Lake Atitlan, Panajachel, Guatemala

Monday, October 31, 2011

Why I'm Not a Fan of the .99 eBook

How to price an ebook? I've read many posts on this topic and considered the variety of opinions. After all the research, it finally hit me why I disagree with pricing ebooks at .99. It occurred to me one day while gazing lovingly at my cookies.

Convenience stores buy my cookies for $1 apiece to resell at $1.59 or $1.79. I make 24 dozen each week, using extra ovens for baking and other techniques to speed up the process without sacrificing quality.

Imagine that each of these cookies represents one book selling on the Kindle for .99. Compare production time of cookies to that of creating a book good enough for people to pay even .99. Scary thought, isn't it?

 Don't forget that Amazon gets 65% of each cookie--er--book, netting you 35 cents per sale. If you went through a publisher they take their cut. Is the solution to self-publish so you get the entire 35 cents? That's what many are saying, but it's still just a pittance for an awful lot of effort and expense.

I wouldn't sell my cookies for .35. If that's all I got, I wouldn't bother. Remember, I sell to the stores for $1 and they add the extra .59 or .79. I, who created the recipe and made the cookies, get the larger cut of the product. I'd be a fool to give the stores over half my profit.

When an ebook is priced for .99, Amazon gets the largest cut because royalty is only 35%. Priced at 2.99 or higher, royalty rate goes to 70%. A Kindle ebook priced for 3.99 earns $2.76 on royalties. Big difference between getting $2.76 for each book sold compared to 35 cents.

Now if I could write 24 dozen quality books a week hahahahahahahaha, I might consider pricing them for .99. But probably not even then, because that's not really .99 it's .35, which is split 50/50 with my publisher.

* So for each .99 book sale on the Kindle, Amazon gets 65 cents, my publisher gets 17 cents and I get 17 cents.

* For each 3.99 book sale on the Kindle, Amazon gets $1.19, my publisher gets $1.40 and I get $1.40.

* $2.99 is the lowest price available to get 70% royalty rate. At that price, Amazon gets 89 cents, my publisher gets $1.05 and I get $1.05.

* I'd have to sell six .99 books to get the same amount of money I get from one sale at $2.99. I'd have to sell eight .99 books to get the same money I'd get from a $3.99 sale.

A .99 promotional price has merit but as a permanent price on one's books? No. I would not do this for 17 cents, not even for 35 cents. At that price, I'm better off making cookies.

On Friday, I'll post about one publisher's experience with pricing ebooks and how price has affected sales.

45 comments:

  1. "I'm better off making cookies." *laughing through the tears* You're exactly right. One other reason I'm uneasy with watching those 99-sale promos is it undervalues the work, the product. The same thing is happening with those social-media discounts for everything from yoga to car washes. It's supposed to draw in new customers, but most businesses find it only draws them for the sale and then they look for another one somewhere else, now thinking the regular price is overpriced. People are going broke with the underselling.

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  2. Thank you so much for breaking this down like this. Genius! Can I have a cookie?

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  3. great post. Authors deserve to make a decent profit on their work - especially in light of all the years they worked for zip!

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  4. this is a great point... and man! Those must be some darned good cookies! :D j/k~

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  5. Thank you for breaking it down like this. I've read so many posts on this subject, and lots of pros about slashing prices to attract readers...
    where will it end? There has to be a way that the artists/writers get to make money, too.

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  6. Great analogy! I was originally going to price HTDA at 99 cents, but after all the research I decided to go with 2.99 for the Ebook.

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  7. That makes sense! Really glad my publisher only dropped the price of my eBook to $2.99.

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  8. I think .99 for a novella, or short story is a good price point, but anything that has a word count upwards of 60K should be priced at $2.99. What's the point if it's not. You're not only devaluing yourself, but your book as well. And $2.99 is still plenty cheap enough. You can't find a paperback for less than $7- these days anyway.

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  9. Great point! I got sucked into lowering one of my ebooks to $1.99 from $2.99 because a site that reviews low-priced ebooks told me I'd get more sales if they could review it at $1.99. I did get a bump in sales, but since Amazon only gives you a 35 percent royalty at that price, I actually lost money that month, because I didn't sell enough ebooks at $1.99 to make up for getting my royalty cut from 70 percent.

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  10. I understand the temporary .99 promotion for authors w/more than one book. Dropping an older title to .99 to pull in new readers who will then feel comfy paying 2.99 for the other titles. Many authors are seeing solid sales #'s that way. But I agree the .99 shouldn't be the standard or the norm. Your math proves it.

    I didn't know you made cookies! Do you have more than 24 hours in your day? ;-)

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  11. That all sounds very fair and reasonable, and having read it, there's no way I want to pay that little for anyone's book. 5 euros at least, if I'm at all interested, and I'd be hoping that at least two thirds of that went to the author.

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  12. Mise, And now I'm wondering how much in dollars 5 euros represents. It would be interesting to get these numbers compared in euros and pounds. I can't do it though since it was all I could do to figure out dollars. I had my husband double-check my numbers because math isn't my strong point.

    Kai, I only make the cookies two days a week. The rest of the time is devoted to writing, editing and all the rest. If I sold books like I sold cookies, I could stop making the cookies but I do enjoy the diversion of it.

    John, Thanks for giving your example and your numbers. Its easy to get sucked into the idea of dropping our prices to sell more but it's important to do the math.

    Anne, We writers can be so insecure about our talent and our work that devaluing our efforts becomes commonplace. How Amazon has convinced tens of thousands of us that it's a good deal to publish on the Kindle for 35 cents while they get 65 cents is beyond me.

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  13. The whole pricing thing is mind boggling. It's a crap shoot at best.

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  14. I think it works as a promo, or -- if you have more then two or three books out there, at higher prices -- it can work as a 'hook' to drive people towards the higher priced books, too. But you're right: it's hard to make any money off of 99p!

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  15. Cookies!! You can never go wrong with home made cookies!

    Ooh - methinks price yourself 99cents or pennies (in the UK) if you don't want to make a profit or are so confident that you'll sell gazillions.

    Take care
    x

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  16. Stop tempting me with your cookies!

    Oh, and your post makes a lot of sense. I'd never really broken the numbers down like that. Haven't gotten far enough in the journey to have to give it a really hard think yet, but $2.99 sounds like the best price to start at.

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  17. This was a great explanation...aside from the fact that it made me hungry. I made my cookies yesterday and donated them to the senior center...should have saved a few!

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  18. I like it a lot as a promotional rate, and I like it for ONE if you have a shelf with maybe half a dozen. Because I think some people will TRY the cheap one and then buy more (especially if the cheap one is first in a series). But I think if you only have ONE book (or two), I'd only do it for maybe a week (heavily promoted leading up to it so you can get that best seller title)

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  19. I have wondered about eBook pricing, thinking some books remarkably cheap. You have explained it so very well.

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  20. I'm glad you wrote this post. Money does matter, even in writing. Most of us who haven't been published yet are writing for free. But at the same time if and when we do get published we want to be paid a fair sum for all of the time, hard work, and effort we put into it. So I totally agree with you.

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  21. I couldn't quite follow the maths - maybe because I was gazing lovingly at your cookies - but I gather that selling the book at half price will get you a lot less money even if you sell twivce the quantity?

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  22. The difference between 35% and 70% is huge. An author has to work twice as hard. And unless they are John Locke, they aren't going to be able to work that hard.

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  23. From the reader's point of view, I'm suspicious of 99 cent books. I have never bought one.

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  24. Wow, thanks for that insight. I'm getting ready to self publish my first book and this is great food for thought.

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  25. If a book is well-written, and wisely published, it is worth more than 99¢. That 99¢ is the price which says, "This isn't worth reading."

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  26. Wow; I didn't know this. Makes me think a bit.

    ......dhole

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  27. Yes, good points and a fascinating subject. I'm with you. I know times are hard, but I just don't understand why people only go for 99c books - and I know plenty that do. Given how many hours of pleasure a reader will (hopefully) get, surely it's reasonable to pay the price of a cafe cup of coffee to do so ...

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  28. Brilliantly stated! And dang, I wish I lived close enough to get some of those home made cookies!

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  29. But what if you only had to create *one* cookie? It might take you a year to make that cookie, but it can be copied endlessly at no additional cost or effort on your part.

    The value of a 99 cent book is not the 99 cents a reader pays, but the royalties you make off it. I raised my price back to $2.99 and am making less money, and that is translating to less sales of my second book as well.

    I thought I'd saturated the free/99 cent market,so that's why I put it back to $2.99, not because I thought I was de-valuing my book. However, I think I may re-visit 99 cents when it closer to Christmas.

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  30. I read an interesting article with some favorable statistics from the wall street journal today. thought it might add to this or not: http://online.wsj.com/article/SB10001424052970203554104577002230413747366.html?mod=wsj_share_tweet_bot

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  31. Wendy, Good article! A couple of the authors mentioned went the .99 path and others priced books at $2.99 and higher. What interests me about high-selling ebooks is that the authors frequently attract the attention of a publisher and sign contracts with them. So there's a mixed message. It starts with "I can make so much more than I can with a publisher!" and turns into "I got a contract with such and such publisher because of high ebook sales!"

    Mary, I'm glad you commented. I was hoping someone with success in the .99 price range would chime in to the discussion. The gist of my post is not that .99 is devaluing the product but that out of 99cents, Amazon takes 65cents while the author gets 35cents and much less if it's the price set by a publisher who takes a cut as well. Indie authors like to say why go with a publisher when I can make so much more on my own, but what about that 65% Amazon takes on every .99 ebook sold on the Kindle?

    However, I can understand using the low price to attract readers, as a promotion and for experimentation. And following your blog, I know that you keep very careful records and details on books sold and money earned using different price structures. Friday I'll post about what WiDo found when they experimented with lower ebook prices. I hope you'll stop by to add to that discussion as well.

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  32. Wow, that's really interesting. Thank you for letting us in on the way things are, Karen!

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  33. Karen I recently bought and am now reading your books, Farm Girl and Uncut Diamonds. I would never pay .99 cents for them. They are worth so much more. I felt guilty paying as little as I did for both of them, got them both from your publisher hoping you'd get the most $ from them.

    Our problem here in these United States is no longer respecting PEOPLES TIME. It takes time to write well, to bake well, to make home made soap well and I for one am always willing to pay more for quality !

    PS. The only bad thing about buying both your books at one time is I keep flipping back and forth between the two and confusing myself. You would think I would learn.

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  34. Food for thought, that's for sure. I want some cookies now...

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  35. I found it very hard to concentrate on this post because my mouth was watering over those yummy cookies!! Very good point. So much work goes into it, that a 99 cent price isn't fair to the writer.

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  36. Yeah, I think I'll be selling my eBooks for £2.99. I don't have a publisher, so I'll get to keep the 70% :)

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  37. "When an ebook is priced for .99, Amazon gets the largest cut because royalty is only 35%. Priced at 2.99 or higher, royalty rate goes to 70%." If I knew this, I'd forgotten it. It's a very important point!
    And those cookies still look soooo yummy...

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  38. I don't want my novels to sell for less than a cup of coffee. Thanks for this post!

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  39. Milo, Comparing ebook prices to what people buy every day for a few bucks puts it in perspective. Someone will buy a cup of coffee without a second thought but hesitate to spend $3 on a book. Not sure that will ever change unfortunately.

    Deniz, It's easy to forget in our enthusiasm to see as more people buying our books. Especially when we see other writers doing it, some of whom are selling thousands of books a month. I'm not convinced however that it's the .99 price alone that makes those big sales.

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  40. I hear ya. I priced my book, 'A Gay in the Life of Melinda Finch' for 99 cents on the Kindle and sales have been crappy. I mean, it's better that some people read it than the manuscript collecting dust in my closet, but honestly, I thought 99 cents would be a give away. However, I am competing with a lot of free ebooks. It's discouraging.

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  41. Point taken, thanks for sharing! I bet your house smells like heaven ;D

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  42. That makes total sense. I like the way your publisher does it.

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  43. Just stopping by to say...great points! Got some good laughs, too! =)

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  44. Great post and perspective! I can't stop looking at those cookies! :)

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  45. "At that price, I'm better off making cookies." Brilliant! And scarily true. Puts things into a kind of crazy perspective when you realise that you can make more money on one cookie than you can on months/years of writing one book.

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