Ebook Pricing: Why 99 Cents Might Be a Mistake for You

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A lot of new independent authors will e-publish their first novels and set the price to 99 cents, thinking that’s where they have to be because they’re unknown authors. Then they’ll go out and promote the heck out of their books (spending hours on blog tours, forum posts, Facebook, Twitter, etc.), all in an effort to sell copies of that single 99-cent title.

The problem?

If you’re selling your ebook for 99 cents, you’re only making 35 cents per sale. Nobody ever said being an author was the road to riches, but that’s an awfully poor return on a novel that probably took you six months to a year or more to write, edit, and publish. What’s worse is that, with only one ebook out, you can’t make more than 35 cents per customer (more on why that’s a problem below).

This is why, if you ask me, I won’t recommend the 99-cent price tag for authors with one book out (short stories or short novellas, being a possible exception).

Wait, you’re thinking, isn’t my first ebook currently free? Isn’t it a 105,000-word, full-length fantasy novel that’s less than 99 cents at Amazon, Barnes & Noble, Itunes, and Smashwords? (Yes, I can work plugs for my stuff into any blog post! 😉 ) And didn’t take it take me a year to write that puppy? (Actually, it was more like seven years in the making, but that’s another story.)

The answer is yes, I have a free novel out there, and there was a time when I had that novel priced at 99 cents too. The difference is that I have books 2 and 3 (with 4 coming this spring) in the series out as well, and those are $4.95. I’ve tinkered with the price on Book 1, and I’m finding that, right now, I make more overall by giving that novel away for free, because more people try the series and go on to buy the following books.

But, if you only have one book out, then it might not make sense to sell it for 99 cents — or less. The problem with 99 cents is you have to sell six times as many copies as you do at $2.99 to make the same amount of money.

You’re welcome to test things (I encourage it, in fact), but if you’re not writing in a popular genre (i.e. thrillers and romance), then you may find it tough to sell enough books for it to be worth it (“worth it” is subjective, of course, but most of us want to at least break even on our editing and cover art costs in a timely manner). Even writing in a popular genre is no guarantee of success. Many people find that their sales increase at 99 cents, but not enough to be significant. They may sell 50 copies a month and think, “Hey, that’s not bad” only to realize that only earns them $17 or about $200 a year. It’s hard to stay excited about your writing and the promise of a writing career on such paltry earnings, and many new indies don’t even sell that well. (I didn’t my first month.)

Is marketing worth it if you only have one 99-cent ebook?

If you only have the one book out, there’s nowhere for a new reader to go after buying your first novel. You’re putting all this time into marketing and guest blogging and hand-selling books, and all you’re going to get out of it is a maximum of 35 cents per customer. Ouch. Not many businesses make it on returns like that.

If you wait to go hardcore on the marketing until you have more books out (perhaps even a series, eh?), you now have the potential to make $10 or $20 per “customer,” depending on how you price your books. It’s still not a lot (see my earlier note on how most authors don’t get rich), but the numbers start to look a little better. Maybe you’re averaging $10 or $20 per hour of promotion you do, as opposed to 35 cents.

At that point, putting hours into promotional efforts begins to make more sense, especially if you start a newsletter and encourage your readers to sign up. In the business world, people talk about the “lifetime value” of a customer, and it’s not so different with authors and readers. Say you’ve sold someone your series and made that $10 or $20, but you’re working on your next series. If you have that reader on your mailing list, then you can shoot him/her a note when you have a new book out. That person may buy the new one and continue to buy your books for many years down the road. Ultimately, this means that your hour of promotional efforts can end up being worth much more than $20, but only if you have multiple books out and only if you encourage readers to sign up for your newsletter (don’t assume that readers will just remember your work, because they have lots and lots of authors they follow!).

You may be thinking that you can do the newsletter thing and try to snag lifetime customers based on your one book, and that is true, but you’ll probably find that it takes more than one book for readers to decide they love your work. After one book, they may decide to look for others by you, but if there’s nothing else out there…well, it’s asking a lot at that point for them to come to your site, read all about you, and sign up for your newsletter (that said, it’s never to early to get started with that stuff).

In summary, I recommend pricing your first ebook at $2.99 or above and not worrying a whole lot about sales and marketing until you have more books out. Even if you only sell 10 ebooks a month at that price, you’re making more than if you’d sold 50 at 99 cents. Then, when you have more ebooks out, you can play around with “loss leaders” (AKA pricing your first book at free or 99 cents to get more people into your world).

A short cut to getting more ebooks out there

If you’ve just published your first novel, and it took six months to a year (to seven years) to finish it, you may be groaning at the idea of not making much money until you have another one out. Well, I started out in the same boat. I’m envious of these new indie authors who pop in with five or ten “trunk novels” they can drop into the marketplace. But what about the rest of us?

Write some short stories to bulk up your list of titles. You can absolutely turn short stories, novelettes, and novellas into ebooks, and they don’t take nearly as long as novels to write.

I’ve talked about this many times on here (so those of you who have heard it before can skip this paragraph), but when I published my first novel, I didn’t have any of the following books in the series written. I did have a short story that featured the heroes from the novel. I uploaded the story to Smashwords as a free ebook (I didn’t even think of charging since it was only 6,000 words), and I included an except to Book 1 at the end. The ebook was distributed to iTunes, Sony, and Barnes & Noble (at the time I didn’t know how to get a free ebook into Amazon, or I would have done that as well), and lots of folks found it, read it, and went on to buy my first book (at the time I had my first novel priced at $2.99). How many people? It’s impossible to say, but over the last year, I’d guess that 500 to 1,000 sales came my way because of that short story.

Do you have thoughts on free/99-cent ebooks? Let us know in the comments. Thanks!

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Comments (25)

I’ll second the “write some short stories to build out your offerings” statement. When I released a short that focused on some of the popular side characters from my novel, I saw a bump in sales. They don’t take long to write and they also let you get some world building or backstory that might not have a place in a novel.

Unless it is used as a loss leader marketing tool like Lindsay states above I do not understand why you would value your novel length work at less than a bottle of soda.

Also it makes sense to me to sell fewer copies at a higher price. I might be wrong, but it seems like it would take less time away from my writing to promote to sell say 50 copies a month at 4.95 than it would to sell 500 copies at 99 cents.

Then with that saved time I get another book out and sell 50 copies of it, and so on and so forth. Slow, steady, maintainable growth.

Always good to see this type of discussion with realistic numbers. Thanks!

Pricing is whirling around my head at the moment. I have two stories [novella close to novel length / novel @ 45,000 words] about to go off to their editors. I plan to offer the first as a loss leader, freebie to grease the wheels, so to speak. I’ll hold back on the novel for a few weeks, the put it out. I see other authors with longer books [2x as long as mine] selling theirs for 1.99 or 2.99. So I worry others will think mine isn’t a bargain. I wanted to charge 3.29 or 2.99, to get away from the indie pricing and get my full royalty. Anyway, now I’m just confused.

I feel I have to at least go to 2.99 to begin to recover my costs. I think it’s worth that price or more. I have this problem of losing confidence after I publish, and think that’s my problem again. I should just do what I first thought. Maybe. lol I hope the answer comes to me with clarity soon.

The nice thing is that we can test and change the prices around to see what does best for earnings overall.

I think you can get away with pricing your novels higher if you have some freebies out there and get people into your world that way. Then, for people who connect with your work, you become someone they want to read, and your books aren’t some interchangeable commodity (so it doesn’t really matter how low others are pricing theirs).

Thanks. That helps. I like that I can change my mind later if I want to. 🙂

This is good advice Lindsay. I’ve sort of soured on the 99 cents approach, even though all the cool kids were doing it back in 2011. The Dean Wesley Smith pricing model seems to be pretty reasonable.

A good post. I agree an author should focus on more titles rather than promotion.

But here’s the curious thing about .99. An author makes only .34. But on a $5.99 paperback the author only made .48. Not much more. So what does that say about traditional publishing and the way authors were treated and valued?

Yes, the traditional publishing game is even less of a road to riches, unless you’re lucky enough to be a mega-seller. I know of quite a few authors in my genre (some who have been publishing for 20 years or more) who are turning indie (at least to publish their out-of-print titles) because the money is there right now.

Great post, Lindsay!

Another thing that I have heard of authors doing successfully is to fluctuate the pricing. You can start off at a 99 cent special price, garner some reviews, then go up to $2.99. If you feel that sales are starting to stagnate, lower (or raise) the price! Most digital markets give a pretty immediate control over price changes, so you can use that to your advantage. Through experimentation, you may find the “sweet spot” that gives you the best return.

(speaking as a reader…)

More of a tangential point: I think there’s nothing wrong with charging for a single short story if you have a bunch of them. One of my favourite ebooks I bought last year was under 3000 words for 99 cents. The author offered several other short stories for free, as well as serials posted on her blog, so I’d got hooked elsewhere.

Only thing to kep in mind is that it should be clear from the description it’s a short story, to avoid buyers thinking they’re getting a cheap novel.

I also think 99 cents is fair for short stories. If I’m a fan of an author’s work, buying something at that price is a no-brainer for me. On the flip side, though, I’d probably be less likely to buy a 3,000-word short story at 99 cents from an author I don’t know.

The sample tends to be quite short (on Amazon) for something that length too. Sometimes you only get the front matter. So, I guess it just depends on whether the author has other stuff out there and already has a bit of a fan base.

I spend so much time debating what would be a perfect price for my frist ebook. So much time, like you wouldn’t believe. I’ve read hundreds of posts and articles on the subject, and finally I think I will settle on $3,99 until a second book is out there. It just feels like a good enough price.

I think that’s a fair price for a novel, Jane. At $4-$6 we’re still offering a deal compared to traditionally published novels, but we make a respectable amount per book.

Yesterday I saw the latest Dresden Files ebook for $11, not even my love for the series would talk me into buying it. I’ll wait for the paperback. ($11? Really? I still can’t conprehend how someone would think THAT’s a good price for an ebook)

Same logic that the cover price for a hardbound book is WAY over that of a paperback. As far as I know that’s not all material cost, but the publisher wanting to recoup their investment by charging “early adopters”.

Following that, I don’t mind it provided that the price for the ebook WILL drop after a few months or a year. If I don’t want it that badly, I can wait, or get it not at all. I did buy an ebook novel in a series I’m following for $12 the day it was published once, too.

“If you’re selling your ebook for 99 cents, you’re only making 35 cents per sale.”

That’s true if you’re publishing on Amazon, where an author earns a measly 35% royalty on everything $2.99 or less.

I earn a minimum of 60 cents per sale of each 99 cent ebook when I sell through Smashwords, so Amazon has to sell 2 of my ebooks to equal 1 sold through Smashwords.

99 cents for a short story is reasonable. I agree with what Paul Salvette said about pricing in his post above on 06-02-2012.

Very true that Smashwords offers a better royalty (at all price points) for authors, Ted, but unfortunately it’s a small marketplace. Smashwords, iTunes, and Sony combined make up less than 2% of my sales with maybe another 5-8% coming from B&N. Everything else is from Amazon.

I know there are a few exceptions (Brian S. Pratt comes to mind in my genre), but most indies I talk to get even fewer sales from Smashwords and its partners.

I make about 1/2 my sales on Amazon, and 1/2 on Smashwords and its distributors (mainly Smashwords and Apple). Next to none on PubIt.

The different price points attract different readers. Some folks shop the bargain bin and only or primarily download freebies or buy cheap offerings, whether their price limit is $0.99 or $2.99. Others see cheapness as a sign that the quality’s no good and avoid every title that’s under x, which can be $0.99, $2.99, $4.99—depends on the buyer.

Personally, I have two novels out, several short stories, and one short story bundle. (Some of this is under a side penname.) My $1.99 bundle of 3 related short stories sells not at all, my $0.99 short stories sell a little, and my novels sell more.

One novel, a YA+ classic fantasy, is available free as a web novel. I admit as much in the sample pages and direct readers to the blog URL. That one’s $3.99. When I temporarily dropped it to $2.99, sales dropped.

My second novel, a YA+ urban fantasy, was $2.99 for its first 5 or 6 months, then changed to $4.95 in December. It’s too soon to tell for certain, but it currently looks like sales are actually increasing at that price point.

Granted, for being YA titles, my novels don’t have much of a YA audience, yet, which is likely affecting the pricing experiments.

As a reader, I’ll only pay $4.99+ for an author I already know I like enough to share with friends—or, sometimes, someone I strongly suspect I’ll like that much, because I like what I’ve seen of them online, whether on forums or on their blog(s).

My personal limit is $7.99 for a physical copy (which I only get for authors I know I’ll be loaning out to friends) and $4.99 for an e-book (unless I’m desperate). If you cost more, I’ll keep an eye on you for sales.

Note: All the prices I list are in US dollars.

P.S. Lindsay, sorry for the blog post of a comment. 🙂

As an ebook customer, I can share my thoughts.

I’ve had my kindle for about 6 months now, and my husband has had one for about 2 years. I do shop around the bargain books, but have learned to be very careful with the free-1.99 books. I’ve read (half of) some free books that were just awful, and some 1.99 books that were palatable but I probably wouldn’t have read if they were any more (note, I probably won’t read those authors again). For something with favorable, good quality reviews that sounds right up my alley, 2.99-4.99 doesn’t even make me bat an eye. (An interesting point, I do judge the book by its reviewers, and if the highest ranked reviews sound like the authors friends or sounds like its written by someone who can form a coherent thought I run. A little honest criticism about something I can tolerate does not scare me off, and in fact lends credibility to the reviewer’s opinion.)

$7.99 and up makes me pause, even for “traditional” authors. I read the first book in a series recently that I rather enjoyed (price 2.99 or 3.99 I think). It left lots of nice hooks for future development of a larger plot, and I was interested to see where that lead. There was a teaser that was enough of the next book at the end of it to feel like I had made enough time commitment I ought to just get the book, even though it hadn’t really picked up some of the threads I found so intriguing. The price was 7.99 and I considered. I poured through the reviews which mentioned the interesting world plot wasn’t really tied into the book, and I considered some more. Ultimately I didn’t buy it. If it had been 4.99 or even 5.99 I probably wouldn’t have paused. Keep in mind I have a very comfortable income and don’t balk at a $2.50 drink at a restaurant- this is not a rational price differentiation, but it’s what I do.

Any time an e-book is priced higher than the paperback for a traditionally published book I usually refuse to buy it on principle, and since I really like reading e-books it means I could forgo the book altogether. Same pricing or close pricing depends on how much I like the author.

Now, how I found the Emporer’s Edge series. Amazon had a “new for you” for the short story, actually. The blurb was interesting and there were lots of positive reviews, but it was clearly a part of a series (and I’m not the biggest fan of buying one-off short stories unless they’re part of a series I’m a fan of). I was prepared to do my normal “should I download it” evaluation when I saw it was free (and also fell in the 4+ star rating territory). I downloaded it immediately and enjoyed it enough that most of the way through I looked at what else was in the series. The prices were 2.99 and 4.99, good rating, and a good number of reviews (meaning a decent retention of readership) and I downloaded them both (yes, I downloaded the third without bothering to see if I liked the second as well as the first). The loss leader worked quite well to hook me, and the pricing structure was a good enticement. Of course that only worked because the first book was good enough to interest me in more.

Hi. At the end of the day, it’s a game. A tango. Readers want books, we writers want to write and make a fair return for them. I go the Smashwords / Affiliates route, with more titles / genre’s than you can shake a stick at. Sci fi to poems. But this worked for me. I have a book, 49k words, that was personal to me. I set the price at 2.99$ and it sat there on Barnes and Noble doing zilch! A month later it must have sold a copy. Sales ranking one million, and twenty thousand. (nearly bought a tyre for my van on the back of that news) So, I took the price right off it. It shot up, one million places in 48 Hrs. I kid you not. I left it a month and got some nice reviews. So, I put 2.99 on it, expecting it to drop like a dead duck. It slipped back slightly, but not much. So i did the same with another book. Bang! Same story. Still quite up there. It annoys me to have to do it, but I have just done the same with a third title. Would they have gone up if I hadn’t done what i did? No, I don’t think so. If I knock out a book in a week, say about 15K words and it is a good read, I would only put 99c on it. Maybe 1.99 at a push. If stays high enough, that book will keep paying its way for years. Not bad for a weeks work that cost nothing to publish. For the record, the books in question are, One Man’s Dream, Griffin’s Witch and the latest, The Fix it Lady. Food for thought, Gary.

I am fast reader and with a fix income. I do download free books. Most are at the end of my TBR list. However a few have caught my eye and read them. I now have about 4 authors that were new to me. The first bok was free. Most I ha e brought their other books. I do ballk at paying over seven dollars for an ebooks there are so many other books out are good. On a well known author I wait until my library has a copy. Recently for $25.00 I brought 7 books; I spent the $15.00 for a couple of favorite authors I could buy one plus.

Thanks for the advice! I’m learning from folks like you who’ve gone before me 🙂

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