The Price Is Right: 6 Secrets to Pricing Your Ebook

by | Jan 3, 2018

By David Kudler

So you’ve finished your book. You cleaned up the text, added optimized images, pulled together all of the front- and back-matter, and created a cover. You converted it into ePub ebook format — either using an app on your computer or online. You’ve made sure the ebook file is valid and meets your standards. You’ve uploaded the file to your first retailer/aggregator and you’ve added all of the metadata, and you’re almost ready to hit PUBLISH, but you’re down to the very last choice…

What price are you going to sell your ebook at?

This question is the cause of more anxious (or panicked) messages and phone calls from clients and friends than any other. So here are six secrets to setting the price for your ebook.

After all, there’s no real basis for a price — no “fixed cost,” unlike a print book, which has per-unit costs to print and ship (and store, etc.). You could name any price you wanted. If you wanted.

So where do we start?

1. Amazon is king

Most of us make the majority of our ebook revenue — 60%–80%+, depending on whom you ask — from one source: Amazon’s Kindle Store. So it makes sense that, when you’re thinking through your price, you might want to start with the ‘Zon.

Now, Amazon has very specific ideas about ebook pricing. When you’re uploading using their KDP platform — or using an aggregator — you can make a very nice 70%-of-retail[i] royalty on all sales between the prices of $2.99 and $9.99.

Price lower than $2.99 or higher than $9.99 and you get a not-so-nice 35% of retail. [ii]
Guess what price most indie authors choose for their titles?

Yeah — actually, a lot choose to go for the 35% rate, and while that can be a good idea sometimes (see #4 below), it’s mostly not.
First of all, hardly anyone buys ebooks priced $1.99. Don’t know why that is, but I’ve learned that the hard way.

And if you price your ebook over $9.99, you need to know that you’re losing money on every sale between $10.00 and $19.99, because you’re making half the royalty — but you’re also killing your sales, because (as I mention in #2 below), ebook prices tend to be fairly elastic — raising the price by a dollar can often lose you more than a dollar in sales.

So unless you’re doing it for a good reason, you want to price your ebook between $2.99 and $9.99.

Now what? How do I narrow my price down?

Well, Amazon has an app for that: their KDP Pricing Support service.

When you get to the final tab in the KDP publishing process — Kindle eBook Pricing — after Amazon tries to lure you into its fools-gold KDP Select program and asks you what territories you hold the distribution rights for (in most cases, “All territories” — unless you’ve licensed some away), there’s a panel titled Royalty and Pricing — the cause of our anxiety. Well, right up at the top of that panel is a button called KDP Pricing Support (Beta).

When you click View Service, Amazon will create a nifty graph that shows your likely sales and revenue at different price points:

This analysis is based on:

  1. Your ebook’s length
  2. Your ebook’s genre

As I’ll spell out (see #3 below), those two pieces of information (as well as the size of your platform) will be the biggest determining factors in setting a price for your ebook.

The chart shows both probable sales (the grey dotted line), and probable net revenue (the red line) based on various prices (the numbers along the x-axis at the bottom). [iii]

For this book — my 32-page children’s picture book The Seven Gods of Luck[iv]— the chart suggests that a $2.99 price point would be ideal.

Guess what my usual price for that ebook is. Go on. Guess.

Yeah, $2.99. How’d you guess?

Now, one thing that Amazon is very, very good at is maximizing sales. And since (for ebooks) their profit and your profit are directly tied together, [v] I’ve found that, as a starting point, that service is pretty reliable.

Which isn’t to say that it’s all-knowing.

2. Ebook prices are highly elastic

Sorry to have to dive back into Econ 101. But this won’t be too complicated, I promise. No charts (aside from the one you’ve already seen). No “assume a can opener” gimmickry.

Let’s discuss price elasticity.

If a price change causes an increase or decrease in sales that changes my net royalty (the wonderful bottom line), it’s said to be elastic. So if I’m selling 100 ebooks a month at $1.00 — grossing me $100 — and raising the price to $2.00 sells 20 ebooks — grossing me $40 — then I can say that the price is pretty elastic — that is, it’s very responsive to price changes. A change in the retail price created a larger percentage (negative) change in gross sales.

If on the other hand raising the price from $1.00 to $2.00 sells 90 ebooks — netting me $180 — then I can say that the price is fairly inelastic, meaning that the raise in price barely dented the number of sales, causing my overall revenue to soar.

Following me?

This is reflected by the dotted grey line on the KDP Pricing Support chart above.

As the chart shows, in general ebook prices are fairly elastic. Raising prices (above a certain point) is going to lose you more in gross sales than you’ll make back by increasing the price. And vice-versa.

This means that, often, the ideal price point (according to Amazon) is $2.99.

But that’s definitely not always actually the case. As you can see in the chart above, for prices below $2.99, for a book the length of mine in this genre, they expect me to gross more at $1.99 than at $0.99 — but much more (because of the higher royalty rate) at $2.99.

3. Length, genre, and platform matter — sometimes

As I said above, the KDP Pricing Support service bases its analysis on your ebook’s length and category.

Now, there’s less of a “doorstop effect” with ebooks than print books. I just helped publish a 1.2 million word ebook for a client; [vi] it looks exactly the same on the Amazon shelves as a 3000-word essay.

Nonetheless, readers are somewhat aware when you charge the same for a short story that you do for a novel. So it makes sense to reflect the length at least somewhat in your price. Otherwise people can get cranky.

However, genre makes a huge difference in terms of what folks are willing to pay.

In some genres (especially high-volume “pulp” genres like romance, science fiction, fantasy, and, to a lesser extent, mysteries), readers often expect anything shorter than a full-length book (fifty thousand or more words) to be priced $0.99, while full length pieces are generally priced $2.99–$4.99. On the other hand, in other genres (for example, literary fiction, non-fiction, etc.), short stories, novellas, and single essays are often priced $2.99, while full-length works are priced $4.99–$9.99.

How do you find out what’s appropriate for your genre? Go to Amazon and do some searches in your genre/sub-genre and see what the best-sellers are priced at. Then click on them and check out how long they are. You can do that be going down just below where the description starts to where a bunch of boring metadata resides — including the page length:

In this case, they took that number from the paperback edition, but if the title is ebook-only, they’ll estimate for you, based on the word count. [vii] For adult books, anything under 100 pages is almost certainly short. Over that could probably be considered full-length for our purposes.

So check out the lengths and prices of the best sellers. See what prices seem to sell short pieces and what prices work for full-length works. That’s a starting point.

While you’re there, it’s also a good idea to spend some time looking at the covers in your sub-genre and making sure that yours will both fit in and stand out, if that makes sense. Also, use your time to see what kinds of keywords and categories the publishers used to get people to buy their books. You can’t use their author’s name, but you can use similar search phrases and make sure your books are in the same categories.

Now, if you’re just starting out, these bestsellers are almost certainly by folks who are better known than you — they have an established platform: a mailing list, followers on social media, folks who can’t wait for their next title. So you may find that you need to adjust your price in order to have an impact — almost certainly, you’ll need to adjust downward by a dollar or two, to take advantage of that elasticity I talked about above.

So perhaps the New York Times bestselling author can sell her novel at $5.99 — but to compete, you may need to sell yours at $4.99 or less.

4. Your loss-leader is your friend

Having said all of that, there are times when you want to toss the price you’ve arrived at in the previous three steps out the window. You may want to price higher or — more often — you want to go lower. Perhaps much lower. Perhaps even giving your book away.

Why would you do that?

Well, there are a few reasons you might price your ebook very, very competitively:

  • You’re looking for reviews (folks who download the free version from the Kindle Store should still be marked as “verified buyers,” which makes their review more credible)
  • The title is the first in a series; by giving it away you’re marketing the other books (this is what’s known in retail as a loss leader — just make sure to include links and blurbs at the back of the ebook to make it as easy as possible to buy the next title in the series)
  • You’re publishing the ebook not for the sales, but to establish yourself as an expert in a field (to promote your services or your speaking appearances, for example)

Note that you should never do this without a specific reason. Too often new indie publishers think that getting lots of readers is in and of itself the point. It’s not; all of these techniques are aimed at either building a platform or selling other books or services. If you decide to create a loss leader, make sure it’s leading somewhere!

And remember: if you’re lowering your price for a promotion — a limited-time offer to your own mailing list or someone else’s, for example — don’t forget to bring the price back up to take advantage to increased sales after the promo has ended!

5. Pricing too low can be as bad as pricing too high

Self-publishers are more likely to underprice their wares rather than overprice them. They price their two-hundred-thousand-word epic fantasy novel at $0.99, thinking that they’ll sell a lot of books, and are shocked when that doesn’t happen.

Most likely it doesn’t happen because they haven’t marketed the book properly. But if they’ve underpriced the book, it’s difficult to make many marketing techniques pay off — their return on investment (ROI) is negative. And a negative ROI (also called a net loss) is a very sad thing!

Here’s the funny thing: although ebook prices tend to be highly elastic (remember what I was talking about in #2 above?), there’s also a point of diminishing return, where in fact you are lowering the perceived value of the book more than the low price can make up for.

If you’re pricing that behemoth as if it were a short story, readers are going to wonder what’s wrong with it. And believe me, experienced readers have been around enough indie books to know that there can sometimes be a lot wrong: bad writing, bad editing, scam books that are really just paid ads, and much more.

Remember the red line in the KDP Pricing Support chart for my picture book above? Although the chart says I’ll sell more books at $0.99 than at $1.99, in fact, pricing the book at the lowest possible price signals low quality to the reader, so I won’t make back in revenue what I’ve made up in sales. The price has become inelastic at that point.

So once you’ve given yourself a range of possible prices… consider starting at the top.

6. Prices aren’t forever

Why start at the top?

Because ebook prices are completely flexible.

There’s no price printed into the barcode or onto the top of the back cover. [viii]

You can change your price as often as you like — so maybe go with Amazon’s suggested price, then adjust it up or down based on your actual sales, then adjust again based on what you learned by raising/lowering the price; rinse, repeat.

You can change your price every day if you’d like. I recommend you let the price settle long enough to develop some sort of trend, however. I often revisit my prices weekly over the first month or two, and then monthly after that. I look at the sales trend. I look at net revenue. Sometimes I shift my price up. Sometimes I shift down.

I do try to keep my prices rational across various titles, so all of the short stories in a genre are generally priced the same, for example — though if one of them is extremely popular, I might raise the price a dollar. Shh.

Now that you’ve settled on a price on Amazon, I suggest you use the same price everywhere — except Google, which will automatically discount your price 20%. I up the price at Google Play so that the discounted price is the same (or close) as everywhere else.

Why do that? Because the stores check each other’s prices and often they’ll match the lower price — or, in the case of Amazon, they’ll send you a nasty email saying they may pull the title if you don’t change their price to match the lowest. [ix]

And once you’ve settled on a price and hit that beautiful PUBLISH button… don’t think you’re done.

Now it’s time to market. [x]


[i] Minus the @#)$[email protected] “transport fee” of $0.15 per megabyte.
[ii] Though without the @#)$[email protected] “transport fee” of $0.15 per megabyte.
[iii] Note that there’s no y-axis. They don’t promise how many more you’ll sell at a particular price — just that you’ll sell more. 
[iv] A lovely holiday story beautifully illustrated by Linda Finch that would make a very nice gift, by the way!
[v] This isn’t true, for example, when you’re using a service such as CreateSpace, where they’re making money off of you for printing each book, even if your profit is next to nil.
[vi] The Thousand and One Nights, edited by Joseph Campbell, for Joseph Campbell Foundation.
[vii] Using something like 350 words/page, a standard publishing rule-of-thumb.
[viiii] Heck, there is no back cover! It’s funny how often I have to point that out to folks who haven’t worked with ebooks before.
[ix] Amazon used to price-match automatically, which was very nice. Over the second half of 2017, however, they seem to have stopped doing that for the most part. They may or may not pick the practice up again.
[x] Actually, I hope that you’ve been marketing all along. When asked what the best time to start marketing a book is, Seth Godin answered, “Three years before it comes out.” Gulp. (I sometimes feel as if, no matter what time I start marketing the book, it should have been three years before that.) If you’ve been hurrying straight to publication without giving a thought to how you’re going to let people know about your book and get them interested in buying it, you might want to take a breath before you hit the button.

 
Photo: bigstockphoto.com

tbd advanced publishing starter kit

26 Comments

  1. Lauren I. Ruiz

    Thanks! I’m wrapping up an e-book for those with body-focused repetitive behaviors (BFRBs)—I’m so excited! But the ideal price point has got me indecisive like never before! I appreciate your posts so much. I have some things to consider.

    Reply
  2. Fredrick Adehe

    Good and educative post. I feel like I know how i will price my ebook once i finish it. Thanks for the information.

    Reply
  3. Eric S. Raymond

    Thank you, this was the most concrete and helpful advice I’ve found on the topic.

    I think I may diverge from your typical case in two ways. First, my books are serious technical nonfiction; at least two of them have been used as college textbooks. Two, I’m a “name” author (or as close to one as you get writing computer books, anyway) with a back trail that includes an NYT bestseller.

    Does this change any of your advice about pricing?

    Reply
  4. Pablo Román Caballero

    Excellent article. Thank you for taking the time to share such valuable information with us. So far, $2.99 has been the sweet spot for my nonfiction ebooks.

    Reply
  5. Erainna

    I just stumbled upon this post and wanted to submit a question. After reading your article and the comments, albeit a year later, I wonder if Kindle Unlimited has helped/hurt the FREE pricing strategy. Do most people search Amazon for Free books with no intention of buying the second book in the series? Do Kindle Unlimited participants download Free books? Do you have any type of research or experience that could help answer those two questions? I’ve read other post and the answers vary greatly. Some say because KU customers want the most value for the $10 a month, they download only books that cost $5+. Or, books priced Free or .99 are from indies and aren’t worth the price due to past history of editing issues or storyline flaws. Your thoughts would be greatly appreciated.

    Reply
  6. Myra Larsen

    How does your information fit when a book contains multiple pictures of artwork, in color?

    I’d also like to see an article about traditional publishing costs and profits

    Reply
    • David Kudler

      Thanks for the question, Myra.

      Obviously, it depends on how I licensed the images, but in most cases, I don’t take the costs of the images at all into account in setting the price — because there is no cost in including them in the ebook (whether in black and white or in color) aside from Amazon’s notorious “transport fee” of $0.15/MB of total files size. (Check out my post on optimizing images for your ebook to see how to get that cost as low as possible.) There’s just the fixed cost of any licenses you may need to clear — but those really don’t effect the ideal price of your ebook, just how long it will take for the book to earn out the expenses involved in preparing it. If you raise the price to try to pay off the licenses faster, you may in fact slow the sales down so much that it will take longer to earn out!

      This is quite different from the calculus involved in including color images in a print book — where adding color immediately increases your production cost by two times or more. Adding grayscale images doesn’t directly effect the production cost of printing a book — you’re using the same ink for the images as you are for the text — but there is an increased cost in designing the book, and of course when you add images you’re increasing the page count, perhaps by quite a lot. Joel Friedlander is probably the best person to answer the question of how to plan for those costs.

      Reply
      • Ekpeno John

        Hi David.
        I want to publish my eBook on Amazon, please I need help because I’ve never done it before.

        The book and the designs are ready, just awaiting the book launch event. But I need it to be on a few Kindle for sale.

        Can you help me with that please?

        Reply
        • David Kudler

          Sure! Reach out to me at david (at) stillpointdigital (dot) com.

          Reply
  7. Chuck Bartok

    This is great information, thank you.
    I did not have any experience on what is ‘hot or not’ regarding ebook pricing last year.
    I just figured what I would pay for a well written 300-500 page novel in electronic form compared to Print Version.
    We sell our Paperbacks daily at $16.95-$18.95.
    So I thought $6.95-$8.95 would be a good ebook price.
    Guess it was a good choice.
    Sales have been brisk daily.
    Although paperback sales still surpass ebooks.
    Sort of figured that knowing our market.

    Reply
    • David Kudler

      Thanks, Chuck. Knowing your market is everything. ;-)

      Having said that, I do encourage you to experiment with your prices — and occasionally try dropping them for a promotion. You never know when something like that will spike sales; that leads to increased discoverability (due to better “ranking” on the various retailers’ sites), which can lead to nice long-term boost in sales even after the price has gone back up.

      Reply
      • Chuck Bartok

        Sorry I missed the response. I did set up a special of two in a series Special digital price on the website. Received well and sales are rewarding.
        Actually offered personalized signed paperbacks on the website for $10 more than on Amazon and Barnes and Noble and it really exploded. Just fulfilling orders is keeping one person busy.

        Reply
  8. Kate McPhail

    I have a fantasy book which is being printed through CreateSpace. They have a “required” price, which seems to be pretty high…my book is 100, 800 words (over 500 pages) and I have NO idea how to figure out how much I should sell it for. They are suggesting around $20. is that too much?

    Reply
  9. Dharma Kelleher

    When I try to use the KDP Pricing Tool, it doesn’t seem to produce any result. I just have the “loading circle” going round and round. I’ve tried to refresh a couple times. No change.

    Reply
    • Ruth Schwartz

      That’s been my experience lately as well. David, any ideas?

      Reply
      • David Kudler

        Just saw this, sorry, Ruth and Dharma!

        My best answer is…. try again. And if that doesn’t work, try another browser. :-(

        Reply
        • Dharma Kelleher

          I’ve tried Chrome and Firefox, which as a web developer are my go-to browsers. It’s the browser. It’s the tool. Maybe it only works on certain genres of books. Mine is a hardboiled LGBT thriller.

          Reply
          • Dharma Kelleher

            I meant it’s NOT the browser. It’s the tool.

          • David Kudler

            Dharma, sorry, I shouldn’t have assumed you wouldn’t have tried!

            Funny enough, I’m now getting the spinning circle. So there you go.

  10. Ian Anderson

    Good stuff Joel, shame the KDP Pricing Support only works for authors who’s primary market is amazon.com. I’m in Norway, but sell mostly through amazon.co.uk and the pricing support is greyed out for me :-(

    Anyhoo, Happy new year to you, looks like 2018 is lined up to be a great one!
    Cheers
    Ian

    Reply
  11. Michael W. Perry

    Thanks for the excellent advice about pricing. I’d add only one additional remark.

    Writers should be giving Amazon hell about reducing their author payments for ebooks prices over $9.99. There’s no business rationale for that. Those ebooks don’t cost any more to distribute. Amazon is simply being Amazon and seeking to control everything in and outside its business. It wants to tell us what our prices should be and alas, all too many authors lack the gumption to take on Amazon.

    I can offer two examples of ebooks that should be priced more that $9.99 with 70% royalties.

    Specialized ebooks for a limited audience. I give as an example a nursing text for the care of children with a rare illness. The cost of production might be high and the sales will be limited to those with a need. The editors may need to charge at least $20 to recoup their costs. Amazon’s miserly payments mean that have to charge about $40 to get the same return on their sales that they’d get by selling it for $20 on the iBookstore. That is sick, twisted, vile and yes, typically Amazon.

    2. Multivolume sets packaged as one. If someone has written a popular 10-volume fictional series that sells well at $4.95 a copy (almost $50 total), they should not be forced to sell it for $9.99 or get those ridiculously low author payments.

    We should also keep in mind why there is this 70% v. 35% distinction. Amazon was typically paying 35% for no more reason than it could get away with that. Then Apple announced that its iBookstore would pay 70%. That forced Amazon to raise their payments, although only grudgingly. Unlike Apple, Amazon only pays 70% over that narrow $2.99-9.99 window and in that range it includes an atrociously inflated $0.15 “download fee” that is virtually pure profit for Amazon.

    That’s a perfect illustration, I tell authors, that Amazon is not your friend. It wants to squeeze every penny it can out of your pocket. But for Apple, it’d be paying you $3.50 for each $9.99 ebook it sells rather than roughly $6-6.50, that 70% less the download fee forces it to pay. Amazon wants to screw you and only competition makes it behave rather erratically otherwise. Never deceive yourself about that.

    I often find it useful to ask myself, “If this were a high school, what role would this person or group be playing?” In the case of most authors, they seem best placed as members of what you might call the “Mousy Club”—meaning a club dedicated those willing being bullied, teased and mistreated without protest.

    By the way, that 70% payment from Apple was set far back when iTunes was announced and for Apple it was a break-even point. They neither lost nor made money on sales. Today, the cost of providing those huge server farms has come way down. Amazon, Apple and others could easily pay 80% to content creators and the breakeven point is probably close to 90%. Could authors benefit from an extra 10-20% income? Of course they could. Do they have enough backbone to demand it? No, not at all. They’re card-carrying members of that Mousy Club.

    –Michael W. Perry, medical writer

    Reply
    • David Kudler

      Michael, what you’re saying is all true. Unfortunately, we’re all struggling to wrestle with the 800-pound from Seattle!

      I just went through a wrestling match with Amazon over a book that currently sells 50,000 copies a year, consistently. They REALLY want the ebook of that title. Since sales of the hardcover account for over a quarter of my client’s revenue and we don’t want to eviscerate the print sales, I asked if I could get the 70% revenue for just that title. Again, this is a title that they are desperate for; they refused, and told me that in the years since KDP was first established, they’ve never granted such a waiver. Eesh.

      There have been some signs this week that Amazon’s main competitors plan to up their game in competing for a slice of the ebook pie, which may put us in a better position.

      Reply
    • Lawrence Hastings

      Yes, you are right in all the points regarding Amazon.

      For niches selling ebooks in Amazon, maybe a solution would be selling only by groups of chapters.

      Reply
    • Michael W. Perry

      Sharon, I have a quick and easy policy that seems to work well. I take the POD printing cost and multiply it by four. That takes into account the book’s length and seems to price it close to the market price for similar books while giving me about a 20-25% share of the retail price. And yes, I am also weird. I prefer even number prices over odd numbered prices. Faced with a split between $13.95 and $14.95, I opt for the latter.

      And for European pricing, don’t forget that there’s a VAT tax that’s taken out of your retail price not tacked on after the sale like our sales tax. You’ll need to raise that retail price accordingly or take a hefty bite of your income.

      By the way, that’s also true of ebook sales. EU taxes on books—print, digital and audio—are currently in a mess, with some categories being charged a full rate, typically 20-25%—and others discounted. Both the Kindle store and the iBookstore provide information on that so you can price accordingly.

      Reply

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