The Pricing Of Your Ebook Can Be Based By What’s In It, Or By What Price Competition Sets. But The Smarter Way To Price Is By The Goals You Set For The Ebook
If you are toying with the best way to price your first ebook, it’s always tough. Some people will tell you lower prices sell more copies, while others will say higher prices will earn more money. Some will say, see what Amazon does.
You may be thinking: “Doesn’t it matter at all what I’ve put into my book? What if I have a secret treasure map route inside my book whereby readers can earn $10000 if they find it. Will my ebook still have to be priced at $2.99?”
At Solohacks Academy, we think the smarter way to price your ebook is by setting goals for what it can do for your business.
Are your planning a series of ebooks, or is this one ebook only a one-off? Do you want your ebooks to be your main product, or do you want your ebooks to bait people into buying pricier knowledge products from you? Think long term.
1. See how and why Amazon prices ebooks: strategize on how much you gain from following it or bypassing it
One of the first points to understand, when you are trying to price your ebooks for online sales, is that Amazon has already set some expectations in the minds of customers about pricing. It’s very hard for you as a lone publisher to try to erase the mental construct ingrained by Amazon into its readers.
Here’s what Amazon believes about ebooks pricing (that it also proves to its ebook creators): the lower the price, the more you sell.
If you’ve been browsing competitor ebooks on Amazon, you’ll notice most of them are priced in the range of $2.99-$9.99. What’s more, Amazon also pays royalty to ebook publishers with this pricing benchmark in mind.
Amazon pays you a very nice 70%-of-retail royalty on all ebooks sold between the prices of $2.99 and $9.99. If your ebook pricing is set lower than $2.99 or higher than $9.99, you get a not-so-nice 35%-of-retail royalty.
To prove its point further, Amazon also shows you a graph of how lower prices create greater sales. For example, the graph may show you that if you priced your e-book at $14.99 you can expect to sell $100,000 worth of ebooks at that price … but you can sell $179,000 of that same ebook if you cut the price to $9.99.
This graph from Amazon takes into account two factors:
- Your ebook’s length
- Your ebook’s genre
Why does Amazon exert so much pressure on authors to lower prices? There could be many factors. Amazon began with printed books and then graduated to ebooks via Kindle. To Amazon, the logic for ebooks pricing is simple. It can be a win-win-win for Amazon, its ebook authors and the readers to price ebooks low in the interest of expanding the whole ebook pie, so that there are more ebook readers and preferrers, and the aggregate sales turnover grows larger.
Amazon also believes in low pricing to gain more sales is possible with ebooks, because:
- Ebooks cost almost nothing to create,
- The competition is very high.
- There are no printing costs.
- There are no publishing fees.
- There are no postage and packaging costs.
- There are no trips to the post office to post your sold ebooks.
- Anyone with a computer can write, publish and sell an eBook themselves.
There is s much room therefore for lower pricing, if that pricing could enlarge sales disproportionately, as it does on Amazon.
Despite such overwhelming pressure from Amazon on authors to sell ebooks at lower prices, however, most of the authors seem to go for the 35% lower royalty rate and set higher ebook prices.
There are also a number of authors, who might be selling their ebooks on Amazon at prices within the Amazon range for maximum gains (70% royalty), while they sell the same ebooks independently at much higher prices (using eCommerce sites like Payhip or Selz).
The moral of the story? When you plan to price your ebook, you have to size up the competitive pricing on Amazon and off Amazon. See what strategy you want to follow. Sell on Amazon, or sell on your own website, or sell at both places. But plan your pricing, with awareness that Amazon has somewhat queered the pitch already for most authors.
2. You can price your ebook as a “loss leader”: or you can sell ebooks as a “tripwire” that begets you pricier sales of other products
To understand this whole strategy, you have to first understand the meaning of concepts like “loss leader” and “tripwire sales”.
What is a “loss leader”? According to Wikipedia the definition is self-explanatory:
A loss leader is a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services. One use of a loss leader is to draw customers in where they are likely to buy other goods. The vendor expects that the typical customer will purchase other items at the same time as the loss leader and that the profit made on those items will be such that an overall profit is generated for the vendor. The loss leader is offered at a price below its minimum profit margin — but not necessarily below cost.”
In other words, a “loss leader ebook” is one that is deliberately priced very low to attract sales of your other knowledge products, as part of the same purchase set.
This is also more or less how a “tripwire sales product” works, as a bait … but it doesn’t expect a person to buy more than a tripwire product at start. It expects to “break the ice” for other, later, bigger sales.
What is a “tripwire”? It’s the analogy that comes from the electrical world. A tripwire is “… a wire stretched close to the ground, working a trap, explosion, or alarm when disturbed and serving to detect or prevent people or animals entering an area.” The military also uses the word tripwire to describe “… a weak military force employed as the first line of defense, engagement with which will trigger the intervention of stronger forces.”
In other words, you, as a solo brand marketer can aim to sell small opening products (low-priced ebooks?) that reset customers’ mental image of you and themselves and your relationship. Like tripwires, small sales help put people into a state of mind ready for the “bigger thing”.
Internet marketing expert, Neil Patel, has described the power of small tripwire sales:
Think of a tripwire like dating. If you ask a girl or a guy, a random stranger to marry you, what do you think the person is going to say? Chances are he or she is going to end up saying no. The reason the person is going to say no is because the person doesn’t even know you.
But if you ask a random stranger, “Hey would you like to go out for coffee?” there’s a much higher chance that you’ll get a yes. And if the coffee date goes well, then you may ask the person for dinner, and if the dinner date goes well, you may go on a few more dates, do a few things with the chosen one.
Then fast forward a few months, you may end up moving in together. And then if you ask the person to marry you, the chances of saying yes are much higher.
It’s “micro-commitments”. By getting people to take small little actions, you’re much more likely to get them to say yes to your big core offer.”
Another important thing. Tripwire sales change the nature of your relationship with your customers. Your “prospective customers” become “actual customers”. It doesn’t matter if they’ve spent just $2.99 on your site. Their changed status as “customers” makes them feel like part of your privileged set. As time grows, you can have more and more trust built up. With enough trust accumulated, even very big sales feel satisfying and wonderful to customers. With enough trust accumulated, even very big sales feel satisfying and wonderful to customers.
3. Whatever your pricing strategy for your ebook, you have to know your real costs: five questions you should ask yourself
How you decide to price your ebook eventually may or may not depend on how much it cost you to produce it. But even so, you should have an idea of what your costs are. Very few authors really know how much time, effort, and money goes into their books – and even time and effort is ultimately money. Being aware of your costs is key to be able to derive a conscious pricing strategy.
How much did it actually cost you to produce your ebook?
Did you do it all A-Z yourself? Or did you hire someone else to produce the content, format it, proofread it, and design the cover? Take into consideration all the costs incurred.
How much originality value does your ebook have?
Originality is actually priceless. The question to ask yourself is how much of your ebook content is new opinion, creative thinking and analysis, and thought-provoking? Is it all just information, or is it also full of imagination?
How much content has been packed into your ebook?
Unfortunately people do assess price against an ebook’s “thickness” in terms of words or pages. If that’s the way the market makes its evaluations, there’s nothing you can do but fall into line. Write a thicker book if you want it to make more money for you.
How much will you need to spend on the promotion of your ebook?
Writers are often so flushed with happiness at the prospect of selling their ebooks that they never ever properly budget for promotion and sales costs. If you sell via your own site, you still have to bear the commission costs of the payment provider like Stripe or Paypal. If you use a third-party site like eJunkie or Payhip to sell your ebooks from, there will be a cost to that too. Sometimes this is a monthly fee, whether you sell ebooks at all every month or not. Then there are local taxes to pay if you aren’t recovering these from customers. And the elephant in the room: how much are you planning to pay for promotional ads, blogger outreach, guest-posting as promotion or other forms of social exposure?
Is this your first ebook or do you have a series planned?
Why is this factor important? If you’re into selling just one ebook, you have to figure your potential for any profit above your costs of production and marketing of that one book. Whereas if you had a series, the costs of production and promotion can be spread across all the ebooks in that series. In general, the more ebooks you create and market together as a series, the easier it will be to see some profitability after costs.
4. Survey the landscape you are planning to sell from: who else sells there, their prices, the market size and the price flexibility
After looking inward at how much your ebooks cost you to produce, you would do well to survey the milieu in which you will sell your ebooks. Are you planning to sell them from your own site? Or are you planning to sell them from other third-party sites where ebooks can be displayed and sold? These could include Amazon, Barnes & Noble, Kobo, Overdrive, and a host of other book sites.
If you know which platforms you’d like to sell ebooks from (and there could be more than one), you need to ask yourself a set of five questions for each such platform:
Under which category would you like to sell your ebook in each of these platforms?
Every ebook selling space may have its own categories of ebooks. You have to see where your ebook fits appropriately. First, see if it’s fiction or non-fiction. Then under the broader classification you may have three or four (or even more) sub-classifications. It’s very important to get this right, because putting the ebook in another category is akin to stuffing your ebook amongst shelves where your ebook simply doesn’t belong, and therefore is unlikely to be found.
How much do your competitive or similar authors charge for their ebooks?
You don’t have to charge the same sorts of prices as competitors, but it helps to be aware of what’s out there. For example, if you think your 65-page ebook on cooking skills could sell for $14, but competition is priced at $2.99, you’re way off the mark. This often happens when you have been selling on your own site without any competition alongside, and then you switch to a selling platform to get more eyeballs, but there is competition there to reckon with.
How big or small is your audience for your ebook?
Here’s the deal. If you have a small but highly-nuanced audience for your ebook, you can price your ebook on the higher side. But contrarily, if your audience is big, consider pricing small – because you can hope to get more audiences by lowering price. This is not a possible tactic if the audience is very small to begin with. Lowering prices will not get more readers.
Do you already own a healthy emailing list of subscribers?
If you don’t have an emailing list of your own that’s healthy, can you negotiate with other bloggers to access their emailing lists through joint-promotion of your ebook? If you have a ready-primed audience that you can email about your ebook, you will be able to charge more. But, if all your marketing has to be through bookselling sites, selling to complete strangers, there’s less chance that they’ll feel familiar enough with you to be able to price your ebook high.
Does the milieu you’re selling in allow price elasticity?
There are many times when you may want to discount your ebook prices for a short while to pump up sales. But if the pricing of other similar ebooks in your selling milieu is already very low, to begin with, you’ll have less gain from periodic discount sales to try and buck up revenues. Your competitors have to be at high-ish prices for your discounts to make a difference to buyers.
5. The two critical factors that allow you to draw in maximum sales and revenue: see if your ebook fits in these brackets
There are two types of ebooks that perennially enjoy good pricing and good sales. If you are wondering if you too can write an ebook, see if it can fit into one of these two categories that sell the best, at the best pricing levels:
Any ebook that deals with human psychology sells well, whether it’s a psychological thriller or a self-help knowledge ebook
Try these two titles for size. One ebook is titled: “How To 100x Your Online Marketing For any Product” … versus another exactly similar ebook titled: “Inside The Mind Of The Marketer With 100x Marketing Tricks”. You can bet the second book will outsell the first one. That’s because people want to look into other people’s minds to see what they’ve got, that they themselves haven’t got.
It’s the same formula that works for any knowledge book or self-help book – you want to know how a millionaire mind functions, how a slim person’s mind functions, how a fat person’s mind malfunctions, how a failed entrepreneur differs in his mindset from a successful one.
In case you think this works only for non-fiction titles, it’s the same for fiction. You will maybe give a pass to an ebook titled: “The Mystery Of The Missing Office Boy” but it’ll be harder to pass by a title like “The Office Idiot Solves The Mystery Of The Missing Office Boy”. You’d wonder how an office idiot suddenly turned on some brilliant brains.
Human psychology is an undefeatable magnet for ebook buyers. It often just takes a clever tweak of your ebook title to suggest a “psychological ride” instead of just an “ordinary read”. Psychology has its own allure, its own mystery.
Boxed sets of ebooks’ series, that come with a visible discount, are again an irresistible pull for buyers
This is not hard to understand because all of us, at some time or other, have fallen for a deal where a series of ebooks is offered as a “set” with some price slashes. It seems hard to let a deal like that go by. Maybe it’s the human tendency to want to get more bang for the buck, but many readers don’t even wait to see if every ebook in the series is worth it to them. They just fork out cash if a whole lot of seemingly dovetailed ebooks are available for a sum less than their aggregate prices.
My guess is that ebooks are low-priced items anyway. So when many of them are created on different facets of a topic as a series, or a set, the perceived value of the set goes up. Then after they are boxed together, if a discount is applied it sounds like a real bargain. The point to note here is that low-priced products like ebooks have greater appeal when they are offered in greater numbers as a set. The discount then becomes icing on the cake.
If you are planning one ebook to start with, see if the topic is extendable into a series or set. There is always greater attraction and greater buying for discounted box sets.
6. The two critical factors that can kill all hopes of high pricing of your ebook: try to avoid these fiascos at any cost
Of all the factors that can kill prospects of pricing an ebook high, these two are the top reasons why authors will be unable to command good prices:
Your book cover looks shoddy, and doesn’t gives cues of quality
We’ve all heard, ad nauseum, that we should “never judge a book by its cover” … but unfortunately, that’s exactly how everybody does. A book’s cover is shorthand for the quality one can expect from its insides.
If an ebook cover has a very artistic, very sophisticated design, instantly we get cues of the kind of writing and content to expect from inside the book – we expect to find creative, sophisticated thinking. Likewise, if the cover is a bit shabby and poorly illustrated, and looks like a one-cent product, we expect the writing inside to be haphazard, poorly written, and poorly organized. Flimsy, at best.
Is it right to thus judge a book by its cover? Why do readers do so? There is some sound logic here.
If an author is fussy about his cover design being very good, it talks of him, the author. It says about him, “Here is a person who is very careful about projecting his quality – and he cares to make excellence his goal”. A shabby cover says of the author, “Here is a man who I would expect to see with a crumpled shirt, and a tie that’s askew, who doesn’t care for the fine details of perfection or nuances of presentability.”
You see your book cover speaks not really of the book insides, but about you, the author. So how you design your cover can make or break your brand, and its ability to command respect and revenue.
Books without any decent reviews look like people no one wants to befriend
Is it any surprise that books that have few or no reviews can never get the prices they wish to get. There will be no buyers if other buyers have not left a good review. It’s the same as how people feel reticent about joining forums where there is just them and the forum owner.
People reckon there is safety in numbers. When they see products with no visible purchasers before them, they get wary of being the guinea-pigs. They don’t want to be the ones that forked out the cash to find the ebook was a waste of time. They’d rather someone else tested the waters and told them if it’s safe or not.
The negative content of reviews is not the bad thing. If an ebook has a lot of reviews, some good and some bad, it’s still an object of interest to a potential buyer. It shows lots of people have found the ebook worth buying, and the ebook has provoked their thinking. But it’s the absence of reviews, or the thinness of reviews, that worries buyers. They figure that the ebook has been seen as a lot of potential buyers as not worth their look in, much less their debate on its contents.
Many authors who know this, first send out a set of ebooks (before launch) to several peers and potential readers, free of cost, to get themselves at least 10-20 reviews of reasonable length and detail. Their ebooks are then launched in tandem with the reviews, and the mix of both good and average reviews makes it all authentic. It doesn’t sound like the author got his own family members to write flattering reviews. The ebook then evokes public interest better, and it’s price become evaluated on one more count: it’s popularity-potential.
7. Try to get inside your ebook reader’s mind: try to see what his “internal reference price” is and what he will pay
As an ebook author, have you ever considered that consumers have an “internal reference price” for most items, including ebooks? What is an “internal reference price”? It is the price customers believe an item should ideally cost. They base this reference point on their past experiences with other products of the same or different kind, and the market conditions.
For example, customers have an idea of what a cup of tea should cost, or what a table and chair should cost, or what an ebook of a certain topic and length should cost. If your ebook is priced higher than this “internal reference price” they would not buy it because “it’s overpriced” … just as they may not buy an ebook priced too much lower than their “internal reference point”, because “it sounds down-market”. The scientific reason why people seem to have an “internal reference price” is because it makes buying of all the hordes of items they need easier on their mental load.
Now, as an ebook author, do you reckon it’s easy to find out if your potential customers have an “internal reference price” for your ebook? It’s worth finding out. Some authors send out price discovery surveys to their email subscribers. Some authors check out the market mood for prices on forums and groups. And yet some authors use Amazon as a quick reference point, figuring that Amazon must have done the customer research.
It’s always worth asking about 10-15 customers for an idea of their “internal reference prices” before launching any product, including an ebook. But once you get a fix, remember, you can either go with the popular perception of what your price should be – or you can strategize to overprice or underprice. The important thing is to be able to justify why the price you’ve set delivers “beyond expectations” for the customer. Having the right arguments can make customers ditch their “internal reference prices” and take a gamble, if – and only if – your arguments for them doing so are very compelling.
8. Some considerations in favor of low ebook pricing according to a Smashwords survey: they argue reader loyalty is more important than money
Smashwords, an online ebook publishing and marketing business, states that lower-priced books almost always sell more copies than higher-priced books. For instance, if priced at $2.99 the ebooks will sell up to four times more copies than ebooks priced over $9.99. Also, at $2.99, the ebooks will earn more than those priced at more than $9.99, because they gain more readers.
The best price for a full-length non-fiction ebook is usually said to be between $5.99 and $9.99. In general, a longer book deserves a higher price than a short book.
Smashwords also conducted a very detailed survey a few years back to see how Indie authors, and especially ebook authors, were fast overtaking both the sales and revenues of traditional authors. Their unbeatable argument in favor of low ebook pricing is this:
When an author sells a book, they receive two primary benefits. 1. They earn the royalty from the sale. 2. They earn a reader, and a reader is a potential fan, and a fan is a potential super-fan who will rush to buy anything you publish, and who will evangelize your book to everyone they know.
I’d argue that readership – the key to building your author brand and fan base, is more important to your long term success than a dollar in your pocket today.”
9. An example of a higher-priced successful ebook: “The Truth About Six Pack Abs” by Mike Geary bucks the low-price argument
There is someone who has earned $1,000,000 per month, and his high-earning ebook is a legend: It’s called “The Truth About Six-Pack Abs” by Mike Geary. This ebook has grown from being just a standalone fitness ebook to now being accompanied by a fitness and health newsletter with about 680,000 subscribers (in almost every country). He has also built a large content-based website that goes along with this fitness newsletter.
How did he decide on his high price-point of $47 for his ebook? Hear it in Mike Geary’s own words:
It’s been really interesting to see some of the testing for pricing. We’ve tested price points for various fitness info products at $29.95, $39.95, $47.00, $67.00, $77.00, $79.00, and $97.00. I’ve found a sweet spot in the $47.00 price point for most online fitness info products that seems to maximize front end revenue and the total number of customers.
Lower price points can sometimes bring in more customers on the front end, but the backend marketing plan needs to be solid in order to make up for the lower price (especially if you’re buying traffic and need that front-end revenue to come close to break even on your ad buys).”
It’s important to see how Mike Geary has verified the best price-points for ebooks in his expertise niche. This is the critical thing. His niche has the demand to support this price. That’s why looking at both your niche demand and its price-sensitivity are important.
There is another trick that Mike Geary has used to his greatest advantage. He put his products on Clickbank to try and get affiliates to sell his ebook. Then came the twist …
I decided to be OVERLY generous with affiliates and truly set myself apart from the crowd. Instead of the normal 35-60% commissions, I set my commissions at 75% (which is the maximum percentage you can pay to affiliates in Clickbank). Immediately, this made my product more lucrative for most affiliates than other products that were paying lower commissions.
I had hundreds of affiliates shift their traffic to my site instead of some of my competitors. Within a couple of months, I jumped up to one of the best selling products on the entire Clickbank marketplace, out of more than 10,000 products.”
Undoubtedly his higher ebook pricing also helped him afford to give away 75% of sales to affiliates. See how the upward spiral of high pricing can work.
10. Another way to discover the best pricing for your ebook: by incrementing or staging the content and the pricing
Every ebook, no matter how similar to another, has its own price vs. value balance. It depends on the value that audiences perceive in the ebook, and not what the author thinks is “value”.
To discover what the price vs. value balance for your particular book is, you can try to gradually “increment” the product contents and price. Keep the price and contents small, to begin with. Then add more content as you gradually increase price. You can either add extra content to the original ebook (and add a blurb on the cover to say “With new extra content”) – or you can try to offer add-on content to the original ebook.
Soon, you’ll get to discover the optimal price for the value your readers want. Most writers think audiences want a lot of content at a low price. This needn’t be true. People want optimum content at an optimum price.
Defensiveness about your content is what makes you either under-price (out of guilt) or over-price (to artificially boost the perception of value).
So What Are Your Thoughts? Do Share!
This post is incomplete without your input. The community of Knowledge Commerce solopreneurs would feel galvanized to hear from you … so do share your thoughts on this topic with us, in the comments field below this post.
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