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I have been looking at the size of the book and deciding that way.  The short stories and shorter novels I put $.99 on.  Then the longer novels, I raise to at least $2.99.

It seems like a lot of authors put $.99 on most of their books, thinking that the lower price would make it sell better. I don't have enough experience to know if this is true.

So how do you decide on the price for your book?
 

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It was an arbitrary decision,loosely based on file size comparison with other uploads. :)
 
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This is how I work.  Please note that I actually run a micropress with recurring expenses, and therefore can’t wait around for a year for a product to make money.  I use the three month turnaround time because that is essentially what I need to do in order to pay for the next project.  This all assumes you are publishing to actually make money and not just as a hobby.

1. Calculate the actual expenses for the product (editing, art, ISBN, etc)
2. Add 15% margin to cover indirect costs associated with business (website, brand building, promotions, etc)
3. Look at the industry norms and determine which price point will recover my expenses in a three month period
4. Take into consideration how you intend to market the book

So let’s say you spent $500 in direct expenses (editing, proofreading, cover art, formatting, etc).  If you add a 15% margin, your total expenses becomes $575.

The industry norms for genre work range from .99 to around $7.99.  Assuming you are only selling through Amazon, that means at $2.99 or above you get 70%, below that you get 25%.

At $7.99, you need to sell 103 copies in three months to reclaim your expenses
At $6.99, you need to sell 118 copies
At $5.99, you need to sell 138 copies
At $4.99, you need to sell 165 copies
At $3.99, you need to sell 210 copies
At $2.99, you need to sell 274 copies
At 1.99, you need to sell 821 copies
At .99, you need to sell 1,643 copies

Now the next part is to determine how you intend to market.  If your primary market is going to be spamming KB, for example, then that is going to force you to look at lower prices because the particular marketplace at KB leans towards the lower end of the spectrum.  If your primary market is people accustomed to paying $40 for hardcovers who just now discovered digital books, you would swing toward the higher end of the spectrum because even at $7.99 you are still cheaper than mainstream authors with digital books priced at $10 or more.  Or, if you already have a strong build in marketplace from some other endeavor; you might hit a price somewhere in between. 

So you pick the price point that most closely matches the expectations of the group you intend to target that also recovers your expenses in a three month period. 

If you are planning on releasing a second book in the next two or three months, you may consider using the first book as a loss leader (i.e. deliberately selling it at a lower price) in order to build a follow-up audience. 

For example, let’s assume you would assume you can sell 300 copies in three months, so you would normally select the $2.99 price.  But, you know you have a second book almost ready and will be releasing it in three months.  You also figure that book should sell about 300 copies as well.  (For a total of $1,256 over six months)

In order to build an audience, you decide to sell the first book at 99 cents.  You sell the initial 300 you expected, but also pick up an additional 600 readers who are attracted to the 99 cent price.  If half of those new readers buy your second book at $2.99, you increase you overall profits ($1,569 over six months)  You take a loss on the first book in order to increase profits on the second. 

BUT if it is going to be a year (or two) before the next book, then this idea could backfire because the chance of someone remembering you a year from now is slim to none. 

Now some people will argue that three months is too short, and if you don’t have recurring expenses there may be a tendency to allow that period to stretch out.  But keep something in mind, money tied up waiting for your book to sell is money NOT doing something else.  The longer it takes you to recover your expenses, the less money you have to invest in other things.  If you have $500 tied up in your book, that is $500 not sitting in a savings account drawing interest.  That is $500 not going toward credit card debt.  That is $500 not available for a family vacation or Christmas gifts.  So you really need to consider what your actual tolerance threshold is for your money to be tied up with no return. 
 

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My book is nonfiction (historical cookbook), so this may not be relevant, but I ran searches on Amazon looking for similar books (there weren't many), but those I could find were priced at $5 or higher. My book doesn't have photos inside and it's my first indie book (I used to write nonfiction for a publisher.) I decided that my book has a limited market but that those who wanted it would pay more than the 99 cents because there is no 99 cent alternative. Finally decided to price it at $2.99 to hit the high royalty rate and still be about half the price of the other similar books. Book has only been out a week, so I don't know whether my analysis was any good yet. This book is a full length book, but I plan to bring out 3 or 4 shorter  cookbooks to have several titles in one genre and to price the shorter ones at 99 cents to try and grab up some readers. Hope that is at least a bit helpful.
 

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I looked at what other books in similar genres were doing, and what I find myself paying for a book.  I also considered the fact that price is one more piece of information about the book, when a reader looks at your list of books.  So I decided to price consistently to length so that they would be less confused about whether they were getting a novel or a set of short stories or a novella.  (When I want to put something "on sale" I put it at Free, at least for now.)

Then I tested the price differences and discovered that for me, for now, price doesn't make a lot of difference in sales.  My books are off-genre and don't sell as impulse buys.

So then I picked my price range for this year:

99 cents - novelette or short collection (7-15k)
1.95 - novella or screenplay (15-40k)
2.99 - short novel (40-50k) (Though I just don't use this one much -- thining of making it for longer novellas)
3.95 - novel (50-85k)
4.95 - big novel or omnibus (85-120k)
5.95 - if I ever do a bigger omnibus over 120k

I'll be revisiting it all next year.  (For one thing, even if these are the very best prices for now, the more novels I have and the more my books are out there, the more it all changes how marketing and pricing works.)

Camille
 

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I'm a price taker. I take the prevailing price for similar books. The market doesn't give a hoot about me or my costs, so I simply try to maximize revenue. Genre best selling and best rated lists are a good guide. Much is simply a guess lacking good data.
 

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I've seen all different types of marketing strategies posted here. Here are some of the ideas I've noted from others:

1. Price by the word count.

Free (non-Amazon) to $0.99 = short stories, novelettes and small collections (15,000 words and under). With free the hope is that Amazon will price-match so you can increase exposure to your paid works.
$1.99 = bigger short story collections and novellas (15,000 - 39,999 words). Don't see many pricing between $1.00-$2.98 because of the 35% commission I'm guessing(?).
$2.99+ = genre novels (40,000+ words)
$3.99+ = epic novels (100,000+ words)

2. Price as series starter or first novel at $0.99 -- loss leader as Julie described above to get more readers.
3. Choose $0.99 for everything. Hoping for greater reader exposure.
4. Price one book in each genre at $0.99 and the rest at $2.99 or above.
5. Launch with lower price ($0.99) and then raise the price after a set period of time to $2.99 or above.
6. Discount titles in a rotational basis. Amazon will automatically do this for some (all?) authors it seems, so this might not be necessary from a manual standpoint unless the author wants to run a special promotion or something.

There are more.
 

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My highly scientific method (which is to say that it's a total ass-pull) is to price my first book at $.99 as an introduction to my series. I'll probably always leave it priced so low to entice the people who are reluctant to try indies at a higher price point. All the rest of my books will be priced $.99 for short stories and $2.99 for novels and short story collections.

If I ever start selling like crazy, then I'll increase my novels to $4.99 which I feel is what a novel ought to be worth anyway. As far as I can tell, once you start selling- really selling- you keep selling because at that point you're chugging along mostly based on word of mouth and people will pay more to read the book everyone is talking about than some unknown author. Obviously, I could be totally wrong about all of it, but that's what I'm going to try.
 

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Bards and Sages (Julie) said:
This is how I work. Please note that I actually run a micropress with recurring expenses, and therefore can't wait around for a year for a product to make money. I use the three month turnaround time because that is essentially what I need to do in order to pay for the next project. This all assumes you are publishing to actually make money and not just as a hobby.

1. Calculate the actual expenses for the product (editing, art, ISBN, etc)
2. Add 15% margin to cover indirect costs associated with business (website, brand building, promotions, etc)
3. Look at the industry norms and determine which price point will recover my expenses in a three month period
4. Take into consideration how you intend to market the book

So let's say you spent $500 in direct expenses (editing, proofreading, cover art, formatting, etc). If you add a 15% margin, your total expenses becomes $575.

The industry norms for genre work range from .99 to around $7.99. Assuming you are only selling through Amazon, that means at $2.99 or above you get 70%, below that you get 25%.

At $7.99, you need to sell 103 copies in three months to reclaim your expenses
At $6.99, you need to sell 118 copies
At $5.99, you need to sell 138 copies
At $4.99, you need to sell 165 copies
At $3.99, you need to sell 210 copies
At $2.99, you need to sell 274 copies
At 1.99, you need to sell 821 copies
At .99, you need to sell 1,643 copies

Now the next part is to determine how you intend to market. If your primary market is going to be spamming KB, for example, then that is going to force you to look at lower prices because the particular marketplace at KB leans towards the lower end of the spectrum. If your primary market is people accustomed to paying $40 for hardcovers who just now discovered digital books, you would swing toward the higher end of the spectrum because even at $7.99 you are still cheaper than mainstream authors with digital books priced at $10 or more. Or, if you already have a strong build in marketplace from some other endeavor; you might hit a price somewhere in between.

So you pick the price point that most closely matches the expectations of the group you intend to target that also recovers your expenses in a three month period.

If you are planning on releasing a second book in the next two or three months, you may consider using the first book as a loss leader (i.e. deliberately selling it at a lower price) in order to build a follow-up audience.

For example, let's assume you would assume you can sell 300 copies in three months, so you would normally select the $2.99 price. But, you know you have a second book almost ready and will be releasing it in three months. You also figure that book should sell about 300 copies as well. (For a total of $1,256 over six months)

In order to build an audience, you decide to sell the first book at 99 cents. You sell the initial 300 you expected, but also pick up an additional 600 readers who are attracted to the 99 cent price. If half of those new readers buy your second book at $2.99, you increase you overall profits ($1,569 over six months) You take a loss on the first book in order to increase profits on the second.

BUT if it is going to be a year (or two) before the next book, then this idea could backfire because the chance of someone remembering you a year from now is slim to none.

Now some people will argue that three months is too short, and if you don't have recurring expenses there may be a tendency to allow that period to stretch out. But keep something in mind, money tied up waiting for your book to sell is money NOT doing something else. The longer it takes you to recover your expenses, the less money you have to invest in other things. If you have $500 tied up in your book, that is $500 not sitting in a savings account drawing interest. That is $500 not going toward credit card debt. That is $500 not available for a family vacation or Christmas gifts. So you really need to consider what your actual tolerance threshold is for your money to be tied up with no return.
Julie, I just wanted to say thanks so much for eplaining your method. :)
 

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Bards and Sages (Julie) said:
This is how I work. Please note that I actually run a micropress with recurring expenses, and therefore can't wait around for a year for a product to make money. I use the three month turnaround time because that is essentially what I need to do in order to pay for the next project. This all assumes you are publishing to actually make money and not just as a hobby.

1. Calculate the actual expenses for the product (editing, art, ISBN, etc)
2. Add 15% margin to cover indirect costs associated with business (website, brand building, promotions, etc)
3. Look at the industry norms and determine which price point will recover my expenses in a three month period
4. Take into consideration how you intend to market the book

So let's say you spent $500 in direct expenses (editing, proofreading, cover art, formatting, etc). If you add a 15% margin, your total expenses becomes $575.

The industry norms for genre work range from .99 to around $7.99. Assuming you are only selling through Amazon, that means at $2.99 or above you get 70%, below that you get 25%.

At $7.99, you need to sell 103 copies in three months to reclaim your expenses
At $6.99, you need to sell 118 copies
At $5.99, you need to sell 138 copies
At $4.99, you need to sell 165 copies
At $3.99, you need to sell 210 copies
At $2.99, you need to sell 274 copies
At 1.99, you need to sell 821 copies
At .99, you need to sell 1,643 copies

Now the next part is to determine how you intend to market. If your primary market is going to be spamming KB, for example, then that is going to force you to look at lower prices because the particular marketplace at KB leans towards the lower end of the spectrum. If your primary market is people accustomed to paying $40 for hardcovers who just now discovered digital books, you would swing toward the higher end of the spectrum because even at $7.99 you are still cheaper than mainstream authors with digital books priced at $10 or more. Or, if you already have a strong build in marketplace from some other endeavor; you might hit a price somewhere in between.

So you pick the price point that most closely matches the expectations of the group you intend to target that also recovers your expenses in a three month period.

If you are planning on releasing a second book in the next two or three months, you may consider using the first book as a loss leader (i.e. deliberately selling it at a lower price) in order to build a follow-up audience.

For example, let's assume you would assume you can sell 300 copies in three months, so you would normally select the $2.99 price. But, you know you have a second book almost ready and will be releasing it in three months. You also figure that book should sell about 300 copies as well. (For a total of $1,256 over six months)

In order to build an audience, you decide to sell the first book at 99 cents. You sell the initial 300 you expected, but also pick up an additional 600 readers who are attracted to the 99 cent price. If half of those new readers buy your second book at $2.99, you increase you overall profits ($1,569 over six months) You take a loss on the first book in order to increase profits on the second.

BUT if it is going to be a year (or two) before the next book, then this idea could backfire because the chance of someone remembering you a year from now is slim to none.

Now some people will argue that three months is too short, and if you don't have recurring expenses there may be a tendency to allow that period to stretch out. But keep something in mind, money tied up waiting for your book to sell is money NOT doing something else. The longer it takes you to recover your expenses, the less money you have to invest in other things. If you have $500 tied up in your book, that is $500 not sitting in a savings account drawing interest. That is $500 not going toward credit card debt. That is $500 not available for a family vacation or Christmas gifts. So you really need to consider what your actual tolerance threshold is for your money to be tied up with no return.
EXCELLENT POST! :)
 

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I've reexamined my pricing strategy recently. At first it was like Daringnovelist and based around the divisions in book length: short story, novelette, novella, novel (short), and novel long. However, I decided to go with another method that is still based on word length, but just not on the above divisions.

100K - 5.99

80K - 4.99

60K - 3.99

40K - 2.99

20K - 1.99

> 10K & < 20K - .99

< 10K - submit to magazines and e-zines

I may change it again in the future, but for the moment I'm comfortable with those numbers.
 

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Ann Chambers said:
My book is nonfiction (historical cookbook), so this may not be relevant, but I ran searches on Amazon looking for similar books (there weren't many), but those I could find were priced at $5 or higher. My book doesn't have photos inside and it's my first indie book (I used to write nonfiction for a publisher.) I decided that my book has a limited market but that those who wanted it would pay more than the 99 cents because there is no 99 cent alternative. Finally decided to price it at $2.99 to hit the high royalty rate and still be about half the price of the other similar books.
That's almost the exact same way I set mine which is also non-fiction. I initially priced mine at $5 by comparing it to similar books. I had absolutely no idea what I was doing when my book uploaded. I just picked a price by running a search for military memoirs in the Kindle store. It's been everywhere from there down to $.99 since then. It has sold about the same at all of them, actually.

I finally settled on $2.99 last month. I think that's a fair price. I actually still think $5 is a fair price, but I found out a lot of people won't pay that for an unknown author. If I gather a big enough audience, it might go back there. That's pretty much the minimum for books similar to it.

My situation is a bit different from a lot of people. I'm not worried about a next book. I don't even know if there will be one. It does me almost no good at this point to attract readers with a give-away price (which I think .99 is for a full length book). There's no other project planned. I'm not creating a brand. I don't really have any interest in fiction and writing history requires more research than I can do right now. I don't consider myself an author. I'm just a guy who lived an interesting life who knows how to write.

I said what I wanted to say with this one.

If I had another book in the works, I still wouldn't price this one at $.99. The new one would be. I might write some history or historical fiction in the future if the urge hits me. That's where the introductory price will be. My market is the market that's used to paying twenty or thirty dollars for a hardback. My book is a steal at $2.99.

The pricing probably depends mostly on your market like some others said. Hopefully that helps a little.
 

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A.R. Williams said:
I've reexamined my pricing strategy recently. At first it was like Daringnovelist and based around the divisions in book length: short story, novelette, novella, novel (short), and novel long. However, I decided to go with another method that is still based on word length, but just not on the above divisions.

100K - 5.99
80K - 4.99
60K - 3.99
40K - 2.99
20K - 1.99
> 10K & < 20K - .99
< 10K - submit to magazines and e-zines

I may change it again in the future, but for the moment I'm comfortable with those numbers.
I've been thinking about changing the divisions some on mine, but not for a while yet. I like your divisions. (I'm assuming those are the base divisions -- that that a 30k novella will be in the 1.99 range?) I need more work out there before I bother to fiddle more with prices, though.

Camille
 

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I worked under a few (quite possibly mistaken) assumptions going into this:
1) Fantasy readers tend to be "more hardcore" and will pay more than some other groups
2) a lot of the 99c-2.99 books are reasonably short, whereas fantasy books are usually quite a bit longer (mine is 150k)
3) Lowballing the book might actually turn off this audience by screaming "indie!"
4) I'm in my own demographic and I've never even looked at the price of a paperback before buying it. It's the cost of one lunch at most - who cares? I pay more than that to see a movie that will last 90min and probably stink.

I have no idea how many, if any, of those assumptions are true, but I thought 4.99 was a good compromise that was cheaper than the $7-10 traditional books but also didn't scream "this is a short story with no meat to it." I figured that in a few months I'll drop it to 3.99 or even 2.99 when I'm closer to finishing the sequel.

It remains to be seen if this was erroneous or not on my part. Reading some stuff here, it very well may be. But just shy of a month in I've hit 75 sales with only 1 book up...I'm not really sure what to compare that to, but it seems decent given the few numbers I've seen thrown around here. Maybe I am costing myself readers by not going cheaper, or maybe those extra readers wouldn't be worth it (not the type to finish what they buy or talk about it to others). We shall see!

I'm willing to be patient at least for now and focus on writing rather than getting too caught up in the pricing metagame. I'll do that more later.  8)
 

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Amera: Robin Sullivan has posted before about how pricing her husband's fantasy novels higher was good for them. Her trials at lower prices did not increase sales enough to make up for revenue loss.  Sounds to me like your thinking is on the right track, and your sales are good. Stay the course, imho.

Camille
 

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Amera said:
I worked under a few (quite possibly mistaken) assumptions going into this:
1) Fantasy readers tend to be "more hardcore" and will pay more than some other groups
2) a lot of the 99c-2.99 books are reasonably short, whereas fantasy books are usually quite a bit longer (mine is 150k)
3) Lowballing the book might actually turn off this audience by screaming "indie!"
4) I'm in my own demographic and I've never even looked at the price of a paperback before buying it. It's the cost of one lunch at most - who cares? I pay more than that to see a movie that will last 90min and probably stink.

I have no idea how many, if any, of those assumptions are true, but I thought 4.99 was a good compromise that was cheaper than the $7-10 traditional books but also didn't scream "this is a short story with no meat to it." I figured that in a few months I'll drop it to 3.99 or even 2.99 when I'm closer to finishing the sequel.

It remains to be seen if this was erroneous or not on my part. Reading some stuff here, it very well may be. But just shy of a month in I've hit 75 sales with only 1 book up...I'm not really sure what to compare that to, but it seems decent given the few numbers I've seen thrown around here. Maybe I am costing myself readers by not going cheaper, or maybe those extra readers wouldn't be worth it (not the type to finish what they buy or talk about it to others). We shall see!

I'm willing to be patient at least for now and focus on writing rather than getting too caught up in the pricing metagame. I'll do that more later. 8)
I'm a believer in $4.99 speculative fiction novels IF (and this is a big if) you have a lot going for you in other ways. For example, Michael J Sullivan had his wife do a lot of promotion for him. Nathan Lowell also had Robin's help, but even more importantly he had a huge following from podcasting his work. So if you have a big audience or you have outstanding marketing going for you, then pricing around $4.99 and being patient might be a solid strategy.

If you don't have those things (or something equivalent) going for you, then some 99 cents and/or $2.99 works are a good way to attract more readers to you.
 

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Add to my above comment that another way to have a big something going for you is to have a big series. Once you have 4 or more books available in a series, that alone will help you sell more books.
 
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