Does anyone share my pricing concerns?

[Ali Cooper]

First of all I'd like to make it clear that every author has the right to decide how they publish and market their books and I completely respect each individual's decisions on how they go about it.

However, there's often chat here about pricing (amongst other subjects) and authors share opinions on eg what they consider are fair prices for different lengths of books.

My concern is that more and more authors are choosing to price full length books (often their only books) long term at the cheapest price amazon will allow. I can't help but feel it's putting out the wrong message about the value of books generally and particularly the worth of indie books. A fellow author (who I very much admire and respect, if she's reading this, I'm not judging here) recently remarked that I have very good sales considering my book is so highly priced. It's $2.99 in US and £1.99 in UK. Now, if that price is considered high for a stand alone 100K word general/literary novel then I wonder if we're doing something wrong.

In UK especially, the cheapest possible price now seems to be considered the norm. Or to put it another way, it looks like indie prices generally are getting cheaper.

Now, if this was because people really needed the money and found that this sort of pricing gave them the best return then I might understand it. But I think it's happening because authors are feeling they need to compete with one another. And maybe the way we've got into the habit (me included) of announcing our sales here is adding to that pressure.

Authors who are relaxed about the idea of self-publishing are not doing this. I think it's people who've got into the habit of competing because that's been their experience of writing so far and also maybe because they're simply using it as a stepping stone (if they get higher sales than others, whatever the cost, they might get an agent and a 'proper' contract).

Obviously, it's up to individual authors what they do. And I'm not suggesting price fixing. But I do wonder whether many new authors are thinking beyond the first few months' sales figures and whether they are stopping to consider that they might be pricing out both themselves and other indie authors in the long term.

I'd be interested to know what others think about this, whether they think it's a problem (or likely to become one) and if so what we might do about it.

[kcmay]

There's nothing we can do about it, so I hesitate to say what I think. But I will.

I generally agree with you. I've read readers' remarks on forums about low price = low quality, and I don't want to be associated with that mentality whether it's accurate or not. Even $2.99 is too low for some readers.

Everyone needs to decide for him/herself what the right price is for a book, and the author is the only one who can define success. I won't permanently price my full-length novels that low. IMO $2.99 is quite low for a quality story, but I'm okay with using it as my loss leader. (I'd give away the 99c novella if Amazon & BN would let me.)

[Daniel Arenson]

Emotionally, I agree that $0.99 - $2.99 is too low for a well written novel that will entertain you for hours, excite you, maybe even move you.  I easily spend thousands of hours writing a novel.  So yes, maybe $0.99 - $2.99 is not "fair".

I charge $2.99 for my novels based on research that this is the "sweet spot" for maximizing profit.  You only earn $2 per sale, but you can sell more this way.  Maybe I'm wrong.  Maybe I'd sell just as many novels for $10.  Currently, I cannot change my Amazon prices without giving up the 70% option -- iTunes won't let me raise my books higher than $2.99.  Someday, if I can convince iTunes to raise my prices (I've contacted them about it, but was ignored), I'd like to try selling my books for a higher price on Amazon.

[Monique]

It's such a tough decision. I'm one of those who lower the price to $0.99. How much would I be selling/making if I were to raise the price? I don't know. What I do know is:

I'm selling about 13 x the number of books I was at $2.99. Sometime tomorrow, I will surpass the number of books I sold last year in the first three weeks of this month. I'm (hopefully) developing a good reader base who will be interested in the next book ($2.99 or above) and all that come after. I'm thinking VERY long-term.

Was it the right choice for me? I think so. Will it help depress prices? Perhaps. But if I can stick to my plan, it might actually help raise prices. If my subsequent books sell well at a higher price that will benefit the community.

I wish I knew what the right thing to do is. All I can do, all anyone can do, is make their best guesstimate and go for it.

[Ali Cooper]

If established authors want to go for the cheapest option and in their experience it's working for them then good luck to them. They're making that decision having watched the market for some time. My concern is that new authors are simply seeing sales numbers, deciding to try and beat them by undercutting others but doing so without considering the bigger picture.

In the UK store I notice that the authors with the cheapest books and boasting the highest sales figures since the store opened initially scored quite high percentages in the 'customers who viewed this book went on to buy' stats under my book. But now their percentages are dropping and presumably their relative sales are dropping, implying that those quick sales might have been more profitable in the long run if they'd set a higher price. This is the sort of bigger picture that I don't think new authors are considering.

I'd be interested to hear Joe Konrath's take on this.

[Christine Merrill]

I think there needs to be a realistic balance struck between the needs of the author and the needs of the audience.  Not saying that I know what it is, though.

But I find it really demoralizing when my traditionally published stuff gets tagged as overpriced and Agency pricing when the book only costs $3.99.  The electronic version is $2 cheaper than paper (which I consider fair).  And Harlequin is not one of the publishers doing agency pricing.  

I know how many hours I put in on that book.  I know my royalty rate, which is the same as it is for the print edition of that book, basically microscopic, compared to a self published book.  I can look in my bank account and see that I am not getting rich.

And yet, people are accusing me of price gouging.  I pray that they are not drinking a Starbucks latte as they tag me.  Because I am already bitter enough.  I am pretty sure that I can deliver more entertainment than a cup of coffee.  Why can't I be priced like one?

I really do want to see people reading my stuff for a fair price.  I do not believe that an ebook should cost more than a paperbook.  But 99 cents for everything is not actually fair, IMHO.  Short term?  Yes.  Everyone likes a sale.  Backlist?  Maybe.   Short projects?  Sure.  and I don't mind being free once in a while, as long as it is done for a reason.

But if everything gets to be rock bottom all the time, how can we or the reader make any distinctions between new and old, short and long, professionally edited vs thrown together?    

[Mel Comley]

Ali, I raised the price of my book to $2.99 last week and sales virtually stopped, so I lowered it again and sales are going through the roof.

I have the sequel coming out next month and have decided to keep that at $2.99, it'll be interesting to see if it sells or not, especially as most of those leaving a review are demanding the sequel.

Mel 

[Daniel Arenson]

And yet, people are accusing me of price gouging.  I pray that they are not drinking a Starbucks latte as they tag me.  Because I am already bitter enough.  I am pretty sure that I can deliver more entertainment than a cup of coffee.  Why can't I be priced like one?

I know how you feel.  There are three Starbucks within a five minute walk from my apartment.  There are about twenty other coffee shops on the same stretch.  All these places are PACKED all day.  Most have a dozen people in line at any given moment.  They buy $3-$6 drinks which are gone in an hour.  I confess I'm one of these people.

And yes, I think my books are worth more than a cup of coffee.  But I don't have thousands of people a day lining up to buy my books.  I have to go out and promote -- in the evening after work, during lunch breaks, on the weekends.  And somehow write new books, too.  Starbucks has thousands of employees, marketing teams, advertising agencies, and billions of dollars to work with.  I don't.  I have my evenings, my netbook, and elbow grease.  So I do what I can, and try to feel happy.  People are reading my work.  Thousands of them.  Sure, I wish it were millions, but I'm not complaining.  

[Daphne]

I have bought Indie books for less than an English pound only to find myself reading quality literature that I would have happily have paid good money for - it feels like highway robbery - but then I've downloaded the peerless Jane Austin and other classic authors for free. Pricing is the way it is - even if we weep for the quality work receiving what seems like scant reward (perhaps the reward is in the feedback from happy readers). The same happens in the art world. Ali, I wonder if you have ever attended an art exhibition of local artists? At most "amateur" art exhibitions I see exquisite work which displays huge talent, years of experience and days of careful work - and usually works are priced a £30 or less, barely covering the costs of materials. The fact is that people strolling into such exhibitions on spec are prepared to buy for under fifty quid, but are just not expecting to pay more. Most artists are just delighted that their work will adorn someone's house rather than being piled against their studio wall with the rest. I'm not saying this is right, but it is just the way it is. In the end each writer has to price their books in whatever way works for them, - and I'm sure that will mean quality work selling at a snip and there are a lot of lucky kindle readers (myself included) benefiting from this phenomena.

[EllenFisher]

I've tried raising my prices.  Sales stopped.  I'm going to try again next month.  If sales stop, then back down the prices go.  If not, then I'm happy to sell them at slightly higher (but still very reasonable) prices.  In a competitive market, a product has to be priced at a level at which it sells, even if it seems too low to the seller.  And my purpose in selling books is to help pay my bills and get my kids through college, so moving books is what matters most to me.

[kcmay]

I'm still considering lowering the price of Kinshield once the sequel is out. I'm undecided. I doubt I could have the kind of success that others have at that price because fantasy fiction isn't a hot genre (and my book is an older, more traditional type that people are generally "done" with ), but I figure that as I add books to my shelf, I can price them higher and drop the prices of the early books. Thing is, we can't drop it down from 99c unless Amazon changes its policy. If sales start to slump at 99c, then what?

[Ali Cooper]

Ali, I raised the price of my book to $2.99 last week and sales virtually stopped, so I lowered it again and sales are going through the roof.

I have the sequel coming out next month and have decided to keep that at $2.99, it'll be interesting to see if it sells or not, especially as most of those leaving a review are demanding the sequel.

Mel 

Mel, I don't know how long your book's been out but unless I missed it for months then not very long.

How you choose to price it is entirely up to you but it would be a shame if you've set a precedent of a low price in order to get quick sales today rather than spend several months building up your reputation as a community member and author.

I do worry that new authors are pricing too cheaply for instant gratification and I especially worry if trying to outsell other authors (perhaps because of reading the figures here) has driven them to that.

[Bards and Sages (Julie)]

Steve Weick is one of the owners of Onebookshelf.com, which is a digital retailer of roleplaying games, fiction, and comic books.  The company started in 2001.  They have ten years of sales data under their belts, and they know digital selling. 

While the RPG industry is not identical to fiction, there are a lot of similarities and the processes are relatively the same.  There are “traditional” publishing companies like Wizards of the Coast, White Wolf Game Studios, Palladium Books, etc.  But the industry also supports a huge indie market.  The RPG industry started moving away from print toward digital products years ago, and it is a good indication of the direction fiction is currently moving. 

Now OBS has a very close relationship with its publishing partners, and shares sales data with us so that we can make good decisions.  They recently sent out an e-mail covering a lot of business topics.  After talking to Steve he gave me the OK to share the following from his e-mail.  I think it is relevant to this thread.

Finally, before your eyes glaze over from this long-winded email, I wanted to say a quick word on pricing. In the era of 99 cent apps and songs, it is easy to envision a world where the price of digital content continues to fall. Some publishers have been experimenting with low price points and finding some success. I want to offer a few counterpoints to the low price approach.

First, consumers often base their purchasing not on absolute price but rather on price expectation. If you’re not familiar with the term “price anchoring”, I recommend you check out Mintlife’s article here. Consumers will respond to a $1 RPG sale because their price expectation for RPGs in anchored at $15-$50 for a core rulebook and $5-$25 for a supplement. When the price they pay is far outside of their expectation it ignites interest in grabbing the deal.

If all publishers trended prices down to $1 for an RPG, then customers will re-anchor their price expectations at that level and $1 RPGs would no longer ignite large sales volumes for any single publisher. Instead $15 RPGs will seem expensive; much like any app over $1.99 is “expensive”.

Second, low price points seem to be suboptimal for long term total revenue. Our data on sales rates of core rulebooks shows very little correlation between a rulebook’s PDF sales rate and the rulebook’s price. This suggests that selling really cheap PDFs of your core books won’t sell dramatically more copies, and will therefore get you less total revenue.

Third, lots of $1 sales transactions kill us in micro-transaction payment processing fees. When an exclusive publisher sells a title for $1, we pay .31 to Paypal (or nearly the same to credit card processors) and pay the publisher 70 cents. We’re already down a penny before we cover any other operating expense. Customer purchase frequency and habits are not the same for games and comics as for music, nor do we make profits selling hardware devices, so what works at i-Tunes/Apple won’t work for us. A race to the bottom in pricing would force us to make some type of change in royalty structure with publishers or fee structure with customers, neither of which we want to do - ever - unless forced upon us by too many sales where we take a loss on every sale.

For those reasons and others (like affording decent art), we encourage publishers not to see lower prices as a long term way to raise your total income.

======

To follow up on a couple of Steve’s points:

The issue of “absolute price” versus “price expectation” is one I have talked about before.  It is one thing to have a book priced at $3.99 or $4.99 and place it on sale for 99 cents for a limited time.  The price expectation is that the book will cost $4.99, and the customer has a chance to save money by acting immediately on the sale.  But when the normal price is 99 cents, this becomes the expected price and there is no sense of urgency to make a purchase.

Steve also mentioned short term success.  The point of his post was that many new publishers have been using the low price point.  OBS is looking at TEN YEARS worth of sales data, not six months.  The reason why some publishers are having short term success is not because they are selling cheap.  It is because their prices are below the customers’ expectations for the type of product.  But what the data is showing is that as customers become more accustomed to lower prices, the lower prices has less of an impact on sales volume. 

The micro-transaction fees, whether you realize it or not, played a part in Amazon’s decision to push indies away from 99 cent books to the $2.99 and up range with the special 70% royalty.  And you can be sure other sites like Smashwords will follow suit soon.  Processing fees are fixed, depending on the form of payment.  If it is Paypal, you have a fixed amount they charge on each business transaction.  If it is a credit card, you have a fixed amount you pay regardless of the total transaction. 

Finally, there is no long term evidence that low prices by themselves actually drive sales.  Why does one author with a 99 cent book see it rocket to the top, while another languishes at the bottom of the sales rankings?  If price was truly a driving factor, the bestsellers’ lists would be a constant flux of new 99 cent titles.  Instead, the bestsellers’ lists tend to have a huge range of prices, from free up to almost $20.  Price only becomes a factor if there is an expectation among the consumer base that a product should cost MORE that the reflected sales price. 

Example:  Your book is listed at $3.99 and you are selling one or two copies a day.  After a month, you drop the price to .99 cents.  You now start getting ten to fifteen sales a day.  The typical author says “99 cents is the sweet spot.”  But what has actually happened is that customers have a price expectation of $3.99 for the book, and when they see the 99 cent price they think they are “getting a deal” and grab it.  The longer the price remains 99 cents, the less effective that price is because it becomes the new norm. 

Example:  An author with a $2.99 book that has only promoted on forums drops the price to 99 cents.  In order to “take advantage” of their new price, they promote the hell out of the price.  They buy ads at KindleNation and other sites to promote the 99 cent price.  They see a spike in sales and assume it is because of the low price.

But if the author had put the identical effort into marketing at the original price of $2.99, assuming all other things about the book are equal (good writing, good cover, good editing, etc), long term sales data shows they would have had almost an identical result…and made more money per individual sale.

In short, the thing Steve is talking about is understanding cause and effect in marketing.  If you think the 99 cents will drive sales, and you drop the book to 99 cents and get sales, you will assume the 99 cents triggered the sales.  I’ve actually seen this happen on this very forum.  An author will make a comment like, “I haven’t marketed all that much and lowered my price to 99 cents.  After promoting the 99 cents I saw more sales” and will attribute the sales to the low price.  But the sales are more likely triggered by the PROMOTION, which she admitted she was not doing before dropping her price!

I’m NOT saying to never use the 99 cent price.  There are legitimate reasons to use it for short term marketing plans.  But the point is to take a long term approach and understand that you need to use it SPARINGLY and EFFECTIVELY.  Overuse of low prices changes the customer’s expectations in regard to price and can negatively hurt long term sales.

[Ali Cooper]

Are authors relying on low prices to sell their books rather than other forms of promotion? You see the problem, because if this is what people are doing then prices will simply drop and drop and cancel out the gain we should be getting from all the extra customers.

btw, yes, I have attended exhibitions, yes I have bought from them, yes I realise the hours and costs involved to the artists. whenever I buy anything indie I try to buy it directly from the person who created it so they get the profits if there are any.

[Bards and Sages (Julie)]

Are authors relying on low prices to sell their books rather than other forms of promotion? You see the problem, because if this is what people are doing then prices will simply drop and drop and cancel out the gain we should be getting from all the extra customers.

In many cases, yes.  You'll often hear people rather proudly claim they have never spent any money on ads or promotion, but instead rely on the low price to sell for them.  What they don't realize is that they are in effect STILL paying...just on the back end in terms of lower revenue per sale as opposed to the front end.  And they don't get that as the low price becomes the norm, it will have less and less impact on sales.

[Arkali]

Oooh, Daniel, Dream is out.  WOOT!  I'll be buying it the instant I get home.  Quick, raise it to $2.99 - I promise I'll still buy it - it's the hawk on the cover

K.C. - I think .99 for the first book in a series is smart.  Granted, I'm just a single reader, but I tend to look at .99 as a paid sample.  I'll happily pay $1 for a full work to sample a series or an author, and if I enjoyed it and want to read more, I'll happily pay more for the sequels.

[Ali Cooper]

Thanks Julie, our posts 'crossed in the post' but you've summed up what I've been trying to say more successfully than I have - maybe because you're a more experienced writer .

[Daniel Arenson]

Oooh, Daniel, Dream is out.  WOOT!  I'll be buying it the instant I get home.  Quick, raise it to $2.99 - I promise I'll still buy it - it's the hawk on the cover

Thanks, Arkali!  Yeah, I've actually raised the price already.  Amazon just hasn't updated it yet.   The $0.99 was only a week-long sale, so grab one now before it updates.   I hope you enjoy it.

This, uhm... isn't off topic.  It's an example of how to use $0.99 for a temporary promotion.  Yeah... that's the ticket. 

[kcmay]

Thanks, Julie. That was a very informative post. Makes a great deal of sense to me. I'm hoping/planning to sell my books for the next 2+ decades. I'd hate to shoot myself in the foot for long-term sales by getting too anxious to see big numbers. I see this as my retirement income, not pay bills now income.

[Ali Cooper]

Thanks, Arkali!  Yeah, I've actually raised the price already.  Amazon just hasn't updated it yet.   The $0.99 was only a week-long sale, so grab one now before it updates.   I hope you enjoy it.

This, uhm... isn't off topic.  It's an example of how to use $0.99 for a temporary promotion.  Yeah... that's the ticket. 

Excellent business plan, pricing and promotion, Daniel. Please feel free to quote it several times on this thread - at least it will be doing something useful .

Another point this kind of raises is something I discovered soon after I published my book to kindle - that helping others helps you. Luckily I got in with a group of people who believed very much in this approach and they instilled it in me - and I'm very glad they did.

[Ali Cooper]

Thanks, Julie. That was a very informative post. Makes a great deal of sense to me. I'm hoping/planning to sell my books for the next 2+ decades. I'd hate to shoot myself in the foot for long-term sales by getting too anxious to see big numbers. I see this as my retirement income, not pay bills now income.

I need it to be both of those .

I learned a lot of those business points years ago when I worked for American Express (in UK). It's partly the memory of that business training that's making me ask questions now.

[Julia Brady]

Something you have to consider is that movies and television shows are now only being sold for $0.99 to $2.99 when they are downloadable, also. Yes, they sell much more, but they also have a lot more expenses that we don't have, like paying actors, marketing and advertising on a massive scale, etc.

When someone has a choice between paying $1.99 to watch a movie online or paying $2.99 to download a book, it seems easier to watch the movie. Sure, the book will take longer to read and provide more hours of entertainment. But customers won't often see it that way.

It's hard enough as it is to get people to choose reading over television or video games or movies. Pricing low helps make the decision a little easier.

[Eric C]

Some say, and it's in line with supply (limitless ebooks) and demand (limited customers) theory, that we're headed for $0 ebooks one day, that all revenue will be ad generated then. (Not an outcome I wish for, personally, but I think it's a possibility.)

I don't market much, otherwise I'd never finish my WIP and preserve my screw-off time. So even though I have a book that's got 34 reviews averaging 4.5 stars, it tanks at $2.99 to the point where if I left it at that price for two months I'm sure it would disappear from notice and sales would dwindle below what I'm making now off the book at 99 cents. So I figure I'm simply maximizing revenue at 99 cents.

And if I'm somehow losing money due to the lower price, which I don't believe, then I'll chock it up to advertising expenses as I've sold about 10K copies of the book by now (with probably two-thirds being 99 cent sales).

Oh, forgot. I have been experimenting with price in the UK. After the .71 GBP (equivalent to 99 cents in America) price got it in the top 100 over there for two weeks I raised the price a bit, but still kept it under a pound, and subsequently the book fell out of the top 100 and has been at around 250 or thereabouts for a month, and I'm losing money as a result in comparison to what I was making inside the top 100 at the slightly lower price. Yesterday Amazon UK discounted the book back to .71 GBP. You think they're trying to tell me something?  

[Ali Cooper]

Something you have to consider is that movies and television shows are now only being sold for $0.99 to $2.99 when they are downloadable, also. Yes, they sell much more, but they also have a lot more expenses that we don't have, like paying actors, marketing and advertising on a massive scale, etc.

When someone has a choice between paying $1.99 to watch a movie online or paying $2.99 to download a book, it seems easier to watch the movie. Sure, the book will take longer to read and provide more hours of entertainment. But customers won't often see it that way.

It's hard enough as it is to get people to choose reading over television or video games or movies. Pricing low helps make the decision a little easier.

I'll leave worrying about that till my book's made into a film .

[Suzanne Adair, Author]

Sisters in Crime (http://www.sistersincrime.org/), a non-profit organization that promotes the efforts of women authors of crime fiction, recently commissioned a study of consumer book buying habits. One section of the resulting report dealt with prices of ebooks. Note that the information you see below is specifically about crime fiction: mystery, suspense, thriller.

The fairest price that consumers reported they'd pay for an ebook was $9.90 for men and $8.46 for women.

The price points considered too low, ie. the consumer would doubt the quality and thus not purchase the ebook, were $4.61 for men and $2.74 for women.

Robin Sullivan posted to Joe Konrath's blog recently about using price to position her husband's fantasy series. She didn't want her husband's books to be perceived as "self-published" and thus "low quality." Thus the prices she set were comparable to those from traditional publishers.

As soon as I have the new covers for all three of my traditionally published books, I'll push the price up to $4.99 each, bringing them in line with the pricing of ebooks by historical crime fiction authors who are traditionally published.