Wednesday, August 7, 2013

eBook Pricing and Self-Publishing of Non-Fiction and Fiction

Trying to determine the optimal price for a book in order to generate maximum net revenue is not an exact science as far as I can tell. Perhaps for authors who have a well established following and consistent sales history can predict with accuracy the optimal price for their self-published books.

For me it has been a lot of trial and error and detailed record keeping. The prices of my paperback books have remained unchanged for the past year. Since my sales are tipping towards ebooks in both volume of sales and total net revenue, I have focused on trying to sort out the optimal pricing for my ebooks, particularly Kindle books.

What is involved in developing a pricing strategy for a Kindle book? I consider the following factors:
  • Amazon's guidelines to receive a 70% royalty (2.99-9.99 earns 70% - above or below that range = 35% royalty)
  • Pricing promotions to build sales rank/search results rank
  • Balance between maximum profit per sale and maximum number of sales
  • What the customer is willing to pay
The first consideration is easy to adhere to. Simply set the price of your Kindle book somewhere in the price range Amazon is willing to pay a 70% royalty for.

When I introduce a new Kindle book I often use KDP Select to provide several days of free purchase to generate some interest combined with a set period of time the book is priced for .99 cents. This might not be the best strategy to launch a book, but I want to build rankings for my new books before the time of the year where my books sell the most (my non-fiction books have a 3-4 month peek selling period that is seasonal and I want the new books to be positioned to take advantage of the peek sales period).

Balancing between maximum profit and maximum number of sales requires time, detailed record keeping and experimentation. I would love to sell every Kindle book I have for $9.99. But how many sales would I generate at that price? Maximum potential net profit is nice, but if you never sell any books you have no profit at all.

If I price the book for $2.99 I may have lots of total sales but I am earning the least amount of net profit per sale. The goal is to fine the highest possible price that generates the highest number of sales. It takes some time to determine the price point that will produce the desired result.

Which leaves me with the last consideration and the one I have no control over, what the customer is willing to pay.  I have two books that are loaded with valuable information, are well illustrated with both diagrams and photographs, have professional covers that look great and the books have generated numerous 5-star reviews. Yet these two books just won't sell in large numbers.

I dropped the price to $1.99 and both books sales picked up. I even received a couple of e-mails from readers who purchased these cheap editions mentioning among other things they would have paid much more for the book they found the information so valuable.

The problem is, how do I get potential customers to realize the value of the information contained in these two books to pay a higher price for the content?

I revisited the book descriptions. Detailed and contained benefits, not features, for the potential reader who is considering buying the book.

In talking to some other authors via e-mail it seems that while the advent of ebooks has created huge opportunities for authors who self-publish, there has also been some market pressure to lower prices for ebooks.

I know I won't pay more than $4.99 for a work of fiction and I won't pay that much unless it is an author I like. My wife won't pay more than $2.99 for a work of fiction.

Are these buying habits impacting the sale of non-fiction as well?

It pains me, as a matter of professional pride, to not list these two books for $9.99! They are worth the purchase price! The paperback versions are 174 pages and 204 pages long in 8.5 x 11 trim size. These books are loaded with information that took me over 20 years to learn, master and organize for maximum use.

Yet, the best price point for maximum sales is a miserable $2.99. I net slightly less than $2 per book due to the delivery fee charged by Amazon (the files for these two books are huge due to the large amount of graphics - I don't begrudge Amazon the delivery fee at all).

Is the Kindle ebook market causing a race to the bottom of pricing for all authors, regardless of whether the book is one of fiction or non-fiction? Will it impact the price of paperback editions of the same book?

I don't know. I hope as time passes people realize they have to pay for information. The more valuable the information, the more it will, and should, cost.

In the meantime, I am going bit the bullet, raise the price to where I think it should be and determine a way to market and sell these two books more effectively.
I would appreciate, as I am sure other readers of this blog would, if you would share you experiences with pricing your Kindle books and share what has worked and what hasn't by commenting.