Here's the gist of the pricing issue as I understand it. Amazon pays you a royalty of 70% on all Kindle titles priced between $2.99 and $9.99. For e-books priced below $2.99 and above $9.99, Amazon pays a royalty of 35%.
That means, the least you can price your book to get the 70% royalty is $2.99, which will yield you a net royalty of $2.09 per sale. If you opt to price your book at $0.99, then you'll get 35 cents per sale. In order to get $2.09 in royalties with a book priced at $0.99, you'll have to sell 6 books.
Let's look at these numbers in a different way. If you sell 1000 books at $2.99, then you'll make $2,090. If you are contemplating a price drop to $0.99, then you'll have to sell 5972 books to make the same net royalties you did when it was priced at $2.99.
If only book math were so straightforward, our decisions would be easy. But the strait royalty calculations are only one factor in the success of a book. Why do some author's price their book at $0.99 when the math seems to be so against that model? Consider these factors:
- A lower price can help a reader take a chance on a book that looks interesting- If you are an unknown author trying to build your readership base, then a lower price point can literally be the difference in someone making an impulse decision to buy your book or not. The higher you price your book, the less the impulse and more thought has to go into the decision to pick up your book. While $2.99 doesn't sound like a lot, it does mean the difference between 1 book and 3 books for the purchaser.
- You're sales don't have to increase by 6X's to move on the Amazon best selling lists- On Amazon, as your book sales increase, your best-selling rank increases as well. This can become another influence on a reader to try your book. So, a drop to $0.99 may cause you to rise in the ranking and gain visibility there, visibility you might not have gotten if you kept your book price higher.
- You can get more visibility on Amazon as your book sales increase- When you visit your book page, you'll see a section that says "Customers Who Bought This Item Also Bought." The real value for you is when your book appears in that section on other successful books. Amazon will list up to 100 books in this section and readers will often scroll through that list to discover other books that look interesting. Again, a drop of $0.99 may be the catalyst to increase your sales enough to land you in that section on some popular books.
We are in a fluid environment when it comes to e-book pricing. Things are so new, and changing so rapidly, that pricing strategies can be outdated in the blink of an eye. One of the great things for authors who self-publish their e-book is the ability to change their book price, test different price points and react to the market demand. With a few clicks of the mouse, you can change your e-book pricing strategy overnight.
So, how much should you price your e-book? I wish I could give you a conclusive answer, but I can't. It depends on your genre, your commitment to marketing, and the winds of the marketplace at any given moment. With Amazon's sample feature, readers can also download a free sample of your book, the equivalent of flipping through the book at a bookstore. That means that the quality and entertaining value of your book is more important than ever. A poorly written book may not sell at any price. While I may not have concrete answers for you, here are some guidelines I feel comfortable suggestion to you:
- If you are a new author who doesn't have a readership, lowering your price may help you find sales you would not get otherwise.
- If you have a series, you may want to lower the first book in the series to entice people to give you a try. Other books can then be priced higher because you are no longer a new author to those who have purchased your book.
- Never be afraid to change the price of your book, up or down, to adjust to the market. However, if you are seeing success at one price, think hard before trying to cash in on a higher price. You don't want to kill the momentum of your sales which may be a hard thing to restart if you do.
-------- Tony Eldridge is the author of The Samson Effect, an action/adventure novel that Clive Cussler calls a "first rate thriller brimming with intrigue and adventure." He is also the author of the Twitter marketing book, Conducting Effective Twitter Contests. His new novel, The Lottery Ticket, was just recently released on Kindle.