).
Remember this:
Price is most important to the consumer at the moment of purchase. I’m not just referring to high prices. I’m also referring to low prices.
If a price is too high, you limit the number of consumers who will buy your book. Some might find value in that perceived high price, but most will not.
If the price is too low, the consumer believes something is wrong with the product. In fact, low-priced items get returned more and receive more complaints from consumers than overpriced items.
The price has to be just right. It’s the Goldilocks rule, and believe it or not, it’s not individual.
Prices work on three levels:
1. The industry level (the standard prices for everyone in the field; the prices the consumer expects)
2. The market level (the prices that competing works or similar works have in the same market)
3. The transactional level (the discounts on one particular product or with one kind of consumer, which generally occur at the moment of purchase)
Too many indie writers only operate on the transactional level, ignoring the first two. Traditional publishers work on the market level, ignoring the other two levels. In book publishing, the industry level is always there, but never really discussed.
So, let’s begin with the industry level. You need to know how traditional publishers price their books. Like it or not, consumers have a price expectation on books, and that expectation is set by traditional publishing. Hardcovers can and do cost $25-30; trade papers generally run $14-18; and mass markets $7-10. These prices have remained relatively stable for the past ten years.
The problem in pricing has come from electronic books, not because indie publishers made things cheap, but because consumers are smarter than everyone realizes. Consumers know that a paper book has costs. They hold that paper book in their hands, feel the pages and the ridged letters on the spine. They know that item had materials.
They also know that the book was written by someone, and edited, and formatted in some way. But consumers also know that once a book is formatted and uploaded onto various electronic devices, there is not a massive per-unit cost, like there is with paper. There is a per-unit cost, more like a rental space, for the digital files, but it didn’t cost trees and printing and binding and shipping and shelf space.
So, consumers balked at paying $20 for an e-book at the same time as the hardcover. However, as this new side of industry has stabilized, consumers have shown a willingness to pay more than $10 for an electronic book, as long as that electronic book is two things: 1) the cheapest edition available and 2) a brand-new title. Once the title is older, then the price needs to go under $10, but not significantly under $10.
In other words, electronic book prices have started to stabilize for novels between $5-$10 for backlist and $8-$12 for front list.
Industry standard is something you as an indie writer need to pay attention to. You don’t want your possible consumer to ask who the hell you think you are when you charge more than $15 for an electronic book, nor do you want that consumer to ask what’s wrong with the content when your electronic book’s normal price is under $5.
That’s e-books. Paper books, which remember, you need to do for discoverability (see the assumptions, below), must be priced properly. You need to make at least $2 on your paper book, and possibly more. But if you want your book to go to traditional bookstores, like Barnes & Noble and Powell’s, you need to price that book the way traditional publishers do.
Not to be like those publishers, but so that everyone else in your supply chain makes their usual profit off the books.
Here’s something most indie writers don’t know, something we will discuss more in future blog posts on this topic. If you click extended distribution in CreateSpace and fill out the proper forms on Lightning Source (not deep discounting), then you will get into the catalogues offered by traditional distributors like Ingrams and Baker & Taylor automatically. Traditional bookstores order 99% of their books through these venues.
However, if your prices are too low, Ingrams and B&T won’t put your book into their catalogs at all, even if you clicked extended distribution. Why? Because they can’t make their usual percentage profit on the book. If they can’t make their usual percentage, then they can’t sell the book at a discount to bookstores. Bookstores need to buy books at a discount so that they can then sell the books to readers at the book’s suggested retail price. If there is no profit margin on that book for the bookstore, then the bookstore won’t carry your book either.
So, when you hear indie writers complain that they have POD books through CreateSpace and Lightning Source, but those books never show up on bookstore shelves, you have to look at a few things. Does that book have a good cover, blurb, and story? If so, is the price too low? Because the low price, more than almost anything, will keep a book off bookstore shelves.
Why do you want to be on a bookstore shelf? God, do I have to answer that? Because over 80% of all readers buy paper books. So, if you’re not putting your books into paper, you’re cutting out 80% of the market.
And if you price your books wrong, you’re still cutting out 80% of the market. Got that?
After you’ve done all the production, uploading, design, storytelling, and everything else right, price is the most important thing to do.
Set a price range for your publishing company. Hardcovers should run between x and y, depending on size; the same with trade papers. E-books should have a price range as well. The best thing to do is to use industry standard pricing for the suggested retail price of your book. It’s easiest.
Note I use the term “suggested retail price.” It’s not firm. Amazon will discount you, so will Barnes & Noble. If you’re lucky enough to get into some other chains like Wal-Mart, they will discount you as well.
But they’ll discount off the suggested retail price. You need some give there. (And for god’s sake, don’t complain about standard retail practice. That’s how business works.)
Here’s the other things you need to do on setting the right price:
1. Your newest book should have the highest price. The demand will be highest for the new work, so charge at the top of your price range for it.
2. Have a standard price for backlist. Use that price for works that are not new.
3. When your next book comes out, decrease the price of your most recent book to that standard backlist price. In other words, when you’ve released Book J, reduce the price of Book I to the same price as Book H.
4. Make sure your hardcover costs more than your trade paper, your trade paper more than your e-book. (Of course, most indie writers under price, so I have no idea why I’m even putting that here.)
5. If the industry makes price shifts, make sure your prices reflect those shifts. Usually, the shifts are in an upwards direction. Even if it feels bad, raise the price on newer titles to reflect the shift.
6. Do not underprice your books. Let me repeat that louder: Do not underprice your books. Do not set your suggested retail price for a novel in ebook format at $2.99. Do not do it. If you look at what has become industry standard, $2.99 is the price that most traditional publishers are charging for short fiction, and most consumers (outside of the tight world of indie writers) are paying that price. I am not talking about specials here or discounts or anything. I am talking about the suggested retail price for the book. Or what most people call full price. Your full price should be, at minimum $6 for a novel in ebook. Minimum.
The worst thing you can do as a business person is under price your product. Perceived value goes way down, for one thing. Your profits do as well. But that’s less important than the things I mentioned above. If you underprice your paper books, your book doesn’t get into most retail markets. If you underprice your ebook, then you can’t offer the kind of discount pricing that makes a book attractive to a consumer—and we’ll get to that below.
2. Set the right price for your work overseas. You need to take into account currency fluctuations and pricing prejudices in other markets. The ebook markets have ways to help you price properly. When Amazon first started to go into non-US markets, we only had one choice on pricing. We set our price in the States, and then Amazon would mark the book overseas at whatever the equivalent price was in pounds or euros. That led to ebooks being priced at things like 1.17 Euros and weird stuff like that, which of course, made consumers balk.
Kobo, iBooks, and Amazon now allow you to set your price per country, and I suggest you do so, using the same rules as in point one. Each country has different price prejudices, and honestly, life’s too short to learn them all. But at least you can price your books in the same way that other publishers do, rather than some weird-looking price that automatically makes the consumer aware of price instead of clicking the “buy” button.
Yes, changing the price to reflect other currencies will often raise the price of your book. Ah, well. Consumers will pay for those books anyway. Since WMG changed its prices on my work to reflect various currencies, my overseas sales have increased. Yours will too.
3. Discounts:
Discounts aren’t something you do willy-nilly or because it seemed like a good idea at the time. Here’s the thing most writers don’t understand.
You don’t offer a discount to get someone to buy your book.
Got that? The discount exists for other purposes. The fact that the consumer buys your book at discount is a side effect of your promotion, rather than the reason for the promotion itself. The only exception to this in discounting is when a retail store has ordered too much inventory, and wants to get rid of it. Then they discount that inventory that isn’t selling to get it out of the store forever.
Consumers know this: that’s why they don’t pay a lot of attention to discounted items (unless they need that particular item, and even then, they might not buy something discounted).
Why would you use discounts to promote your book?
Here are just a few reasons.
1. You want to build readership for all of your books.
2. You want to build readership for a particular series.
3. You just released a new title, and you want readers to sample your older work so that they will then buy the new title at full price.
4. It’s Black History Month and your protagonists are African-American and/or your books are set in the Harlem Renaissance. In other words, there is a real world reason to run a promotion at this particular time. (Downton Abbey just premiered so you discounted your World War I historical. See? Stuff like that.)
5. It’s the slow season (summer, for example) and you want to goose all of your sales just a little.
And so on.
You need a strategy, every time you discount.
Before you discount anything, you need to:
1. Have more than one book published. You discount book one in your series so that people will buy the rest of the series at full price. If you do not have any other books, then write more. Once you have at least three books, then you can start contemplating a discount on the first book. But only then. Because if readers like your discounted book, they will often buy more. But readers don’t’ remember author names if they encounter that name only once. Even if they have read one book by that author. So asking the reader to wait and remember doesn’t work.
2. Place a time limit on the discount. One day, one week, one month—but nothing more than that. In fact, one month might be too long, except in something like the Black History Month promotion. Offering your book at a discount is one of the very few times when you work off the old publishing model of velocity. Actually, it’s the Buy Now! Before It’s Too Late! model of retailing.
3. You do not offer the same discount again for several months. Because it subverts #2. Think about it.
4. Offer a good discount. That means you need an industry-standard suggested retail price. The bigger the discount, the more likely the reader is to buy—except in one area. Free. Free has its own problems and pitfalls. Right now, I’m not discussing Free. I’m talking discounting from full price to half price or more. We’ll discuss free next week.
If you don’t believe me about having a proper suggested retail price and then offering a good discount, look at this post by the good folks at BookBub. They have empirical evidence on this topic. (Of course, so does every single business book about pricing, but I know you guys ignore that stuff. [Yes, your sarcasm detector just went off]). They wrote:
…we ultimately found that the size of the discount does make a difference….The effect was magnified when we isolated our analysis to titles that had all been reduced to $0.99. The only price difference between these books was the original price, and of course a title that is marked down from $7.99 is more steeply discounted than one that typically sells for $5.99. Once again, the data suggests that readers may respond better to titles that are more steeply discounted, even if the deal price is the same….
They have lovely charts and graphs and everything else. What’s fascinating to me about BookBub’s site, is that they assume that book publishers don’t want to offer discounts—and you know what, they’re right. Because most places understand that discounting is a weapon that should be used sparingly, with lots and lots of forethought.
You need a marketing plan whenever you offer a discount. And then you need to test that discount.
What do I mean?
In 2013, WMG Publishing and Sourcebooks tried various book discounts on several of my series titles. WMG always used the first book in one of my series. Sourcebooks seemed to just use old backlist titles, without care as to what they were.
Most discount promotions through a major retailer (like Amazon or Kobo) really didn’t have much effect. Big discount promotions done directly to readers, like Book Bub, had a strong effect—so strong, in fact, that we could see the wave of readers flow through the rest of the series like a mouse being digested by a snake. I’ll be discussing these kinds of promotions more in a different part of this discoverability series, but here’s the takeaway on the price side.
When you experiment with a discount, make sure you then watch to see if the discount had long-term effect on sales—not just of the title you discounted, but of the other titles related to it (either in a series or under the same pen name or in the same genre). Test your promotions. Just because you goose the sale of one book for a weekend doesn’t mean the discount worked.
Again, you don’t offer a discount to get someone to buy your book.
You offer the discount as part of a marketing plan that should have an impact on your entire business.
Put another way, if your entire business is one book—and that book is fiction—then your discount hurt your profit margin and gained you nothing. (This technique works better for non-fiction, which we are not discussing here.) If your business includes several books, then the discount might actually improve your profit margin.
Ack! I know. I just discussed profit margin at the same time as discoverability.
Most writers never think in those terms. They want readers to read their one book, logic be damned. I want writers to build long-time readership, to become an automatic buy for readers, so that the new book, priced higher than the older books, gets pre-ordered no matter what the price. (Yes, we’ll discuss pre-orders later.)
As I mentioned, pricing is complex, and I’ve only just touched on it. I’m at my word count, so I’m going to continue to discuss pricing—and free [sigh]—next week.
It feels so weird to discuss price when I offer this blog for free with a donation button. But honestly, that’s a pricing strategy. I decided I want the information available. In this market—on my website—I have decided to let the reader decide the price, based on what the reader can afford and whether or not the reader finds any value in what I’m doing.
This pricing strategy has kept me writing the blog for nearly five years now. However, it also means that a select few are supporting this blog for the rest of you. I’m grateful to them. They’re great people who deserve our thanks. They have mine.
I do appreciate the payment that comes in other ways—through e-mails and links and forwards, not to mention the loyal readers.
Thanks, all of you!
“The Business Rusch: Pricing (Discoverability Part 7)” copyright 2014 by Kristine Kathryn Rusch
Please Read These Assumptions Before Commenting:
I’m going to make some assumptions in the next group of blog posts, and I’ll repeat those assumptions each week until I’m done.
Assumption #1: I’m going to assume you’ve read the previous posts, beginning with this post here.
Assumption #2: With only a few exceptions, we will be talking about fiction here. There are promotion techniques that work for nonfiction—even on the first book—that do not work for fiction. I don’t want to muddy the waters here. We’re discussing fiction in these posts.
Assumption #3: You have learned your craft well enough to intrigue readers. You know how to tell a good story, you have grammar, spelling, and punctuation under control, you create interesting characters, and you write what you love.
Assumption #4: If you have indie published your work, then your work has a good blurb, a great cover, and a well-designed interior. Your work is available in ebook and trade paper formats. (I also hope you have audio books, but for our purposes here, I’m not going to assume it.)
Assumption #5: If you have indie published your work, your ebooks are available in every ebook venue you can find. Your paper novels are in extended distribution on CreateSpace or Lightning Source. In other words, if a bookseller whom you don’t know and never will know wants to order your paper book, that bookseller can call up a catalogue from a major distributor (Baker & Taylor, Ingrams) and order your book at a bookseller’s discount.
Assumption #6: If you are traditionally published, your books are with a company that makes the books available in e-book and paper formats, and your books are still in print. (If they aren’t, ask for those rights back and then publish the books yourself.)
Assumption #7: You have at least a minimal web presence. You have a website that readers can easily find. You have a list of your published books somewhere, also findable. You have some passive marketing in place. (A mailing list, a social media presence, or a contact button on your website. Something.)
Assumption #8: You have published more than one book. Most of what I tell you won’t work on one novel. You’ll need several—or at least a novel and some short stories. If you’re haven’t published much, make sure you’ve done 2-7, and write the next book.
Assumption #9: You will finish this discoverability series before you decide which of the things I mention is for you. Because one of the last posts I’m going to write is how to measure success. That should have been one of the first posts I wrote, but of course, I write out of order, and so it’ll go at the end. [VBG]
Those are the assumptions.
Now, I have one big WARNING:
Everything I say here, everything, MUST take place after you’ve finished writing your story/book/novel. Do NOT take ANY of this advice into your writing office. None of it. Be an artist: write what you love. When you’re done, then worry about marketing it. This new world of publishing allows us to write whatever we want and publish it. Please take advantage of that. When you write, be an artist, be a great storyteller, not a marketer or a salesperson.
I know, I know. Lots of warnings and assumptions. But I had to be clear, because these points are extremely important. I won’t get to everything this week or even the next week. So…you need to be on the page that I’m on to understand what I’m talking about.
72 responses to “The Business Rusch: Pricing (Discoverability Part 7)”
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Does the 80% of the market getting paperback books still ring true in 2019?
I have not seen this year’s statistics. I know that most people still prefer paper to ebook, but I’m not sure at what level. And it varies by income level and by country.
Thank you! I guess I’ll wait and watch to see what your future analysis shows! Appreciate your answering.
Great article. Some people aren’t factoring in the profit an author makes at higher prices. For example, if your ebook is priced at $6.99 and you’re not ranked in Amazon’s Top 100, you only have to move a few copies to out-earn that top-selling bargain-priced author. In other words, you can make more money as a mid-list indie author if you charge a premium for your books.
Great post. One of my biggest complaints of indie authors is under-pricing their books.
I have a question about getting into bookstores. As to Create Space, it is my understanding that virtually no bookseller will carry their books because they are Amazon, and because they don’t offer returns. Do you have any data to the contrary?
As to Ingram, it’s my understanding that your book is unlikely to end up in a bookstore because you are an indie author, and space is limited. Ingram does offer returns, but the calculus of a return can make it deadly for an author.
For example, if you list your book for $20, the bookseller buys it for 55% off, so they pay $9.00, of which the author gets about $4.00. If the book is returned, the author is charged the $9.00 that the seller paid, resulting in a net loss of $5.00 per unit. Is that consistent with your understanding?
Thanks, Michael.
Of course booksellers carry Createspace books. If the publisher is listed as Createspace, booksellers won’t, but writers should be professional enough to have a name for their press.
If the book is priced properly and in extended distribution, with an actual business name (not Createspace), then books will hit booksellers with no effort from the writer at all.
Please look at Dean’s post on this very topic: http://www.deanwesleysmith.com/killing-the-top-ten-sacred-cows-of-indie-publishing-1-cant-get-indie-books-into-bookstores/
As for Ingram, if you go into the wrong portal and hit returns, then yes, you’ll run into this problem. But there are a million ways around it, none of which I have the room to go into here. Some of it gets discussed in the comments section of Dean’s post.
Thanks, Michael.
Of course booksellers carry Createspace books. If the publisher is listed as Createspace, booksellers won’t, but writers should be professional enough to have a name for their press.
If the book is priced properly and in extended distribution, with an actual business name (not Createspace), then books will hit booksellers with no effort from the writer at all.
Please look at Dean’s post on this very topic: http://www.deanwesleysmith.com/killing-the-top-ten-sacred-cows-of-indie-publishing-1-cant-get-indie-books-into-bookstores/
As for Ingram, if you go into the wrong portal and hit returns, then yes, you’ll run into this problem. But there are a million ways around it, none of which I have the room to go into here. Some of it gets discussed in the comments section of Dean’s post.
The short answer is yes, indie published paper books get into bookstores all the time–if the writer knows their business. (Always the key.)
On the off-chance you see this, Kris . . .
In your reply you say, “As for Ingram, if you go into the wrong portal and hit returns, then yes, you’ll run into this problem. . . . Some of it gets discussed in the comments section of Dean’s post.” But Dean’s post, as it exists in March 2019, has no comments section. Where did the discussion go?
I’m attending to the last details before submitting my first paperback novel to IngramSpark for printing and distribution. It’d be good to know everything possible on this returns allowed vs. no returns allowed business before I click the yes or no button on the IS site.
For that matter, if you or Dean are ever moved to write a new post on the current state of the returns system, I, for one, would be deeply grateful.
Thanks.
Click returns. That will get you into bookstores, and you won’t have much of a problem with it if you’re using Spark. Things have changed a lot since 2016. Good luck!
Thanks for replying! I believe I’ll check the “Returns — Deliver” button, because even with the shipping charges I’ll have the returned book in my possession to resell, donate to a mini-library, whatever. That’s assuming that all the horror tales about bookstores deliberately damaging books before sending them back to the publisher are just that— tales.
I’m not sure which is best. Because often the returns go into the Ingram warehouse. So…you’ll need to check with others on the best way to do that. I might be giving old advice as to which button to check.
Kris,
I can’t see why $6 is a warning threshold for ebooks especially since you can’t display a list price AND a discount price at the same time for them. There is only one price displayed for ebooks. At least on Amazon. If you have other editions (paper), it will show you the price variance there, but not ebooks.
The average price of ebooks on the bestseller lists range from $3-7. I just went out to the Kindle store and only 34 of the top 100 books are priced $6 and above. In thrillers, it’s 43 out of 100.
The majority of bestsellers, the stuff that buyers assume everyone likes and is, therefore, probably good, sells for less than six bucks.
Buyers see a Lee Child for $1.99 next to an indie for $4.99 next to a Michael Connelly for $2.99 next to a Picoult for $7 next to indie for $3.99. And, again, they don’t see a normal list price. They don’t see a discount. They just see the price.
Which means lots of prices below $6 are in the normal range for bestsellers, i.e. in the reader’s eyes “probably a good book.”
So help me out here: what’s the data you’re using to come up with $6?
You’re mixing apples and oranges with your examples, John. The list shows varying prices, yes. And on Amazon, at least, the list mixes long and short titles together. The Lee Child is a short story (and weirdly priced, I might add). The Michael Connelly is also a short story. It’s okay to discount your price from $5.99 to $2.99, but make sure the readers know it’s a discount and the regular price is $5.99. Discounts show on the actual page for the title. And how to do it on Amazon outside of Select is something that I no longer have a hand in (I hire folks for that stuff now, and it changes constantly), so I can’t tell you exactly how to do it.
Remember, e-books are the new mass market paperbacks. They’re the low priced option. Lots and lots and lots of studies have shown that readers easily fork out $5 for a book, without even thinking about it. $4.99 is okay, but consumers see $4.99 as $4, $5.99 as $5 and so on. It’s weird, I know, but lots of retail studies have been done for decades on pricing, and that’s one of the things they mention. (Which is why $9.99 is a price point but $10 is not). Charge a good suggested retail price for your title. Amazon (and the other retailers) will discount it automatically. Then if you want to discount it, you have a place to go down to. Don’t start down and then go up. I’m not going to link to the studies. I have a life. (Publishers associations, bookstore associations, writers groups have all done studies on this, as well as the Big Guns like Walmart and [cough] Amazon itself.)
Seriously, if you’re going to question how to set price and the best way to do it–read all the books that exist on the way to price things, from cars to apples to houses to classes. There are hundreds (maybe thousands) of serious studies on this, and there are even more business sites–outside of publishing–that explore all of these topics. Do the research. Then come up with your own conclusions.
John,
If you have a $6 price for ebooks on Amazon and Amazon finds a lower price elsewhere (Smashwords, for instance), you will see both the full price and the discounted price on Amazon. That is how it looks for my one discounted book The Book of Nepharid.
Nick,
Ha! That’s interesting. I did not know Amazon would do that. Good info. Thanks.
Kris,
I realize you don’t want to get into a pricing argument, and that’s not what I want to do either. I don’t have some set in stone pov on pricing.
At the same time, you’ve mentioned a very specific price for a very specific product. I understand the general principles of pricing you refer to. I’m simply asking you what data is leading you to suggest we apply those general principles in this specific way.
I understand that a discount of a whopping 5 cents is not a discount 🙂 But when the listing does not display any list vs discount on ebooks (except in Nick’s method), then the discount is only against what a buyer perceives as the average price range of ebooks.
My assumption is that the bestseller lists are going to be a good indication of what that average is. But maybe I’m missing something, and that’s what I’m asking 🙂
BTW, it’s not just shorts and no-brands being priced under $6. Tom Clancy’s Command Control and Threat Vector are 5.99 and 5.12. Grisham’s The Racketeer is priced at 4.99. Baldacci’s The Hit is at 4.99. Connelley’s Reversal is 3.99. Cornwell’s Bone Bed is 3.99.
Given that these brands are where they are, it seems to me that a book priced at 4.99, 5.99, 6.99 says good value. Normal price. Maybe even 3.99 fits there. But that’s feeling like a good sale. 99 cents and 1.99, seem to register clearly as discounts and bargain isle stuff. Probably also 2.99.
And so it seems buyers will come to store and, not seeing a normal price for the book, assume either “oh, it’s discounted” or “it’s in the good value range” even if that’s been the price for the last three months. Because they can’t compare the book against itself, just other books.
But maybe there’s some data driving you to $6 that I haven’t considered. Maybe I’m doing my math wrong on those lists. If so, I just wanted to understand what it was that was leading you to that specific price point. That’s all 🙂
You’re assuming there is one price. All of the bestsellers you listed are last year’s books. What would be the paperback release if this were ten years ago. So the publishers are using those books to get readers into the series/author. Take a look at Grisham’s Sycamore Row, his current release. It’s $6.49 (discounted) on Amazon. Pricing is a strategy, not an absolute.
Is that $2 profit expanded distribution or through Amazon? I’m assuming expanded.
Yes, extended distribution.
When you set extended distribution to yield $2 profit, the profit on units purchased either directly from the CreateSpace store or from Amazon will be more.
I updated my paperback and eBook prices and Amazon discounted them straight away, so I had to alter my prices again! Yet more reason not to price too low as eventually Amazon might make them free through discounting. Facepalm.
I believe the author receives his or her cut based on the price set by the author. If Amazon discounts the title, Amazon gets less, not the author.
So, why not leave them be?
More people will buy them, but you will not receive any less money per unit. And, because you are selling more units, you’ll receive more money.
Or…am I missing something?
If you have a chance to answer questions later, Kris, I wonder how to handle price promotions/discounts with Smashwords? I’ve published separately with Kindle, but am using Smashwords as my distributor to the other e-book retailers.
I discussed this problem with one of the Smashwords’ service team:
“Worst case scenario, you submit your price change, say, 2/15, it is shipped to some of our retailers the next day and is posted a couple of days later (as early as 2/17 on a couple of channels). At the same time, that price change isn’t shipped to some of our retail partners until half a week later. And then they take another two weeks to update the price. Maybe as late as 3/5, who knows.”
The problem is further complicated by Amazon’s price matching.
The gentleman with the Smashwords’ service team did say that he would discuss this problem with Engineering to see if they could come up with something that might work along the same line as their new pre-order feature, but he advised me not to hold my breath.
Interesting (and scary) blog on pricing, Kris, because I know that you advise self-publishing authors to price their e-books higher than Mark Coker does. Thank you.
Hope your travels are treating you well. I’ve appreciated your insights and have been following your discoverability series from the beginning; wondered if you had any specific comments on the data from Smashwords on optimizing revenue using a $3.99 price point for e-books. Are there other business- or collection-level optimizations that are going on with the higher price that I’m overlooking? Mark’s data seems to suggest that a $7.99 price, on average, is going to generate only about half the revenue that $3.99 does. The data is from mid-year last year, but this is what I’m looking at. It shifted some from 2012, but not a lot.
http://blog.smashwords.com/2013/05/new-smashwords-survey-helps-authors.html
I’ve been generating content for a couple of years; 2014 should be the year that I finally get the business side of it settled out and start publishing. I’ve appreciated your willingness to share your experience and cut through so much of the anecdotal mythology out there. I had gone through the Smashwords data and thought it should be a good guidepost on pricing. Are the underlying assumptions and goals different? Is there something about the way that the data is processed that’s masking the reasons behind the $3.99 revenue? Is this a sampling bias because it is going to be (nearly) exclusively indie publishers?
I caught that you said you’d be unlikely to answer comments. Either way, thanks for your time and energy. Happy travels.
The “format” is use in paperback buying is, “are there sufficient pages to justify the price?” For ebooks, I would go with. “What’s selling at that price,” and “Is it low enough people will take a risk?” People like Kris, LE Modessit, etc., can get $12+ for ebooks (maybe).
Trad pub doesn’t discount all debut authors as a matter of course. Why should indies?
Trad pub also fails to acknowledge that many people buy by author, and only when they’re out of author do they start looking around the genre for similar. As a result, word of mouth can take up to two years for a debut author’s book to hit its stride… by which time it’s already long since been pulled from the shelves and taken out of print. And thus the working life of so many trad pub debut writers is 3 books before they need to change the pen name.
If we’re using the grocery model, look around your local grocery store. Every time they want to introduce a new item or a new brand, you notice how they give it a shiny display and offer it at a cut-rate deal in order to get the shopper to overcome the reluctance of the unfamiliar and try out the strange and new?
Today I went to the grocery store, and next to the frozen potstickers were a new item – frozen asian dumplings, by a different (and new) brand. The dumplings were three bucks less than the potstickers, for essentially the same item and weight of product – and at that price, I was willing to take a bag and plop it in the cart. If they’re good, I’ll buy more after the price goes up… but if they’d been the same price as the practically-identical brand I know, only an occasional imp of perversity or itch of curiosity could have motivated me, after a few months of seeing them, to spend full price on them instead of my known and trusted potstickers.
Or, to take the discussion away from dinner and back to books – I’m willing to try a new author for cheap. I’ll gladly pay $30 for a new Bujold, sight unseen, but for this Michael Bunker that Hugh Howey just linked? If he’d charged $8, I wouldn’t have touched his ebooks, but at $0.99, I was willing to throw it on the kindle in order to see if I like it. If I do, I’ll be back for more.
Well, you just showed pretty clearly why indies should simply choose which market to price to and stick with it: Bunker isn’t a new author. He’s an Amazon bestseller who is new to you. ALL authors are new to someone. I buy based on the quality of the work, which I can only determine by a sufficiently large sample.
I admit to being a statistic in what launched Divergent as a bestseller. They made the entire first third or longer of the book free. I was too invested in the story to stop and promptly spent 11 dollars on an ebook from a debut author.
Heh, good point!
Great post, Kris, as always!
When I started pricing my paperbacks, my market research consisted of visiting as many bookstores as I could reach. I went to the relevant genre section (SF, romance, Westerns), and looked at as many books in the same size range as my book. I even took a tape measure and measured them (book clerks looked at me funny). I noted the number of pages, the cover price, and the size. I would probably have weighed them if I could have managed it. When I had all this data, I went home and calculated a cover price that came within 90% of the titles on the market from Big Publishing.
This made my books more expensive than others coming out from indie publishers. As time has gone by, my indie friends are selling hundreds or thousands of copies at $2.99, while mine are hardly moving.
I still have faith, but it’s sometimes hard to hold on to it.
I can tell you why your books aren’t selling–far, far, far too much of a gap between release dates and (sorry if this hurts) bad covers. The latter is fixable: study similar covers in your genre if you design them yourself or hire a cover artist. The former is fixable only if you write faster. Publishers both trad, e-, and self- release books daily, weekly, monthly. The longer the gap between your release dates, the further and further your visibility decreases. The fact that your “also bought” for your latest release (Deadwater, I assume) is only for your previous book, Deadfall, is proof that you are invisible to the greater Amazon book buying public. Those “also bought” sections should have at least two pages of different authors to show that your books aren’t falling into the abyss.
Also it wouldn’t hurt to make your website less 1995 as well. There are some very simple and easy ways to give a contemporary look to your site.
Check out: –
http://themeforest.net/search?utf8=%E2%9C%93&term=portfolio
or
https://wrapbootstrap.com
If you can edit your own site (as it looks like you have at your author site) then use one of these cool templates to update your look. Readers will see the care and attention you put into your covers and website and assume that the same care is within the covers in your writing.
I am interested though Gigi – how do you get more ‘readers also bought’ listings if you’re just starting out? Is it setting genres correctly?
David, setting your genre IS important, but if you put a new book on Amazon, they start with the “people who looked at this also looked at X”. Lots of readers scan the New Books listing, so the listing may not always have the same genre as your book.
In my case, it takes about two weeks before enough readers buy the book before the also-boughts for the same genre kick in.
Hope that helps.
I echo Sarah’s thoughts – if established indie authors are pricing novels at $2.99, what chance do I have – a raw newbie – at getting people to buy works at twice the amount?
Still, I plan to price my short stories (5k below) at 0.99, novelettes at 1.50 and novellas at 2.99. Novel of 80k above will be 3.99 to 4.99. It’s my hope that when I have more pies in my pie store I can slowly raise the price.
The concern I have is that by starting at a low price my readers would be used to getting books at that price…
Don’t use $.99. You’ll get nowhere. I started selling more copies of my short once I switched the price to $2.99, and my experience is hardly unique.
Also, don’t worry about the competition. The pie is growing for everybody. Just price appropriately, get professional covers (very important because it creates a perception of quality), and make sure the words are the best you can do. Rinse and repeat.
Many retailers I deal with have the buy so many get one free discount. I don’t think is possible now but maybe in the future? What do you think?
Hope you’re having a great time in Vegas! 🙂
Several months ago, didn’t you write (maybe it was someone else, sorry) about rewarding early readers by not moving the price around? Being stable in your pricing. (Similar to what you discussed today.)
But in that other blog post, one of my take-aways was that it might be more logical (against the traditional standpoint) to price the backlist higher. In a way to reward early readers and true fans. To spur sales initially and create that sense of urgency of buy now, because it will cost more later.
If it was on a different blog that I’d read that idea, sorry. But I’d appreciate your thoughts on the concept of a higher priced backlist. (I was thinking up to two dollars more (depending on book length) from a new release price…)
Thanks for all of these essays by the way! You help take a lot of the anxiety and fear out of deciding to indie-publish.
I remember advice to limit discounts to the very first book in an ongoing series (on special occasions) to whet the readers’ appetite (on Dean’s blog, I believe), but I don’t recall anything at all about pricing the backlist higher as a matter of course.
Thanks Jacintha! I’ll have to go search through Dean’s blog and find the article and read the comments there.
The Passive Voice featured an article about this.
http://www.thepassivevoice.com/11/2013/challenging-assumptions-pricing-frontlist-like-backlist-and-backlist-like-frontlist/
And here is the article that TPV was excerpting:
http://www.edwardwrobertson.com/2013/10/challenging-assumptions-pricing.html
This certainly has me thinking. If you are correct most Indie authors are underpricing their e-books by a long shot.
This piece gave me a rather wry smile, for two reasons:
(1) It properly recognizes that price in a developing/mature market is a relative measure in which being part of the herd is — for all but works at +/- 3 standard deviations away from the mean, that is a little over 1% total — a good thing because it actually enables better outcomes for both the buyer and the seller. But…
(2) It doesn’t note that the herd is insane in publishing (and, indeed, in take-home copies of entertainment, including music, film/retrospective TV, and periodicals). The reason that the herd is insane is actually quite simple: Over 90% of price variation is explanable solely through identifying general characteristics of the packaging, without regard to even general characteristics of the content. In turn, this makes a lot of the “grocery store” thinking of MBA-trained management in Big Publishing irrelevant; they’re busy trying to apply grocery-store paradigms to a market that doesn’t behave like a grocery store, never has, and never has priced its wares like a grocery store.
Examining the somewhat illusory “ranges” Our Gracious Hostess quotes for the prices of commercial fiction hardbacks, commercial fiction trade paperbacks, and commercial fiction mass-market paperbacks is enlightening. One reason that the ranges are illusory is that almost no imprint prices books all the way across the quoted ranges; for example, in the current and last-three-months’-worth of frontlist titles for [recognizeable mystery imprint of major NY publisher], the range of hardback titles is not $25-$30 but $27-$29 (less than 10% variance), and so on. Another reason is that prices are ordinarily set at time of acquisition, not at publishing time; they can be changed, but it’s a huge effort. That has some obvious problems with multibook packages, especially if any of the books is late (for any reason)…
And within that narrow range of prices for a given package-set one finds the entire panoply of noncomparable content — from barely-over-a-novella to nearly-a-doorstop; from complete unknown to Grisham/Braun/et al.; from “editorial released this to production so they wouldn’t have to look at it any more” to “the editor can’t stop talking about how great it is and pushed a movie deal”; from stand-alone to 17th in a long-running series with established fan clubs. If one goes to the grocery store, the ranges are just a little bit more extensive and perceived-quality/perceived-value variant!
These observations lead into the flip side of the major problem alluded to by Our Gracious Hostess: The absolute moral certainty expressed by gurus whose business/marketing knowledge was developed outside of the entertainment industry that they know how to fix everything that is wrong with pricing of take-home copies… balanced by their utter failure to acknowledge that the inmates are running the asylum, so merely proclaiming what is Right isn’t going to change behavior. The almost uniform slinking away of these gurus about 36-42 months after they “put their money where their mouths are” by releasing their own products using one of these “superior” pricing paradigms (all the while offering explanations that “they’ve done what they intended to” without any real change in the standing paradigm) is a pretty good indicator… especially since that behavior pattern has held for the three decades I’ve been following the entertainment industry.
In short, I think Our Gracious Hostess is charmingly underselling her point. For now, anyway.
Great comment, but I’m not sure that “identifying general characteristics of the packaging” is the way people make decisions on books. Movies, TV, maybe, but books are not filmed, and demand different cognitive energy.
Most of us read a portion of the book, either in person or online, before buying. Many also look at reviews. It’s a free sample, much like what is offered by someone offering cocktail wieners on a grill in aisle seven at a grocery store.
Once trust in the brand has been established, of course, none of that is necessary.
I’d be curious to hear a response to this.
Jason, you’ve identified exactly why the pricing model is insane.
Vendors base the pricing on packaging characteristics (“Is it a trade casebound book? Then it’s $27-$29 at this publisher.”).
Actual buyers don’t. Ignore the middle-creature distributors for the moment, because they’re largely price-agnostic (they care about margin, not price).
If pricing was sensitive to what buyers actually do, an otherwise-comparable edition of a John Grisham novel would always be more expensive than a Richard Powers novel:* The Grisham sells so much more than Powers that neoclassical economics would have the pricing mechanisms respond to perceived increased demand by raising the price. Or, conversely, one might argue that the award-attractiveness of the Powers (that is, virtually guaranteed finalist for the National Book Award, among others) would necessarily lead to a higher price for it from the collectors/cognoscenti.
Neither happens. Instead, the price differential is entirely due to the respective packaging of the works. And that is the insanity.
* I purposely used noncompeting authors who seldom appear simultaneously or in the same format to avoid hurting feelings or starting an argument over what is really “quality.”
Yes, and that’s exhibit ZZZ, this week alone, on how the market isn’t rational.
I notice that you didn’t include an explanation for what *causes* this insanity in pricing: the power of groupthink. The hive mind. The madness of crowds.
From what I understand, a full 50% of the population reads nothing. The majority of the remainder (25%? 35%?) only reads one or two books a year, and it’s ALWAYS a title that comes recommended by friends or relatives. These buyers aren’t sensitive to pricing because they don’t have anything to compare it to. These people pay $12 for a poorly written book on sadomasochistic billionaires even though they have an innate interest in neither.
So the neoclassical model presumes an informed populace, even on something as mundane as pricing. Perhaps if we were living in an English village circa 1750, we might be able to keep better tabs on the relative price of socks, for instance, simply because there were only three competing shops within walking distance from our homes that sold socks. But our global production today is so unfathomably vast that our ignorance re: pricing is inevitable.
I don’t know how common this is, but I get deeply suspicious, almost at a gut level, if a book is too cheap (excluding, for the main part, second hand shops). There’s something amateurish about it, and a feeling that it’s being discounted because no one wanted it.
When an MMPB is $7.99 for a full novel, and I know that POD costs more because of the custom nature of it, I’m also going to wonder what’s wrong with a POD novel if it’s not more than that. It does suggest desperation.
I need to remember to stock up on popcorn for next week and “FREE!!!”
In the meantime, I set my price (only on book so far) at a level that is slightly under the primary competitors (small niche) on the ebook and a touch above in the paper. The price points allow distribution to book stores in paper and enough flexibility that I can offer a 50 percent discount in the future and stay in the 70 percent royalty. Determining pricing was actually one of the first things I started to do when I decided that I wanted to publish a book. Writing is art; publishing is business.
Since each of my planned books for the next two years are standalones, I won’t have the momentum of a series or the advantage of discounting the first book. Instead, it will be more a seasonal/timing effort and limited.
Unlike romance or mystery, I’m writing to a small audience that is accessible by alternative means. Since it is also an underserved niche, a small premium is likely possible on each book.
Once I get a few more books done and published, I’ll begin to actively market and I’ll have a chance to test my theories. Then it’s just a matter of adapting, find what works for my particular audience and do more of that.
Just a quick “design” question about price, Kris: On paperbacks, do you want to put the price on the book or not? I’ve read differing opinions about that but, if we’re going to change prices after a new book becomes an old book, it sounds we should leave them off.
As I recall, Dean (Wesley Smith) argued strongly for keeping prices on books. I don’t have a link and it may have been in the comments section rather than a blog post itself.
As I recall, prices on books are really important to bookstore owners, who want the price on the book so they a) don’t have to price each book individually b) have a reference point for the consumer for discounts. Also c) consumers expect the price to be on the book because prices have *always* been on books. My personal reaction to the last ‘priceless’ book I saw was that the seller was trying to rip me off. (Obviously, they were going to sell the book for different prices in different places, depending on what the market would bear, and the market I live in bears a great deal. Everything is inflated)
Also, if you read the BookBub article Kris linked to, it should be obvious that the consumer responds more strongly to relative discount over absolute price.
Meaning that if you take a blank, unpriced book and put a sticker on it for $7.99, you will sell less books than if you had a printed price of $15.99 and a sale sticker for $7.99.
One of the things I hate is NOT seeing the price on a product. I won’t buy it unless I can find out the price — if I do that much effort. I don’t want to go the register thinking it’s $4.99 and find out it’s a lot more. There’s nothing like be surprised and finding out something costs more. A fast way not to make a sale.
I’d say leave prices OFF paperback books because of the way self-publishers need to change their prices often these days. Both trad and indie publishing prices are in constant flux right now.
Most bookstores won’t stock books without prices on the spines.
Besides, it takes very little effort to change the price on the cover and re-issue it. It’s a matter of ten to twenty minutes work.
-Dan
It’s not really a big deal to go back and change them. (At least, it hasn’t been in my experience.) I keep the final version of my cover files with layers intact so I can just go in and change the numbers on the back cover. Then it’s simply a matter of saving the cover as a PDF and re-uploading it to Createspace. No re-ordering of proof required.
Granted, if you have a large number of titles to change at the same time, I could see it taking a few minutes, but still…
I have found that my proof copies do NOT match what I see in the digital proofer.
Additionally, there must be some variance on the CreateSpace end in the process that maps the digital files onto the POD printer.
Because I once found a few errors in the interior of a book after I ordered the physical proof copy. I corrected them, uploaded the corrected interior file, did not upload a new cover file (no need), and ordered a new proof copy.
The new proof copy had different margins on the cover than the first one. Even though I had changed NOTHING on the cover, and CreateSpace was working from the exact same cover file.
Obviously, the human being shepherding the process at CreateSpace has some control and discretion. It is not purely automated.
As it happened, the second version was NOT as nice as the first.
So I re-uploaded my cover file (the same one), to see what a third person would produce.
It was different again (from both the first two), and still not as good as the original. Grr! I was kicking myself for not catching the interior errors BEFORE. I would have loved to be able to approve the first proof.
I have found that once the proof is approved, the actual printed copies of the book are the same. They do not vary. Thank goodness!
BUT…I would never approve a proof without ordering a proof copy of THAT iteration. Because of the variance at the CreateSpace end of the process.
Digital Book World is a good resource for pricing info. They track ebook prices over time and write about consumer purchasing habits and the “sweet spot,” the price-range in which most ebook consumers are making most of their purchases in a given period. When researching this for my column last year, for example, $3-$8 and $4-$8 had held steady for months as the “sweet spot” for ebook pricing in 2013, the price range wherein most consumers made most of their ebook purchases.
You’re not answering now, and I’ll be patient, but I DO have a question: what about shorter fiction? For example: I’m getting ready to release a 14.5K novelette that story-wise is dense enough to be a novella. But it’s not a novel and its mass market page count is 100 pages and trade about 60. I’m trying to figure out how to price in regards to both length and profit margins on print.
If it’s any help, for SF, I basically use:
<4k $0.99
<7.5k $1.99
<25k $2.99
I don't have any novellas for sale, so I'm not sure what price I'd pick between there and novel length.
That seems to work for me. In the last couple of months I sold about 200 copies of a 15k novelette at $2.99, and approaching 500 of a 7k short story at $1.99. I'm more tempted to increase prices than reduce them.
The print prices of the shorts are mostly based on making a dollar or so on Amazon. I think the 15k novelette is in expanded distribution on Createspace, but I couldn't really justify pricing any of the others high enough for that to make any sense. I sell a few now and again, but they're mostly for my own book shelf.
I was asking about print prices.
Liana, Kris mentioned pricing the print book so that you at least get >$2 on Amazon extended distribution.
I just put a 15,000 word story into POD. It clocked in at 98 pages (on 5″ x 8″ trim size). I wanted to be able to put print on the spine, so I added 4 pages of back matter (about the magic in the story – it’s fantasy), which put the book up to 102 pages. There’s a 100-page minimum for print on the spine.
I priced it at $9.99. I really didn’t want to go over that price, if I could manage it. That gives me $1.84 on extended distribution. It’s close enough to $2 for me to be comfortable. The ebook is currently priced at $3.99. I suspect it should be $4.99, but I’d like to see a year of steady sales (they remain sporadic) before I do that.
I have two other titles at a similar POD size.
23,000 words, 112 pages, 5×8 trim, $9.99, extend distribution yield of $1.80
21,000 words, 116 pages, 5×8 trim, $9.99, extended distribution yield of $1.75
Differences in point size of the type, and leading (line spacing), cause the variation in the ratio between word count and page count.
Thanks. Considering a 2.99 for short ebook with a 60 pg trade for 7 or 8 bucks kind of worried me. I can afford to put the 102 pg mass at 5 bucks, but I’ll have to double check the margin.
She mentioned 2.99 as short work, but I’m going to take another look at that.
Liana, I have a similar sized story in print. It clocks in at about 16,000 words. Print through Createspace gives me a 79 page book at $10.99. This gives me extended distribution and keeping $2.00 profit margin.
The ebook version is $4.99.
I’m still new at this and learning, but I’m comfortable with $2 profit from print.
“the last time I was at this particular place, I wasn’t able to answer e-mail or work for a long time on the website.”
LOL. Yeah, Las Vegas doesn’t want to encourage anything that might cut into time more profitably (for them) spent gambling, or spending money on *anything* they offer. 🙂
“TURN OFF THAT COMPUTER AND HIT THE SLOTS!”
Great summation of the ins and outs of pricing, Kris. Just what I needed, in one cohesive bundle as part of a bigger bundle that covers all the interlinking issues.
Thanks!
What a fantastic post. There were a lot of things I didn’t know. For instance, where the range of pricing has stabilized on ebook novels. I had no idea!
But that’s why I come back again and again for your posts; I learn so much (from Dean’s too). You both have so much knowledge about the publishing industry, where else could I possibly go to get the straight poop on it? 🙂
I think this is going to be one of those posts I’ll be referring back to again and again and again.
Kris, could you say more about determining prices for overseas markets?
When I go look at Amazon UK, Amazon DE, Amazon ES, etc., the computer screen will show prices for paper books. Presumably, I could buy a paper book and have it shipped to wherever.
But it does not show prices for ebooks. Instead, there’s a little note saying I am not eligible to purchase ebooks in that store.
This makes it difficult to look at standard pricing for that market. Is there a way to do this? Or should I just blindly correct prices such as 1.17 Euro to 1.20 Euro?
I’m absolutely loving this series of yours! So clear, intelligent, and well-researched. I am learning exactly what I’d hoped I would. Thank you!
I’m American living in England so I can see prices for both the US and UK. It is very tricky when you’re looking for prices on foreign Amazon sites because there’s also a tax charge! So when I go to set the UK price for one of my eBooks NOT based on the US price, it gets muddled up in the end by about 0.09 pence at the moment. Pricing is difficult, but I think I’m getting the hang of it thanks to Kris’ advice.
In regard of international sales and price discounts: Most european countries have fixed book price agreements. No problem if you distribute internationally via Amazon only – just set/lower the price. But if you distribute via a multitude of channels, you’ll have to ensure the price is the same in each of them.
I don’t know how strong this is enforced but I’d be careful.
One of the things that I thought about while reading this was the show Restaurant Impossible. There are a number of episodes where the owner is going out of business because he doesn’t know how to price the food — and prices it too low. So it doesn’t account for how much the actual food costs, nor does it account for the cost of how much it takes to run the restaurant. In other words, the owner stuck an emotional price on it and didn’t think beyond that.
As a reader, I started screening for price when books went up past a certain price point. I used to buy hardbacks for some authors when it came out because I couldn’t wait — but it became so high for me (plus inconsistent quality) that I started waiting until the paperback version came out. Then I started screening the paperbacks. If I could only afford XXX that month or was trying not to overspend, then I started screening them, too. If I was on the fence at all about the book, I didn’t get it. If the cover objectified women, I didn’t get it. If the book looked like it was a thinly veiled romance with thriller or fantasy slapped on it, I didn’t get it (I hate mislabeled books that try to trick me into buying).
If an author has a new release and I see one of the books go down to a good discount (I presume this is the strategy you’re talking about), I’ll snatch up the discounted book. If the book just seems to be priced too low as a normal price, it’s like going to the dollar store and buying a steak for a buck. My first reaction is “What’s wrong with it?” I’m guessing that’s the pricing too low you’re referring to.
The U.S. culture is built to get a “sale” or the best “deal” — but that’s almost a science in getting people to buy. I’ve seen several stores struggle with pricing. The PX put out some clothing on sale (as in they had to move it to make room), and they priced it too high. Nothing on the racks was selling (in fact, it felt like they thought they had conceded that they needed to sell it to make room and grudging priced it slightly lower). Yet, several major store chains have had financial problems because they have too many sales. Their original strategy was to offer sales to bring people in so the customers would buy more expensive items while they were there. But they had so many sales that now the customers wait for the sale, but aren’t buying the other stuff because they’re waiting for it to go on sale — and the stores have had a lot of financial problems. In that case, I think they let the emotion of the customer interfere with the sales strategy.
As an example of how the consumer mind works, remember when JC Penney decided to make the everyday price their best price and have no more sales? Customers stayed away in droves. It wasn’t too long before they had to go back to higher prices and holding sales to stay in business.
Good stuff to think about here. This falls into line with some of the econ classes I took in college.
I remember one class that discussed the ramifications of underpricing your product, one of which being that potential buyers will undervalue your work. This has borne out time and again from authors who have offered their books for free or 99 cents, only to get more negative reviews than if they had priced their books higher.
There was a Freakonomics podcast that discussed wine drinking, and cited studies showing that people who unknowingly drank the same wine rated it higher based on price.
Here’s the link: http://freakonomics.com/2010/12/16/freakonomics-radio-do-more-expensive-wines-taste-better/
And that’s a good observation about the paperback price between too low for bookstores to consider buying. I’ll have to go back and review my pricing.
There is one minor observation about this paragraph (from a recovering copy editor):
Why do you want to be on a bookstore shelf? God, do I have to answer that? Because over 80% of all readers buy paper books. So, if you’re not putting your books into paper, you’re cutting out 80% of the market.
There seems to be a slight disconnect between the sentences, since 80 percent of paperback sales are not made through bookstore shelves. (I’d love to know what percentage it is in reality.)
The 80% is buying paper vs. pixels, whether the bookshelves are material or virtual. If the book isn’t available in paper, then the paper consumer browsing Amazon’s virtual bookshelves won’t buy it. Market not served. Sales lost–80% of sales.