Most publishers are pricing their eBooks too high.
How much is an eBook worth? Several factors must be taken into account when attempting to answer that question, and the answer can change depending on the book.
Amazon reserves their best 70 percent royalty rate for eBooks priced between $2.99 and $9.99. Books priced above or below this range only earn a 35 percent royalty.
This is an important clue, since Amazon knows more about the eBook business than anybody else. They devote considerable time, money, and effort to determining the optimal prices for eBooks. The fact that they heavily incentivize publishers to price eBooks between $2.99 and $9.99 speaks volumes about the most profitable price range for Kindle books.
It's also telling that legacy publishers are ignoring Amazon's expert analysis by pricing their eBooks above the price range that's proven to optimize profits. They're not demanding unreasonable eBook prices to help their authors (who earn half as much from the sale of a $10.99 eBook as I do at $2.99). They're trying to drive readers away from eBooks to prop up their failing paper distribution cartel.
This desperate, ill-advised gambit is yielding predictable results. Readers and authors alike are abandoning big publishers for indie publishers who are actually interested in success.
What is an eBook?
If you want to price your product effectively, it's essential to understand what your product is. An eBook is really only called a book by way of analogy.
When you buy an eBook, you're not taking ownership of a physical object. You're not really buying anything at all. What you're actually doing is obtaining a license from Amazon to store and display a digital copy of a book on one or more electronic devices.
The differences between buying a print book and licensing an eBook have important value implications.
- Scarcity doesn't apply to eBooks, which are a series of ones and zeroes that can be instantly and infinitely replicated at no cost.
- You never really "own" an eBook. Amazon can remove any Kindle edition of a book from your library at any time, and they've done it before.
- Since eBooks don't have to be typeset, printed, physically stored, shipped, or insured, their production costs are infinitesimal compared to the sunk costs associated with paper books (which are, by and large, reasonably priced). Thus, the profit margins on eBooks are so high that there's no ethical justification for charging anywhere near the same price for an eBook and a paperback.
What are other authors/publishers charging?
Here are a few examples of current (as of this writing) eBook prices from a variety of traditionally published and indie authors. See if you can spot a pattern.
The Kindle edition of The End of All Things by John Scalzi, published by Tor Books, costs $11.99--well beyond Amazon's recommended optimal price range and only twenty percent less than the hardcover!
If you were curious as to why the Big Five's percentage of the eBook market had dropped from 60 to 40, Scalzi's twelve dollar eBook is a big hint.
I'm shocked that Tor isn't the worst offender, here. Don't take your well justified wrath out on Scalzi and Jim, folks. They have zero control over the outrageous prices their publishers set. Jim Butcher's brand is probably even strong enough that his fans will gladly pay that hefty premium on his book (more on how brand strength can affect eBook prices below).
So much for the Big Five. Let's take a look at some indie eBooks.
Submitted for your approval: my first self-published novel Nethereal. This isn't just a blatant plug. Since I'm also this book's publisher, I can offer the inside dope on the factors that went into my pricing decisions.
First and most obvious, you can see that I'm selling it at $2.99, right at the low end of Amazon's optimal pricing range. At this price, I earn two bucks on each copy sold--which is still double what a trad author earns from an $11 eBook under a standard publishing contract. I experimented with prices as high as $4.99 and as low as $0.99, but $2.99 seems to be this book's sweet spot.
You'll also notice that the print versions of Nethereal and The Aeronaut's Windlass are priced almost identically (my book is rather meaty). FYI, that earns me the same amount on a paperback as I get from an eBook: about two dollars (indicating, according to tried and true indie pub consensus, that my paperback is priced correctly).
Which goes to show you how much more expensive print books are to make and ship than eBooks. It also shows that Roc is offering Jim's book, which is a hardcover, no less, at a very attractive price. It's no accident that trad publishers are demanding exorbitant sums for eBooks while their print prices remain competitive.
Up next we have The Cunning Blood by Jeff Duntemann. This is another indie eBook, but a hardcover edition was originally published back in 2006. By the way, I highly recommend it.
Jeff has also priced his eBook at $2.99. Unlike me, he's enrolled his book in Kindle Unlimited, so it's free for KU subscribers to download. Jeff says that he's making a killing off of KENP payments (KU pays authors per page read). I tried KU briefly and had a less than stellar experience with it, but I plan to re-enroll Nethereal soon because experimentation is the name of the game.
Yeah, Wool by self-publishing king Hugh Howey is an extreme outlier, but I want to cover the whole field. Hugh was one of the first to make millions in the early indie pub gold rush, and he gives back by sharing his valuable experience with aspiring authors.
Check out that price. That's the main reason I wanted to show you this book. Hugh's got it priced at zero. Zip. Free. How did he do that when Amazon mandates an absolute lowest price of $0.99? Well, Hugh is such a Kindle wizard that he figured out how to play Amazon's own policies against each other.
You can do it, too. If you want to make the Kindle version of your book permanently free (which you should only do if you have a very tight plan), offer your book for sale through other eBook sellers that do allow you to permanently price it at $0. Then you need enough people to tell Amazon that their competitors are giving your book away for free. Amazon's price matching will do the rest.
Note that this tactic will disqualify your book for Kindle Unlimited, since enrolling in KU requires Amazon exclusivity (note that Wool is not available through KU).
I'm not Hugh Howie. You're not Hugh Howey (unless he is reading this post, in which case, hi, Hugh!) Is this permafree trick likely to pay off big time for you? Nope. But the fact that the biggest, baddest dude on the block is using it should at least give us pause for reflection.
Gorilla Mindset is a fascinating case study in self-publishing success for myriad reasons. The brainchild of male fitness guru and mindset pioneer Mike Cernovich gives us a prime example of a seemingly counterintuitive marketing strategy that has paid off enormously.
This book has sold 16.5k copies and counting--despite being non-fiction, which is traditionally an underperforming category, and despite being priced at the high end of Amazon's recommended price range. According to all indie pub wisdom, it is The Thing That Should Not Be.
The above tweet from Mike is 100% true. How, then, to explain his runaway success?
- eBooks aren't normally subject to scarcity. By selling his book at a premium price, Mike is, in a way, creating scarcity via introducing an element of exclusivity. He doesn't want people to thoughtlessly buy his book as Kindle filler. That sends a powerful message: "Only serious readers need apply". The higher price is a de facto barrier to entry that's a mark of worthiness for those who meet it. This generates demand.
- Fantasists like me sell pretty lies designed to distract our readers from the grinding misery of their lives. Mike is interested in showing people how to actually improve their lives, which is cool, if that's your thing. Based on all of those positive reviews, his advice is applicable and actionable. That's where most nonfiction books fail, and that's money in the bank for Mike.
- Mike has spent several years building up his personal brand--which is what all authors are actually selling. As in Jim Butcher's case, readers will pay a premium for books by their favorite authors.
What all of this means for you
Here are the lessons that indie authors should take away from this post:
- Amazon recommends an optimal price range out of enlightened self-interest. Listen to them.
- Most big publishers grossly inflate their eBook prices, screwing their authors and themselves.
- All else being equal, the infinite abundance and far lower production costs for eBooks compared to print books means that a fair price for an eBook is far lower than the price of a paperback.
- The pricing sweet spot differs between books. Experiment to find the optimal price for your eBook.
- Free (e.g. Kindle Unlimited, forcing Amazon to make your book free through price matching, etc.) can pay off big like all risky bets. Make sure you have a solid plan in place before going free.
- Every market has outliers like Jim Butcher, Hugh Howey, and Mike Cernovich. The overwhelming odds are that you are not an outlier. Then again, experimenting with free/premium pricing could yield valuable data.
- As an author, your main product is your brand, which is you. Readers will pay more for books from a strong brand.
- Start building your brand now. Be prolific (release at least two books per year). Blog extensively. Start a podcast. Engage with readers on social media. Will all this hustling cut into your writing time? Yep. Suck it up, because you're a publisher now, snowflake!
As with all things in life, self-publishing offers no guarantee of success. It does guarantee control. Never before have so many vital decisions been entirely in authors' hands. Get informed and take as many steps as you can to maximize your chances of success.
Follow me on Twitter: @BrianNiemeier