Category Kindle royalties

Jan 26 2014

Kindle e-book Prices and Royalties

Prices

What Is the Best Kindle Price?

That’s the million-dollar question. The answer also varies from book to book.

A recent article from TechCrunch points out that the $9-10 price range is the most profitable list price for e-books in the United States, evaluating sales data for all books—i.e. it includes both traditionally and indie published e-books. Click here to check it. It’s short and makes some informative points for both US and UK pricing.

However, the article doesn’t make a few points that may be particularly significant for indie authors:

  • Thousands of traditionally published e-books are priced at $9.99 and sell frequently because the authors are quite popular. Think about it: If a hardcover is selling dozens of copies per day at $35 or if a trade paperback is selling frequently at $25, then $9.99 is an enticing e-book price.
  • Many e-books that would be priced between $10 and $20 are selling at $9.99 because the publisher actually makes a greater royalty with a $9.99 list price. Kindle offers a 70% royalty on books with a list price of $9.99, so the royalty on a $9.99 e-book can be as high as $6.99 (it will be somewhat lower due to the 15 cents per Mb delivery fee). A Kindle e-book priced at $19.99 draws the same royalty of $6.99 because the royalty rate is 35%. Think about it: Would you rather sell your book at $9.99 or $19.99 if either way the royalty will be $6.99? Therefore, the $9-$10 price range is selling many, many more e-books than other price ranges above and below this—it’s kind of like ten price ranges in the same slot.
  • Technical nonfiction—especially, textbooks—tends to sell for higher prices.

I’m not advocating cheap e-book prices. I’m just warning that e-book prices of $7.99 to $9.99 might not turn out to be as profitable as this article might suggest for newbie fiction authors.

Low Prices

The article also shows that many e-books sell at low prices. One reason is that there are tens of thousands of books selling for free, 99 cents, $1.99, and $2.99. These are very popular price points, especially among indie authors. New authors often feel that they have a better chance to get discovered with a more enticing price. Others use this strategically, hoping that readers will get hooked and check out the author’s other books.

There is something important to note about low prices:

  • Kindle e-books priced 99 cents to $2.98 earn a 35% royalty. A 99-cent e-book earns a royalty of 34 cents and a $1.99 e-book earns a royalty of 69 cents.
  • A Kindle e-book priced at $2.99 which qualifies (public domain books, for example, do not) for the 70% royalty and has a small delivery fee earn royalties of up to $2.09.
  • In this case, you would have to sell 6 times as many e-books at 99 cents as you would at $2.99 or you’re losing profits.
  • Similarly, you would have to sell 3 times as many e-books at $1.99 as you would at $2.99 just to break even.
  • Amazon seems to have made recent changes to the sales rank algorithm to factor in list price. This would make sense, as Amazon would prefer to sell 100 books at $2.99 than 100 books at 99 cents.
  • Books enrolled in KDP Select can benefit from Countdown Deals. Books priced under $2.99 aren’t eligible for Countdown Deals.

Perception

Most authors expect to sell more books at lower prices and fewer books at higher prices, but it doesn’t always work out that way. Many customers believe that you get what you pay for, and this perception affects the economics of e-book sales. Even if you do sell more e-books at a lower price, you might make more profit at a higher price (since you draw less royalty per sale at the lower price).

Some authors have actually raised their prices from $1.99 to $299 or $2.99 to $3.99, for example, and started selling books at a higher frequency. This doesn’t happen for all books, but it does happen for some.

It depends in part on the value that your book provides, how it appeals to the target audience, and on the buying habits of your specific subgenre or subcategory.

There are many customers who have been disappointed with e-books that they purchased for 99 cents to $2.99, who now shop for e-books priced from $3.99 to $6.99.

Another factor is marketing. If you market your book effectively and reach potential readers on a personal level, they may be willing to spend more money on your book.

Suggestions

Here are some things to consider when deciding on the price of your Kindle e-book:

  • Research books that are very similar to yours, including top sellers. Buyers will know what the typical price range is. If your book seems underpriced, they might wonder what’s wrong with it, and if it seems overpriced, it might not seem to be worth the money.
  • Consider the length of your e-book and the value it provides. Customers like to feel that they are receiving good value for their money.
  • Most e-book buyers want to save at least 50% off the print price.
  • Some buyers will also purchase both print and e-book editions through MatchBook. If you use MatchBook, set your list price high enough that the MatchBook price may seem like a compelling option.
  • A boxed set may help to create the perception of value. The $5.99 to $9.99 price point may be more profitable for a boxed set than for a single volume by a new fiction author. Ideally, the individual volumes would be priced so as to help the boxed set seem like a good value.
  • Technical nonfiction books that provide significant content are generally worth more to buyers.
  • If you succeed in selling multiple print books per day priced $20 or higher, you have much better prospects for selling e-books at a $9.99 list price.
  • Authors who will be signing up for Kindle Select have an incentive to price their e-books between $2.99 and $9.99 in order to take advantage of the Kindle Countdown Deal. This allows you to create a short-term sale to help stimulate sales.
  • Amazon’s algorithm for sales rank may currently factor in the list price. Only Amazon knows for sure, but some authors have expressed recently that this seems to be the case now, and this is consistent with my observations, too.
  • If you have several similar books for sale, a compelling price on one book may help to generate interest in your other books.
  • If you have a series, offering the first book cheap may help to hook readers in the series.
  • How professional does the book look, in terms of both content and formatting? A higher price does command higher expectations.
  • What is the demand for your book? If the content is very specialized, this may warrant a somewhat higher price.
  • What are your specific objectives? Is your goal to draw the most royalty? Is your goal to maximize your readership? Is your goal to get on a bestseller list? When a higher price may draw a greater net profit, if you’re more focused on sales than royalties, then a lower price may fit your objectives better.

Publishing Resources

I started this blog to provide free help with writing, publishing, and marketing. You can find many free articles on publishing and marketing by clicking one of the following links:

Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

Follow me at WordPress, find my author page on Facebook, or connect with me through Twitter.

Jan 17 2014

International Kindle Prices & the 70% Royalty

International Prices

When you publish an e-book with Kindle, you must set your price for the United States, Great Britain, Canada, Australia, Europe, India, Mexico, Brazil, and Japan.

Most authors will focus on the price in one or two countries, usually the United States and Great Britain, and not put much thought into the others.

At first, this makes sense. For one, most authors sell very few e-books in countries where English isn’t the dominant language; for another, most authors who publish with Kindle are much less familiar with the other currencies and markets.

There is an EASY button: Just let KDP automatically determine the price in each country.

However, a little refinement may be worthwhile.

Examples

For example, if the suggested Great Britain pricing is £1.83, your e-book won’t be eligible for a Countdown Deal in the United Kingdom. If you’re enrolled in KDP Select and considering use of this tool, you should set your Great Britain price to at least £1.93.

As another example, suppose the suggested price for India is ₹423. If your e-book is enrolled in KDP Select and qualifies for the 70% royalty rate, you could draw a higher royalty by reducing the price to ₹399. In India, the maximum list price for a 70% royalty is ₹399 (but note that the rate is 35% in India, regardless of the list price, for e-books that are not enrolled in KDP Select).

The chart above shows the minimum and maximum list prices by country for the 70% royalty option. The asterisk (*) designates countries where 70% is only available through KDP Select enrollment (India, Brazil, Japan, Mexico). (This is a relatively minor benefit of KDP Select. It’s not compelling to make you switch to KDP Select, but if you’re in KDP Select for other reasons, you might as well take advantage of it.)

Another reason to consider refining your price is to change the ending. Suppose the suggested price in Japan is ¥673. You might raise it to ¥695 or ¥699, for example. (Or you might check out the sale price of your e-book in other countries after adding Value-Added Tax, VAT, and reset your price based on the actual selling price.)

Here is a link to the KDP pricing page: https://kdp.amazon.com/help?topicId=A301WJ6XCJ8KW0

Publishing Resources

I started this blog to provide free help with writing, publishing, and marketing. You can find many free articles on publishing and marketing by clicking one of the following links:

Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

Follow me at WordPress, find my author page on Facebook, or connect with me through Twitter.