How Authors Can Price Their Books for Profit: Self-Publishing with ALLi Featuring Joe Solari

On the Self-Publishing with ALLi podcast, host Joe Solari explains how authors can price their books for profit. He challenges the idea that books are commodities, using Starbucks as an example of how to create value beyond price. Solari breaks down price elasticity, customer lifetime value, and direct sales, offering practical strategies to maximize revenue.

Listen to the Podcast: How Authors Can Price Their Books for Profit

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About the Host

Joe Solari assists authors in developing successful businesses as the managing partner of Author Ventures LLC. In his role as a business manager, he supports his private clients, who collectively achieved gross royalties of twenty-two million in 2023, with an average pre-tax profit of 44%. This remarkable success results from implementing disciplined business strategies and maintaining an unwavering dedication to enhancing the customer experience.

Read the Transcripts

Joe Solari: Welcome to Self-Publishing with ALLi.

Hi, I'm Joe Solari and you're listening to the Publishing for Profit Stream, the podcast where we explore strategies and tactics that help authors to build thriving businesses.

As an author consultant, and the managing director of Author Nation and Reader Nation, I'm passionate about empowering authors to achieve emotional and financial success through their creative work.

On this podcast, my goal is simple, to share big ideas and practical applications that deliver real results for you and your publishing business.

Future episodes will feature industry experts and authors, but today it's just me, and we're diving into the topic that every author wrestles with at some point, pricing.

But first, let's talk about another beloved subject to many authors, coffee, not just any coffee, but a $5 cup of coffee. Now, I remember back in the 1990s, I was walking to college, and I saw for the first time a Starbucks, and if you told somebody back then that they would be willing to pay $5 for a latte, they would laugh.

Coffee was a commodity. It was quick and cheap, and you went into your local diner or a gas station or a convenience store, but then, Starbucks came along and changed the game.

This story isn't just about coffee, it's about value. Too many authors think of their books as commodities, just like coffee used to be.

But what if you could position your work as something much more? What if your pricing wasn't about the cost of your book, but about the experience you were giving readers?

Now, let's take this idea further by exploring how different markets behave, just like Starbucks identified the coffee lover's willingness to pay a premium for an elevated experience.

Pricing. Are you asking the right questions?

Let's get real. If you're asking, what should I price my book, you're starting with the wrong question.

The question you should be asking is, who isn't reading my books yet and why?

By the end of this episode, you'll understand that pricing isn't about numbers. It's a tool for creating opportunities to connect with readers who haven't discovered your books yet, and it's a way for building a sustainable, profitable strategy and identifying who sees the value in your product and what they're willing to pay.

To do this, let's take a little bit of a dive into some topics.

We'll start with the book market. To effectively price your books, you need to understand how the book market behaves. Too often, authors jump into marketing tactics, choosing things like between wide or being in KU, running a Kickstarter campaign, or offering special editions, and it's without any clear strategy. They're just copying trends without understanding the ‘why' behind them. The key is developing a deep understand of your readers' needs, expectations and behaviours. Different readers value different things and pricing is your lever to attract the right audience.

For example, a subscription reader who pays a flat monthly fee values endless books at no additional cost. They are loyal to that platform, not you.

A collector, on the other hand, may pay a premium for a signed special edition because they value exclusivity or ownership.

Your pricing should reflect these differences, to connect what you're trying to do with that particular reader and the value they see at the right time.

One of the things that'll help is to understand a wonky economic term, ‘price elasticity'. The important thing is it's why most readers don't care about price.

The concept for authors around price elasticity is this, how sensitive are your readers to any price changes?

For example, if raising your book price by a dollar barely affects sales, you have inelastic demand. But if that $1 jump caused a sharp drop in sales, you're dealing with elastic demand.

Now, here's the fascinating part. Books are remarkably inelastic.

Think about it. In a world where millions of free books are available, people still pay for their stories that they want, and they'll pay full price. They may even buy it more than once. Why? Because readers choose books based on the story, the author and the emotional value, not just the price tag.

This inelasticity gives you pricing flexibility. When readers are invested in your series or your brand, they're more likely to buy your next book, whether it's $4.99 or $6.99.

In fact, raising your price slightly can often increase your profit without significant impact to sale volume.

The next concept that we really need to understand is customer value. It's the foundation of effective pricing.

Great pricing starts with the understanding of customer value, and in the business world, we use a metric called lifetime value or LTV, the total revenue you can expect from a single customer over your relationship with them.

Your pricing decision should be guided by three components that tie into this LTV. Customer segment, there are a variety of customer segments. When you say you want all the customers out there, they're not all to be treated the same. They all need to be seen in what they see as value and then your product associated with that value.

So, in this case, who is this ideal reader you're going after next? What do they value and how does the price reflect that value?

The next thing to think about is value optimization. Are you building a sustainable relationship with your reader? Are you able to collect first-party data to better understand and serve them?

The more that you can do that and the more that you “own the customer” or at least have access to that customer data, the better you can serve them and the better you can optimize the value and the offer to them.

The third piece is value extraction. How can you create opportunities to reach different tiers of customer over time to extract all the value that's possible out of this intellectual property?

Think of it this way. Apple releases a new phone every year. While most of us don't need a new phone annually, they've created this strategy to extract value from different customer segments. Some customers will pay a premium to have the latest model. It's important for who they are to have that. While others opt for a discounted older model, some of us wait until the phone is almost obsolete and then we buy the latest model.

Each one of those is a different set of customary behaviors that has a different price or lifetime value associated with it.

You can do the same with your books. Maybe you start with direct sales or premium editions and then later release into a subscription service or do discount bundles. Each pricing stage allows you to reach a new audience while maximizing the value of that work.

So, what if we give you some things to put this all into practice? Let's break this down with some actionable steps.

First off, analyze your current position. Are you primarily reaching readers through discount promotions or subscription services like Kindle Unlimited? Are you looking to transition to something like direct sales?

Understand your starting point, and then figure out how you're going to navigate these changes.

For example, if you have a large existing audience in KU, and you're really thinking seriously about attracting a direct audience, these two are separate audiences, and you're starting from scratch building this new direct audience.

The idea isn't to convert your subscription fans into direct fans. Sure, some will come over. But really what you want to do is start a completely new strategy that is going after a different type of customer.

Most people that are buying single books direct don't even know Kindle Unlimited exists. They're just looking for books on whatever platform they're looking for, and when they see your product, they may, if that's the kind of book they want to read, buy it, and if it's priced appropriately, they'll pay it.

So, think about how the pricing is going to be allocated to the customer, and then over time.

So, in the case of if you were going direct, you would have to have books. Maybe you're already in a series, it's a later book in the series that comes out direct for a short period of time, and then it goes into KU. Or you wait until you start a new series, and you start it outside Kindle Unlimited and move it into Kindle Unlimited at a later point.

Number two, segment your customers. Recognize the difference between bargain shoppers and premium payers. A reader that buys a 99-cent book will not invest 4.99 in a new release, and that's okay. Focus on catering to each audience strategically and when appropriate.

If you don't believe me on this, I can show you time and time again, people that are launching with massive launches at full price on Amazon. While new books, similar genre, 99 cents, don't get the same traction.

If it was just about price, then all the books in the top 100 of the stores would be 99 cent books. It's about the value. It's about the audience that's already connected with that product.

Number three, invest in direct relationships. Building direct relationships through your website and your mailing list is invaluable. These readers will provide first-party data. They'll become long term supporters. These are the folks that will help you see the customers that are the best customers for you and the value that they're looking for.

Number four, experiment with pricing strategies like offering bundles, creating premium additions, and testing first and series promotions.

Continually measure the impact on your revenue and reader engagement, and the types of readers that are engaging.

One final thought on bundles, bundles can be a very powerful tool in direct sales, but use them wisely. Over discounting can really lower the lifetime value of your reader.

For example, if you have one main series that you're taking direct and you're selling half of that, the first five books, at a steep discount, you have deeply discounted the entire lifetime value of that customer.

Not saying don't do it, but understand the impact of everything that you're choosing to do. Ask yourself, are you attracting bargain shoppers who will only buy at deep discounts, or are you nurturing loyal readers who will pay full price for new releases?

There's nothing wrong with doing both, maybe at the same time, but they are different pricing strategies, completely different, because what the customer wants is different. Both types can coexist, but you have to be deliberate about how and when you use those pricing strategies.

Remember, one reader willing to pay 6.99 for an eBook is worth fourteen 0.99 cent buyers or over a thousand page reads. All customers are not created equal. So, that's why we're not going to treat them the same.

Now let's return to that Starbucks story. How did they take a $1 cup of coffee and turn it into a $5 cultural phenomenon? The secret wasn't in the coffee. It's the experience.

Starbucks understood that people weren't just buying caffeine, they were buying the feeling of belonging, comfort, and even status. They wrapped it into a cozy experience with the shop and the personalized service, and the smell of the freshly brewed espresso, and even how they would write your name on the cup.

Starbucks wasn't just selling coffee anymore. They were selling an identity.

But here's the twist. Many people initially thought Starbucks was doomed. How could they possibly convince anyone to pay five times the price for something you could get almost anywhere at a fraction of the cost?

By focusing on what their customers valued rather than just competing on price. Starbucks was able to attract loyal fans who are happy to pay more. Today, paying $5 for a cup of coffee almost feels normal because Starbucks taught us that the value is beyond the product, and that's the big takeaway for you as an author.

You're not just selling words on a page, you're selling an emotional experience that your story delivers, whether it's escapism, inspiration, entertainment, a little spiciness.

Your readers are buying so much more than a book, they're investing in how your work makes them feel So, don't fall into the trap of undervaluing your book. Be like Starbucks, understand your audience, your focus on their experience, and the price your work needs to be at to reflect the value you bring to their lives.

Thanks for tuning in to this episode. I'd love to hear more of your thoughts. Are you experimenting with pricing strategies? What's working for you? Drop me a line or share your insights in the comments. I'd love to hear if this has been an inspiration to you and if it's got you thinking about some new pricing strategies for your business.

Until next time, keep writing and keep building. This is Joe Solari and you're listening to the Self-Publishing with ALLi podcast.