Thursday, January 07, 2016

Indie Publishing Paths: What’s Your Pricing Plan? Part Two

By Jami Gold, @JamiGold

Part of the Indie Authors Series

Hopefully, we all know by now that there’s not one single path to success for an indie author. We’ve seen other self-published authors try different approaches and find success. So while there might be wrong choices (publishing unedited work, for example), we can choose from many right options.

Previous posts in this Indie Publishing Paths series have covered the steps we should go through to decide on the options that will best work for us. We first need to figure out our goals and priorities. Then once we’re ready to put our book up for sale, we need to decide on the where (such as whether we use a distributor or we sell direct through a retailer or go exclusive with Amazon’s KDP Select), the when (whether we delay, use a preorder, or go for immediate sales), and the how much (whether we price high, in the middle, or low).

Last time, we looked into why we might want to price our book higher than the normal ebook sweet spot, right in the middle of the normal ebook prices, or lower than that sweet spot. As we mentioned before, there are valid reasons for each of those options. Today, we’re going to continue our discussion of what to keep in mind for our how much decision, specifically the pros and cons of pricing low.

A Quick Review: Why We Might Want to Price Our Book Low

There are several reasons we might want to price our book below the ebook “sweet spot.” We might:
  • be running a short-term promotion (preorder sale or other discount period)
  • prioritize gaining readership over income
  • think lower ebook prices look more attractive (especially to new readers)
  • be a debut author or not have a platform for attracting readers
  • have other books priced higher for providing income
  • hope for more sales to lead to higher visibility
  • be able to wait very long-term for income
  • decide on long-term or series-wide strategies (priorities are spread over a series, with some books focused on increasing readership and others prioritizing income)
  • struggle with low author self-esteem/high self-doubt

Obviously, some of those are positive reasons—meaning that our pricing strategy is part of our long-term plans—and some of those reasons are less positive. If we want our pricing decisions to be based on business reasons, making choices based on self-doubt or low self-esteem might be short-sighted and/or missing the point.

But let’s focus on those positive, business-focused reasons…

Are We Thinking Like a Business-Person?

Last time, we said that we have to start first by reviewing our goals and priorities (as we discussed in the first post of this series). The reason is because if we decide to approach our writing with a business mindset (or somewhat of a business mindset), we should have a good business reason for undercutting our prices.

If we’re acting like an entrepreneur, we shouldn’t just undercharge for our products because someone said so, or because we see others doing it, or just because we’re making decisions willy-nilly. In other words, unless we’re simply charging less because we don’t care about income at all, we should have a strategy that takes advantage of the pros of lower prices.

Pricing Strategy = What Do You Want to Accomplish? And How?

Before deciding to price low, we should know:
  • Why are we willing to undercharge for our work?
  • What are we trying to accomplish?
  • How do we plan to accomplish it?

Until we can answer those questions, we won’t know if our plan for how to make that accomplishment happen is feasible.

Summing up those Quick Review bullets above into business terms, some of the possible reasons we’d price our book low include:
  • using our low-priced book as a “loss leader” for our other books,
  • hoping our low price leads to more sales, or
  • hoping our low price leads to more exposure and/or better rankings. 

Example: Book One of a Series Designed as Loss Leader

For example, we might decide to price Book One of our series low as a “loss leader.” Stores often advertise products on sale for below cost with the goal to get shoppers into the store, where they’ll hopefully buy other normally priced products to make up the difference.

Similarly, authors can price the first story of a series low to attract as many readers as possible with the hope they’ll check out the rest of the series (which is priced normally). However, just as stores have their aisles arranged to make shoppers pass by other products to find the loss leaders, we have to make sure our plan includes the details for how we’re going to lead those readers to our other books:
  • Does our low-priced book include links to the other books in the series?
  • Does it include a blurb, cover image, and/or excerpt for the next book?
  • Is the book a cliffhanger or part of a serial, and readers need Book Two to continue the story?
  • Do we direct readers to sign up for our newsletter to keep them as readers?

We also have to make sure we’re putting out our best effort with that loss leader or no one will stick around to learn about those other books:
  • Do we have a plan for how to get visibility on that loss leader? (Low pricing alone won’t make it popular when so many other authors price low as well.)
  • Is our low-priced book still high enough quality to impress readers (professional cover and editing, etc.)? 

Example: Non-Series Book Designed for More Sales

On the other hand, if our low-priced book isn’t part of a series (or if we have no backlist of other books at all) that we can leverage for other sales, we might have other reasons and strategies for pricing low. We might think we can sell more books at a cheaper price and make up the math difference with just this one book.

Or we might think we can sell more of a low-priced book simply because from a potential reader’s perspective, a low-priced book is less of a risk. Readers might be willing to give an unknown author a try when the price is only $0.99, whereas a higher-priced book might see lower sales just because of the risk factor.

However, pricing a book at $0.99 at Amazon results in a lower royalty percentage than the straight two-dollar difference of a book priced at $2.99. (The Amazon royalty percentage for authors is 35% at $0.99-$1.99 versus 70% at $2.99-$9.99.) So the math between a $0.99 and a $2.99 ebook works out to a 1:5 to 1:6 ratio (depending on delivery fees, etc.).

In English… *smile* That means for every 1 book sale at $2.99 at Amazon, we’d have to sell at least 5 books at $0.99 to make up the difference. So if we think we could sell 10 books a day at $2.99, we’d need to sell 50+ books a day at $0.99 to come out ahead.

Will our story be 5-6 times more appealing at that lower price? Maybe. That’s the whole purpose of temporary sales, after all. But the appeal of a low price might decrease over a longer term, so we’d have to be prepared to reexamine our strategy over time.

Example: Temporary Price Reduction Designed for Exposure

Many, many authors temporarily reduce the price of their book for a sale or promotion. The pricing strategies we might take advantage of for a short-term situation might be very different from our long-term choices.

Depending on the sale price, we might be using our story as a loss leader, as a lure for more sales, and/or for the exposure that might come from the better ranking of a book on sale. We’ve already talked about the first two reasons, but let’s touch on the last one, which can act as an amplifier to the other reasons.

The higher our book’s ranking on Amazon’s Kindle Store, the more potential readers who are simply browsing the site will see our book (and thus potentially lead to even more sales). The uber-popular ebooks-on-sale promotion vehicle BookBub often leads to so many sales that a book’s ranking will improve enough to hold onto its high ranking for days or weeks—even after the promotion ends and the price returns to normal.

So the exposure that can come from a sale price might improve our ranking, which could then lead to more downloads introducing our stories to new readers (loss leader) and/or could lead to more sales overall. However, like the loss leader disclaimers above, a sale alone won’t be enough to attract attention. We’d need a plan to get the word out, such as a BookBub ad or other promotional strategies.

Depending on our goals, we also might make different choices for how long our sale price lasts or even what day of the week we start our sale. This article by BookBub explores some of the analysis they’ve done on the best strategies for increasing income (more sales), marketing a book series (loss leader), or hitting a bestseller list (exposure/ranking).

What about a Freebie?

Obviously, with a freebie, we won’t make any money on the distribution of our book. Because of this, the only business reason for pricing our book as free is if we have similar long-term plans as mentioned above for a loss leader. More “sales” of a freebie don’t mean anything, as more of zero added to zero is still zero. *smile*

Instead, our “what do we want to accomplish?” answers would typically be:
  • introduce new readers to our other works and/or
  • interest new readers enough that they sign up for our newsletter.

Let’s talk more about that second reason, as it’s even more convoluted than the loss-leader strategy…

If we have only one book for sale, we can’t use a freebie as a loss leader, as there’s nothing else to lead readers to. Instead, the best we can do is lead readers to sign up for our newsletter so they’ll hear about our future stories. But the payoff in that case is iffy-er. We’d want to ask ourselves if the potential of having readers sign up for our newsletter, where they might buy our future works we tell them about, is worth the loss of income from a freebie.

Whether we go with a freebie or a lower-priced book, we also run the risk of giving readers the impression that our work isn’t worth more money. While many readers download freebies left and right, some readers avoid free and $0.99 books, assuming them to be crap. In addition to that potential issue, freebies come with other risks that we’ll cover next month. *smile*

So how should we decide? As author Bree Bridges says:
“Do whatever works for you. .... Don’t stress out trying to figure out which plan Works the Best. Because the answer is: none of them for everyone all the time.
Do what works for you. Today. And for the love of God, try to figure out why it’s working. And when it stops working (and it will stop working) try to figure out why that happened, too. And each time you have to adapt, you’ll do it with less hesitation and more confidence.”
Join me next month when we dig deeper into the pros and cons of offering a freebie in Indie Publishing Paths: What’s Your Pricing Plan? Part Three (The Freebie Option). Until then, let me know if you have any questions in the comments!

After escaping Area 51 armed only with a ukulele, Jami Gold moved to Arizona and decided to become a writer, where she could put her talent for making up stuff to good use. Fortunately, her muse, an arrogant male who delights in causing her to sound as insane as possible, rewards her with unique and rich story ideas.

Fueled by chocolate, she writes paranormal romance and urban fantasy tales that range from dark to humorous, but one thing remains the same: Normal need not apply. Just ask her family—and zombie cat.

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About Unintended Guardian, the free short story introduction to The Mythos Legacy:

A shapeshifting gryphon cursed to eternal darkness…

Sunlight shouldn’t be deadly to Griff Cyrus. Determined to break his curse, he follows an oracle’s bizarre instructions to have a magical package shipped to his apartment. Since when do brown trucks deliver mystical cures?

A lonely woman craving the spice of life…

Kala Kaneko’s social life couldn’t be more bland. When a strange parcel arrives at her door by mistake, she seizes the excuse to introduce herself to the intended recipient, her mysterious neighbor.

Fate has a twisted sense of humor…

Griff expects the package to free him from the curse, but opening the box unleashes a mythical creature bent on Kala’s death. Yet if Griff follows his instincts to protect her, he could sacrifice his last chance at freedom.

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  1. One thing I would love to see you tackle Jami is how a increasingly robust "sale climate" may be contributing to the devaluation of books/writing.

    This is a tough one for all writers, because while individually we can (and should) consider lower pricing strategies in exchange for exposure, as a whole, authors may be helping to alter the perception of value. Discount services are becoming more prolific, 10-book 99 cent boxed sets are being used to hit the bestseller lists and perma-free lost leaders all may be training many readers to expect to get all their books on sale (or even for noting).

    On the other end of this we have agency pricing altering purchasing habits by over-pricing ebooks to drive people to buy print instead so they feel at least they are getting a physical product for the price.

    I'm not an expert, but from my view, all of these things appear to be changing how many people look at trading money for stories. It's something for us all to think about--is this a problem? Is this something where we need to weigh the wide angle repercussions? Is there a line we should draw between what is good for us and our books, vs. what may be good for the industry as a whole? I don't have the answers, but I bet this would make a good discussion.

    1. Hi Angela,

      I agree that there's a risk of overall devaluation when a big chunk of the industry decides to price low. Like you, I don't know what (if anything) can be done about that. :/

      It seems like I've seen discussions of the topic elsewhere on blogs, but of course I can't think of *where* right now. LOL!

      As you mentioned though, when we (as readers) can get more than enough books to fill our to-be-read pile just from the freebies or 99 cents-ers, do we stop buying regularly priced books? I don't know. :)

      Going from my own experience, however, while the lower prices work great on me for getting me to try an unknown author, once I know I like their work, I'm happy to pay normal prices. (And I'm likely to put off reading those unknown others to binge on the other books by an author I value.)

      There's definitely some psychology at play here. :) But once I know an author really appeals to me, I'll pay more to avoid the wheat/chaff issue. LOL!

      It would be interesting to see of others feel differently or have a different take on the matter. Thanks for the comment!

    2. I've also seen this discussed recently and I do think it's a valid point. Personally, I price my short stories and novellas at $.99 to $1.99, but my novels are full price (between $3.99 and $5.99 for ebook and $10-$15 for print).

      As a reader I get very annoyed when I see a book I'd like to read then realize it's under 10K words and $6.99. 10K words is just over an hour's worth of reading for me. If I'm paying $6.99 I expect to be reading for at least 3-4 hours.

      I think it's a similar problem to the one the video game industry, as well as the movie industry, is having. Businesses give consumers something of value. When that good/service is basically an experience that requires time spent by the consumer, how do we know they are going to feel they got their 'value' in the transaction?

      Short answer: we don't. Until the reviews come in.

      But we cannot devalue ourselves and the time we spend crafting these stories. Hopefully the market will achieve balance though it will probably take a while.

    3. Hi Davonne,

      Absolutely. I can't imagine charging that much ($6.99?) for short stories. *shakes head*

      Overcharging won't help us get our work into the hands of readers, at least not without risking many unhappy reviews. :/ As you said, it will probably take a while for the balance to work itself out. Thanks for sharing!

  2. Great insights, Jami! Thanks!
    As I read part 2, I found myself thinking I usually pick a first in a series to price low for all of the reasons you listed. As you stated previously, I just feel it's easier for a new reader to take a chance at less of an investment, so I'm willing to price lower for 2 of my 6 books.

    1. Hi Emerald, Exactly! From a reader's perspective, a lower price can sometimes counteract the risk of investing time reading a new author. :)

      I've also seen a post from BookBub about how discounts on first books in a series tend to get more interest from readers than discounts for later books. Many readers don't like starting in the middle of a series (I know I don't).

      So our pricing choices for one book in our series don't have to match our choices for the others. Thanks for bringing that up so I could reiterate that point! :)

  3. Thank you again, Jamie, for offering detailed advice. Another post I'll be adding to my Evernote file. Thank you, too, Janis for having Jamie over here. :-)

    1. Hi Tracy,

      These posts are my brain dump. LOL! I hope they're helpful. :)

  4. Awesome brain dumps, Jamie! Thanks for making me chuckle. :-)