Some Thoughts on E-book Pricing

It is now one week shy of a year since I got into this e-book racket, and lately I’ve been thinking a little bit about my journey so far.  It was the last week in November 2010 that I uploaded my first book, No Cure for the Broken Hearted, with an initial price of just .99 cents.

I’ve learned a lot in the past year, and seen plenty of online debates on what the “sweet spot” for Indie book pricing might be.   When I originally put my book for sale, it seemed that most independent authors were charging 2.99 for their books.  Amazon encourages this as a price minimum by doubling the royalty rate at that price.  Any book below $2.99 earns a 35 percent royalty.  Anything above earns 70 percent.

It seemed to me, from reading the online forums, that a surprising number of independent authors were making a decent living, mostly at that $2.99 price, and after a few weeks I raised mine as well.  In the meantime I saw authors bemoaning the “race to the bottom” on e-book pricing.  More and more authors, it seemed, were choosing the .99 cent price and sticking to it as a long-term strategy.  Fierce competition among authors was driving prices lower.  After my own sales stalled out, I too ended up going back to the lower price.  Only then did my sales recover, and I ended up selling over 25,000 copies.

When my second book, Sweet Ophelia, came out, I tried $2.99 right out of the gate.  Surely people who bought my first book and liked it would buy my second, right?  Well, not necessarily.  After an initial burst from friends and family, sales completely dried up.  Even after lowering the book to .99 cents I was only selling about one copy per week!  This went on for nearly two excruciating months.

For independent authors like myself, Amazon makes .99 cents the minimum price point.  Some writers, however, figured out how to game the system.  If you price your book for free on a competing site, Amazon reserves the right to “price match.”  So put your book free on iTunes, then have a few friends write to Amazon to tell them about the lower price, and “bingo,” your price goes to free on Amazon.

This has become the latest rage among independent authors.  The “race to the bottom” on e-book pricing has gone from $2.99 to .99 cents, all the way to free.  I, too, went this route with Sweet Ophelia when it wasn’t selling, and the strategy did work wonders for me.  Suddenly your book starts showing up on bestseller lists, and “also bought” lists, and in a little over a week I had about 45,000 free downloads.  When I went back to paid I sold about 1,500 copies in the first week.

Now I’m not sure what to make of all of this, except that the competition is indeed fierce, and growing.  More and more authors are uploading more and more books all the time, and it is getting harder and harder to stand out.  Low price (or no price) is one way to go, but in the end I’d like to think that quality will win out.  Positive word of mouth and good reviews are what matter most at the end of the day, in terms of both sales and also the satisfaction that comes from creating something one can feel proud of.

It has been an interesting year, and an exciting time to be a writer.  Whatever happens with pricing and competition is really beyond my control.  What I can do is create the best books that I’m capable of, and right now I can’t wait to get my next one out there, just to see what people think!

Update on Nov. 26:
Well, after I finished writing this last post I raised my price from .99 cents to $1.99.  I'd been selling 50-60 copies per day lately and figured that the higher price might not dent these numbers too much...  This turned out to be wishful thinking.  The day before I raised the price I sold 67 copies.  In the days after that I sold 36, then 26, then 13 and now I seem to be stuck around the 13-15 level, despite some excellent blog reviews this week.  Any momentum I'd previously had is gone...  Indeed the competition is quite fierce, but I'm not complaining.  I am still happy that my books are out there!