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How Much Should You Charge for Your eBook?

[This article is excerpted from BookBaby's free PDF "eBook Publishing: The How-To Guide for Writers" by Steven Spatz. Download the whole guide HERE at no cost.]

Cruise any of the writer’s forums on the internet and you’re bound to find a log of discussions on the topic of eBook pricing.

You’ll find legions of authors who are enjoying success — and best net sales revenue per book — at the currently popular price levels of $4.99 to $9.99. They’re making the maximum royalty from the eBook retailers — up to 70% returned to the author — and believe the higher prices begin to reflect the quality and value of their efforts.

On the other side of the argument are hundreds of authors thrilled with the results of pricing their books down to rock bottom levels — $1.99 to 99¢ — giving up the high percentage of return for larger numbers of fans. A few authors like John Locke have seen their literary fortunes soar with this pricing strategy.

Amazon’s list of 100 best-selling books has become a pricing free-for-all. During the week I’m writing this, 21 books were selling for just 99¢. Others were priced at $4.98, $7.59, and $8.82. The most expensive single book, at $16.99, was Dick Cheney’s memoir. There is none of the clarity of iTunes in its early years, when the price of music tracks was fixed at 99¢.

Think about percentages

One of the biggest factors to consider in pricing your eBook is the percentage of sales you’ll receive from the retailers. Amazon pays out a royalty of 70% on all Kindle titles priced between $2.99 to $9.99. For eBooks priced below $2.99 and above $9.99, Amazon pays out only 35%. Most of the other eBook retailers have similar price banding.

To encourage more readers with a low price and still get the 70% royalty, you would set your price to $2.99. Every sale will yield you a net royalty of $2.09 per sale.

If you opt to maximize your exposure and price your book at $0.99, then you’ll get 35 cents per sale. In order to get $2.09 in royalties with a book priced at $0.99, you’ll have to sell 6 books. If you sell 1,000 books at $2.99, then you’ll make $2,090. If you are contemplating a price drop to $0.99, then you’ll have to sell 5,972 books to make the same net royalties you did when it was priced at $2.99.

But writing and publishing an eBook is more than just numbers, dollars, and cents. These kinds of royalty calculations are only one factor in the success of an eBook. Why do some author’s price their book at 99¢ when the math seems to be so against that model?

A few reasons to price your book at 99¢:

• It’s only 99¢, what’s the risk? An impulse-priced book allows a reader take a chance on a book that looks interesting. If you’re an unknown author trying to build your readership base, this might be the answer. While $3.99 doesn’t sound like a lot, it does mean the difference between 1 book and 4 books for the purchaser.

• an easier path to best-seller status. To rise atop the Amazon rankings is the Holy Grail quest for most every author. Amazon counts book sales units, not revenue. Setting your price at the impulse level of $0.99 could help you creep up in the ranking and gain visibility there — visibility you might not have gotten if you kept your book price higher.

• Success begets success. When you visit your book page, you’ll see a section that says “Customers Who Bought This Item Also Bought.” The real value for you is when your book appears in that section on other successful books. Amazon will list up to 100 books in this section and readers will often scroll through that list to discover other books that look interesting. Again, a drop of 99¢ may be the catalyst to increase your sales enough to land you in that section on some popular books.

Those are a few of the arguments for dropping your Kindle book price to 99¢. Of course pricing is only one factor in the success of a book. There’s no guarantee your 99¢ book will attract hundreds of new readers — that’s why it’s important to continue to market your book and actively seek out ways to get it in front of new readers.

So what should you charge for your book?

As the back-and-forth pricing arguments attest, there is no easy answer. It depends on your genre, your commitment to marketing, and the prevailing winds of the marketplace at any given time or place. New authors who are trying to find a readership can use the low price strategy to great success.

If you have a series, you may want to lower the first book in the series to entice people to give you a try. Other books can then be priced higher because you are no longer a new author to those who have purchased your book.

And if you’re an established author finding success with eBooks, think long and hard about changing your book pricing strategy. If you are seeing success at one price, think hard before trying to cash in on a higher price. You don’t want to kill the momentum of your sales which may be a hard thing to restart if you do.

Like the rest of the eBook world, we’re in a rapidly evolving environment when it comes to eBook pricing. Things are so new, and changing so quickly, that pricing strategies can be outdated in the blink of an eye. One of the great things for authors who self-publish their eBooks is the ability to change the price, test different price points, and react to the market demand.

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