Most often I see people price an eBook based on Amazon’s royalty structure (generally, prices outside $2.99 to $9.99 get a 35% commission). Some might look at production values, the niche it serves, or even competitive eBooks (always good). Authors publishing their first title are especially resistive to pricing low.
I don’t believe there is a magic eBook price point, or a formula you can follow. One of the things that make the art of picking the right price especially difficult these days is the speed at which publishers can adjust pricing and how quickly the eBook store search engine algorithms—especially Amazon’s—can reward or punish book listings based on price.
With this in mind here are what I consider to be 7 considerations every small publisher should pause to reflect on. Not all will apply to every eBook but most will.
1. Who the heck are you? (And why should I listen, or what makes your book so darn valuable?) Last spring I wrote about a good metric to apply to this situation: do you have at least 2,500 mailing list subscribers and 1000 social connections? If not, it's going to be tough to create the demand necessary to support a high price, and keep it there (at lease without advertising).
2. What is your goal? Most people won’t say income, but then they price to maximize their royalty. If this is your first book, or even second book, you are better off all the way around getting it into as many hands as possible. The more you charge, the harder it is to move copies. This is especially true for unproven authors (see #1).
3. How much does your competition charge? Within reason I think this is the best place to start when pricing your eBook. It can be sobering though. I happen to think that at 37,000 words my book has far more information than the average $3.99 eBook with 9,000 words but people don’t shop that way, at least in my genre.
4. The pros and cons of 99 cents.
- No-brainer to spend a buck.
- Better than free—free books can attract buyers outside a writer's target audience and I've heard their reviews can be more harsh (perhaps because they are not as familiar with the subject matter or author?).
- Use it as a Trojan horse (build your mailing list, include affiliate offers and advertising).
- Build readership and brand awareness.
- If you participate in KDP Select you’ll make more money loaning it, than selling it.
- Does 99 cents devalue your writing? Some think so.
- Much lower royalties = longer ROI.
- Buyers may not read it which defeats the purpose.
5. Avoid $1.99. I’ve been reading this in forums, blogs and Smashwords research for more than two years. But it seems true; I rarely see eBooks priced at $1.99.
6. Expensive ebooks have a good chance at being discounted. Sometimes you must price higher like when your print book is expensive, or your content is demonstratively better. One of my clients actually anticipated this when she priced her cookbook Long Way on a Little at list price and Amazon promptly dropped it by 27%. I suspect this might be because she has a print equivalent. I say that because another client’s book, An Essay Approach for the California-Specific Subjects, hasn’t budged from its original $119 price point.
7. Start high to capture demand…or low to reward loyalty? Beyond the obvious extra cash from your closest fans who will buy it to support you, it’s a short-lived strategy for self-publishers. Now you need to lower the price to be competitive and imagine how that makes your early supporters feel. Writer Edward Robertson makes a strong case in his post Challenging Assumptions: Pricing Frontlist Like Backlist and Backlist Like Frontlist, that smaller presses and self pub authors might be better off pricing low to reward loyalty and find new readers for higher priced backlist books.
Bonus: The U.S. eBook market is different than foreign markets. Foreign sales are a real possibility for many authors but don’t assume you should price the same in those markets. Luzme founder Rachel Willmer shares her firm’s research about U.K. eBook prices vs. U.S. eBook prices (right now you should price lower in the U.K.).
Lastly, don’t forget that you can and should change your initial price. Experiment.