Something I learned about self-publishing… And why I had to increase the price of my first novel.
Ever since I began writing Mega-Burg I knew I wanted to self-publish it first as an e-book. The problem was that at the time I wanted to make it extremely cheap ($0.99) because of its length and to attract readers.
There is a problem however, with pricing your book so low, not only on the purely economic but also self-evaluating front.
But first, let’s crunch the numbers and see why $0.99 for any book on Amazon is a bad idea (especially if you use Kindle Direct Publishing to do so).
Amazon offers two tiers of Royalties, one which is 35% the other which is 70%. While there are certain requirements in order to go into one or the other category the primary one is price. If you want the 70% royalties you need to price your book at $2.99 minimum. Anything below that price will use the 35% royalties system.
While working on Mega-Burg I bought out a domain, worked on a site (which is still a lengthy process of editing and modifying), hired two different artists (one to work on the book cover, another to work on some Mega-Burg art) and then spent months writing my first book, second book (which is still a work in progress) and to write other short stories.
So I invested not just money, but also a lot of time and effort into my work (and some sleepless nights trying to figure out how my taxes worked).
If you invested a lot of time into your work you would want some of it to pay off (or at least cover your expenses). There are two ways of going about that. Have a low price to encourage larger sales, or have a higher price and rely on smaller sales that will still cover the costs.
So, hypothetically, let us say your goal was earning $100. How many books would you have to sell to earn that amount with the $0.99 and the $2.99 price tags?
In the case of of the “1$” book you get only 35% royalties, so out of that 1$ to you get only 35 cents. On top of that Amazon has to withhold some of your royalties for tax purposes (in my case that’s 10%) so out of that 35 cents I only get to “keep” 32 or 31 cents (depending on whether we round up or down). So, with every book selling for about 31 cents profit I would need to sell 323 books to reach that $100 goal. For a startup writer that might be hard to achieve without increasing costs from advertising, promotion, etc.
With the $2.99 price tag you get to keep 70% royalties, which means around $2.10 (or $2.09 to be exact). With the 10% withheld for tax purposes you earn $1.88 per book sale. (There is also a delivery fee, but for Mega Burg it was only 3 cents). So to reach that $100 goal you would in turn need to sell only 54 books. Something that is easier to achieve just through word of mouth.
Before I reached this decision I looked at what other publishers chose to do, namely how they price their books, and there is really no rule. Quality vs Quantity vs Price is a tough equilibrium to reach and here I found that different publishers and authors price their books in very varying fashions. Books that are about my length can cost as much as mine, sometimes more, while “Molochs” that are three or four times my size can be cheaper (going as low as the $0.99 we discussed). Most often though these books are on different promotions/sales and their actual price is much higher than what you see, simply because they are on Sale at the time.
So, let’s talk about the “Self-evaluating” part of price choosing. Here came a different problem, what if you set your price low from the get go? Your first book was dirt cheap? Well, if you published a second book and it was, more or less, of the same length but you think of higher quality, how would people react to a higher price? I can only speculate here but they might turn down the offer. If you look at examples of products around you price often means quality. Something that is of a higher price tends to be viewed as of higher quality (sometimes wrongly). Other times it’s the brand that dictates the price. Now, you can go about this by saying, “I do not really care about the money, I just want to publish my works”, that’s fine. But, if you are looking for a way to live off your writing you need to go into the center stage and present yourself in the best way possible. Not as a “Cheap Book Writer” but as an aspiring writer. Do not undersell yourself, but also do not swing the other way and “milk” your fans for every penny. Just like other writers and publishers you need to find that golden equilibrium which suits you and which you are feeling confident with.
Also, hold in mind, there is always room for putting your book on sale. Only because your book costs $2.99 doesn’t mean you cannot organise a $0.99 sale when you think that would help, and the higher price-cap helps you in that. If your book was already $0.99 how much lower could you get the price? At which point does the book stop being profitable at all because the royalties would not cover your expenses?
While I am far from being a professional writer (at least, just yet) I thought that sharing my thoughts and reasoning behind all of this would at least answer that question, and maybe help other writers decide how to price their books.
And I imagine that as I learn more about self-publishing I might reach other conclusions… but for now, this is where I stand.