Tag Archives: Kindle prices

Jul 21 2014

Will $5.99 be the new FREE?

Free Reading

Book Pricing Strategies

Amazon recently launched Kindle Unlimited, which allows customers to download multiple books all for just $9.99 per month. The selection includes all 500,000 KDP Select books plus an additional 100,000 books, including Harry Potter. (Read more about Kindle Unlimited by clicking here.)

If Kindle Unlimited really catches on—it looks quite promising for readers—it could be a game-changer for pricing Kindle e-books.

Many customers are indeed trying Kindle Unlimited out, and as more customers do this, it will surely impact sales ranks of Amazon e-books.

Let’s look at a little history:

  • 99-cents has often been a popular price-point. It’s cheap enough that customers can buy on impulse and not worry too much if it doesn’t work out. But many also believe that you get what you pay for, and believe this more strongly after a few books don’t work out.
  • When KDP Select first launched, FREE was a popular promotional strategy that worked for many authors. But then FREE lost its luster.
  • $2.99 has been a popular price point. You have to sell 6 times as many books at 99 cents to make the same royalty at $2.99, plus the higher price suggests higher quality than 99 cents.
  • Recent studies have shown that $3.99 to $5.99 is a profitable price-point. Indeed, many customers shop this slightly higher price range, expecting to find better quality here. (The study also showed that $9.99 was highly profitable, but nonfiction and big-name authors have lent popularity to that range.)

In the past, many books have sold in the free to $2.99 price range because many customers have been thinking about saving money—and about the risk of a higher-priced book not turning out well.

Kindle Unlimited customers are likely to have a different mindset:

  • Kindle Unlimited customers aren’t asking, “What’s affordable?” Once you spend $9.99 for the month, every book you want to read is essentially free.
  • So they are instead asking, “What’s the best book I can read?” They are looking for the best book, not the best price. If they do look at price, it’s as a guide to value.

The value of e-books may be changing. It is, at least, for Kindle Unlimited subscribers:

  • Cheap price-points have no value to Kindle Unlimited readers. Free isn’t a good deal to them. Instead, low prices may suggest low quality.
  • Higher-priced books may have more value to Kindle Unlimited readers. You have to read ten 99-cent books to get your $9.99’s worth for the month, but if you read ten $5.99 books, that’s a $60 value.

Since Kindle Unlimited has just launched, it still remains to be seen how much Kindle Unlimited customers will impact book pricing strategies and Amazon sales ranks.

Here are some things to look for:

  • Will 99-cent thru $2.99 books slip in the Amazon rankings?
  • Will $3.99 thru $9.99 Kindle Select books rise in the Amazon rankings?
  • If higher-priced Kindle Select books do rise in rankings, will that improve their sales, too?
  • Will KDP Select freebies and Countdown Deals become less effective?
  • Will BookBub and other promotions become less effective?

Even if $2.99 and lower books are enrolled in KDP Select and receive downloads, if other books—such as $5.99 books—are receiving even more downloads than they are, then those $2.99 and lower books will still fall in the rankings despite the downloads. There may be a lot of books that used to have sales ranks in the 100,000’s moving up to the top and pushing other books down in the ranks.

The effect may not be immediate. Customers also look at reviews. Covers, blurbs, and great beginnings will always matter. Books at the top probably have good packaging and many reviews, and books at the bottom may still need to build reviews. But as more readers try out higher-priced books, their popularity may grow and they may gain more reviews. Many Kindle Unlimited readers will approach the book-buying process differently, and it will eventually have some discernible effects. If the cover, blurb, or Look Inside have problems, this will deter sales regardless of the price-point.

Either way, the book must command the price it has. If you simply take a 99-cent short story and reprice it at $5.99, it’s probably not going to be perceived as a better value suddenly. Plus, if customers think the book is worth much less than the list price, it’s likely to show up in a review.

Rather, if a book really is worth $5.99, but has been priced lower based on how the market had been prior to Kindle Unlimited, if that book is enrolled in KDP Select, it might be a good time to reconsider its list price.

It depends on two things. First, will Kindle Unlimited customers favor higher-priced books? Second, how popular will Kindle Unlimited be? Time will tell.

If sales ranks of lower-priced books slip over the next two weeks, this will become food for thought.

The other side of the coin is that KDP Select borrows pay the same regardless of the list price. Books priced $3.99 and up would earn higher royalties for sales than the KDP Select borrows have historically paid (about $2 per borrow). But if their inclusion in KDP Select generates additional sales because of the perceived value, it may well be worth enrolling those books in KDP Select.

It remains to be seen how popular Kindle Unlimited will become and how much (and what kind of) impact it will have. But authors need to decide which side of the fence to stand on, and how to best plan their marketing strategies around the introduction of Kindle Unlimited, and so authors must make many decisions, such as whether or not to enroll in KDP Select and whether or not to change the list price. These decisions won’t be easy, but they may have a significant impact on a book’s sales in the coming months.

Chris McMullen

Copyright © 2014 Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

  • Volume 1 on formatting and publishing
  • Volume 2 on marketability and marketing

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

Comments

Click here to jump to the comments section:

https://chrismcmullen.wordpress.com/2014/07/21/will-5-99-be-the-new-free/#comments

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.