Pages

Choosing the Right Pricing Strategy: AskALLi Beginners’ Self-Publishing Salon November 2018

Welcome to AskALLi, the self-publishing advice podcast from the Alliance of Independent Authors. This week it’s our monthly beginners’ self-publishing salon with advice, tips, and tools for indie authors just starting out.

The AskALLi podcasts are sponsored by Damonza: Books Made Awesome.

Topics discussed this week include:

  • The benefits of co-writing, drawing on Jyotsna’s experience of co-authoring a book with 23 other authors called Write and Grow Richwhich is now a best-seller.
  • What is the right price for an ebook? $9.99? $2.99? $0.99? Free?
  • How much will KDP and Kobo pay in royalties and for which price points?
  • What does “permafree” mean and why do authors do it?
  • How do countdown deals work in Amazon KDP Select?
  • What is the price for paperback bookstore distribution?

And more!

If you haven’t already, we invite you to join our organization and become a self-publishing ally. You can do that at http://allianceindependentauthors.org.

Listen to the AskALLi Beginners’ Self-Publishing Salon

Subscribe to our Ask ALLi podcast on iTunes, Stitcher, Player.FM, Overcast, Pocket Casts, or via our RSS feed:

Subscribe on iTunes   Stitcher Podcast Logo for link to ALLi podcast   Player.fm for podcasts   Overcast.fm logo   Pocket Casts Logo

Watch the AskALLi Beginners’ Self-Publishing Salon

About the Hosts

Jyotsna Ramachandran is the founder of Happy Self Publishing and author of the international bestseller Job Escape Plan.

Tim Lewis is the author of three time-travel novellas in the Timeshock series and three fantasy novels in the Magpies and Magic series under his full name of Timothy Michael Lewis. He is the host of the Begin Self-Publishing Podcast and is currently working on the book Social Media Networking- a guide to using social media to find your dream job, find love and boost your travel experience.

Read the Transcripts

Jyotsna: Hello everybody. Welcome to the AskALLi Beginner Self-publishing salon and I’m your host Jyotsna Ramachandran and with me, we have our co-host Tim Lewis. Hi, Tim.

Tim: Hi guys! Hi Jyo.

Jyotsna: Hi, Tim. How are you doing? Back from the U.S. right?

Tim: Yes, I’m back from the U.S. I went to the Digital Book World conference where I ran into Orna Ross who, of course, is our imperious ALLi leader-

Jyotsna: Ah, did you meet Orna there?

Tim: Yes, I did. She gave kind of a, I don’t know if it was keynote, but she gave a session to the whole room about self-publishing so that was pretty impressive.

Jyotsna: Oh, that’s good. So from my end, I’ve been really excited because one of the books that I co authored with 23 other authors, It’s called Write and Grow Rich and it went ahead to hit the bestseller charts in both USA Today as well as Wall Street Journal bestseller lists. I was super pumped about that.

Tim: Oh, properly impressive to be honest.

Jyotsna: Yeah I think the person who initiated this, her name is Alinka, so she really did an amazing job of it actually, 6 months of work.

Tim: Yeah.

Jyotsna: She carefully took us through the step by step process and finally, due to the collective effort and collaboration of 24 people it was made possible.

Tim: Was it like a box set then or something or?

Jyotsna: It’s not a box set, it’s just one book with 24 different chapters, so each contributor talks about their experience of making money by writing books. So what I’m really happy about is a self published book can reach the charts.

Tim: Oh yeah, yeah, it sounds very similar to the book I wrote where I had 20 interviews of people and each is a separate chapter. It’s actually a very good format. I mean, it’s a big organizational project to get right, if you can get it right and make those kinds of books work perfectly.

Jyotsna: Absolutely, yeah. So in today’s episode, Tim, let’s talk about the pricing strategy of books because a lot of authors get confused about because Amazon and other platforms for self published authors gives the total freedom to choose the kind of pricing you want. So what’s the way to price your book and how do you change the pricing and these are some of the things that a lot of my clients keep asking me, so we’ll go ahead with your insights on what’s the right price for an e-book and then we can talk about the paperback as well.

Tim: Yeah, well I mean, ebooks are traditionally cheaper than paperback books. There are practical reasons why ebooks are cheaper, as in they cost a lot less to push out and also It’s where self-publishers tend to be more dominant and a lot of self-publishers will price too low, basically, or they use price as a way of distinguishing themselves from traditional publishers. So, I mean, something that looms in the background, certainly on Amazon is the royalty structure. This is why you see an awful lot of books for $2.99 is because that’s where the 70 percent royalty rate kicks in.

Jyotsna: Yeah.

Tim: So and it’s not even a stepped thing so if your book is available for $2.49 you’ll get 35, I think it’s 35 percent royalties.

Jyotsna: Yes.

Tim: So just by adding an extra $0.50 on your book price, you’ve suddenly done a massive jump in royalties. So back to 99 book level is kind of significant. There’s also a big, like, surge of books at $0.99 and that’s people who are accepting that they’re going to get lower royalties but they’re trying to promote their book in some way but they don’t want to make it free.

That’s another step place where you see an awful lot books $0.99 and of course, there are books that are free, now there are issues with making a book free. Certainly you can make a book free as part of the KDP Select scheme and that is an advantage of KDP Select that you can have a free period and you get paid, I believe you get paid royalties even from when it’s free, which is attractive but that’s only a limited time frame, that’s one of the 2 things you can do on KDP Select.

Beyond that, you obviously see ebooks up to $9.99. Again, nothing beyond on Amazon still beyond $9.99 you suddenly drop down to 35% royalties again.

Jyotsna: For first time authors, we need to clarify that. If your book is priced between 2.99 and 9.99 you get to enjoy the 70 percent royalties on ebooks. But if it’s below that, and the minimum by the way is 99 cents, unless you’re taking advantage of KDP Select and giving it away for free, which is a 5 day period opportunity. But after that it has to be at a minimum of 99 cents. Between $0.99 to $2.99 or above $9.99 you only get a 35 percent royalty. So that’s something you should bear in mind.

Tim: Yeah, I mean Kobo actually pay 70 percent royalties above $9.99 which is unusual. I think a lot of the other competitor one, I think ibooks might as well. Amazon, like, they don’t want expensive ebooks, they don’t want like $99.00 ebooks on their things so that’s why they have these massive jumps down and to correct you, you can have books free outside of KDP Select, in fact, one of my books-

Jyotsna: Yeah, you can make it permanently free right, but that’s a separate strategy, would you like to discuss about that first?

Tim: What perma free is is that you’re not in, in fact, you can’t do perma-free on KDP Select because KDP Select you have to be exclusive to Amazon and why the perma-free works is that you put your book free on every other store and then you basically pester KDP support and you click, like, match price because Amazon say they will match the price of other retailers.

They will eventually set the book free on Amazon when they get around to doing this is and they do it, like, sometimes they just suddenly jump the price back up to full randomly at some point and then you have to go to a guy, so it’s not, that’s why it’s kind of called perma-free because once you go to this effort of trying to set your book free on Amazon by using the other stores, it’s not a great idea to make it priced again because then like Amazon may not raise it from free and then the other stores are complaining and you can get into this terrible mess.

But the way that people are using perma-free, because like, why do you want to make your book permanently free? Because you’re not going to get any royalties from it, like, clearly it’s pointless. What most self-published authors are doing is they provide like an introductory book or first in series is free. So, for example, in my time travel Time Shock series, the first book is free. And you can download that for free from Amazon and that’s part of a three book series, a trilogy. The 2nd book I put is 0.99, I think I actually raised it up to $2.99, but I put it as $0.99 and then the third book is $2.99.

So. actually, the place I’m making my money is in the 3rd book, it’s not in the 2nd book or the 1st book but the 1st book is kind of to encourage people to read it and if they like that then they can cheaply buy the 2nd book. And a lot of the more kind of industrial and kind of professionals self-publishers have very, very long book series, so I know people who write zombie books, for example, they had like 15 books in their series, like the most ridiculous kind of, and the first book will be free and then a step and they’re making their money on those later books. So that’s where perma-free is useful because it gives an opportunity for people to read your work without having to pay for it. Because obviously paying for something is a big step so that’s kind of where perma-free comes into it.

Jyotsna: Wonderful. So one has to clearly use perma-free as a very conscious strategy so that the book can always be for free and can act like the first step or an introduction to your brand or to your catalog of books that you have, right? So, Tim, do you, just talk about at the end of the book that I have 7 other books in the series are, do you also capture people’s email ids through the free book?

Tim: Well I should capture people’s email address, I have got a sign up for it but it’s never, I’m not sure even sure that list works anymore but this is clearly a sensible idea. I know what people are doing what they’re supposed to be doing. There are a number of strategies like capture an email address, that certainly works if you haven’t completed the series yet, so let’s say you’ve got a free book and then you’ve got another book, and you’ve got another book but you’re actually going to write another 10 books in that series.

Jyotsna: Yeah.

Tim: If you have people sign up for emails has them when the 4th book comes out that you’re writing at the moment, you can blast it out to the people who signed up for it in the previous 3 books. So email does work, it’s still the most efficient way of getting people to do things at one particular time.

I mean, you can put a post on social media but you don’t know when and if people are going to see it and they may not be in the right frame of mind but generally people when people are checking their email they tend to be in more of a buying kind of mindset than like if they’re just on Facebook to look at cat pictures they’re not necessarily going to be like, “Oh, Tim’s new book is available.” They might say that but an email works really well. The other thing that people have done which, again, I don’t do, is they put in like a sample chapter of the next book at the end of their free book.

Jyotsna: Yeah.

Tim: So, I mean, what I did and what other people do is they put a cliffhanger at the end of their book. I don’t put a particularly big cliffhanger, because people don’t like cliffhangers in a way but they work so if it’s kind of like, you have a zombie book and then it’s kind of like your hero is dangling from a cliff and it’s like, “Find out in the next book” which just happens to be available for $9.99 on Amazon and that does work very well as a strategy though some people will hate you for doing it. So that’s another option.

Jyotsna: Yeah, so I think if somebody is trying to write a series then definitely having the 1st one for free works like magic. Now, let’s talk a little bit about this 99 cent strategy. So I’ve seen a lot of authors use this when they’re just launching their book. They either use KDP Select and start off with a few free days of if they already have an audience they launch the book directly for $0.99 and make sure that a lot of people load it so they can get it to climb the charts and then they increase it to the free pricing so have you tried that as well?

Tim: I have tried that as well. Well, I didn’t have particular success with it, to be honest, but I can see that, well, I say that, I mean actually with my first book it was priced $0.99 and I did pay for quite a lot of Facebook advertising and I pushed it up into the Time Travel Channel in the UK so that strategy can work, the only trouble is that you are betwixt and between because you’re getting, like, sort of $0.30 a copy you sell so unless you’re very good at when you switch it back to-

Jyotsna: Exactly.

Tim: Full price.

Jyotsna: It’s definitely not a long term thing because you’re not going to make anything out of it but if it’s just for probably a week or less than that then it’s still fine because you can get the initial momentum, a lot of downloads, which will help you climb the charts and then you have good visibility for the book which will help it sell at a higher price

Tim: Yes, I mean that’s where the KDP countdown deals are good because those I do know you do get 70 percent royalties even though you’re at $0.99. So at least you get an extra 35 cents.

Jyotsna: Would you like to talk a little bit about how Countdown deals work, Tim.

Tim: Yes, so for people who, I mean, a little bit of we’ve talked about KDP Select, without really saying what it is. When you go onto Amazon’s KDP interface, and that’s Kindle Direct Publishing, and you’re writing like all your book details, right at the bottom is this kind of “Do you want to take part in our KDP Select exclusive program?”

Now, what you’ve given up on being in KDP select program is that you can’t have that ebook available anywhere else including, you know, your website or on Amazon or on Apple on Google Play, Kobo, all the other ebook retailers. My understanding is it doesn’t affect paperback so you can put the paperback on as well as audio books. But this is just for ebooks. But what you get out of being in KDP select is that your book is available for lending under their scheme and also that you get access to, once in your 3 month period, you can either do a couple of free days and I think there’s like 5 or something which don’t have to be on the same time or you can do a countdown deal.

Now, what a countdown deal is it will basically show your book on the Amazon store with its normal price crossed out and then down to a lower price and a little countdown clock that says, like, this book is available for $0.99 for 5 days which is quite, actually is quite a good impressive thing, least on the Amazon dashboard and the way it works is that you get paid royalties at a higher rate even though your price is down in the $0.99 or whatever. So that is what a countdown deal is. It’s one of the promotion options that you get from being in the KDP Select scheme.

Jyotsna: Yeah and you can select multiple price bands, right, like, you know, $0.99 for a few days then you can just lower it or increase it, right?

Tim: Yeah. I’ve only done one once. I think you do have the right, you have the option of doing several steps, you can do a step down or a step up. You’d need to check on KDP but yeah, countdown deals can be effective. What I didn’t appreciate is I thought you could do countdown deals and the free days but you have to pick one. That’s kind of and also I believe that you can’t do a countdown deal within the 1st month of your KDP Select which is a bit of a pain because there were lots of charts on Amazon which are new release ones which are within the 1st month so being if you could do a countdown immediately that would make a bigger difference but you have to wait a month. So that’s another thing to consider.

Jyotsna: Another reason why people might want to consider the $0.99 pricing is like how we ran a preorder for our Write and Grow Rich book and the reason why we priced it at $0.99 is we wanted the maximum number of units sales to happen but if we give away the book for free we will not be eligible later for USA Today or a New York Times or any of those lists so that’s why we had to choose the lowest price and definitely our goal was not to make a lot of money from the book but was to just see how the whole bestsellers outside Amazon works so that’s why we had to consciously do a pre order starting a couple of months before the actual launch and start gathering these 99 cents sales so it really helped us that way.

Tim: I mean, something else to consider pricing wise, I generally don’t recommend people put their book on $2.99. Now the reason why is if you think about it you have nowhere to go apart from say $0.99 or free. If you put your book available for $3.99 you can at least go to $2.99 and stay in the royalty and say like as a special deal for this month because it’s Halloween or whatever I’m going to lower my book to $2.99 but if you’re already at $2.99 then any kind of promotion you automatically jumping out of the high royalty range into a lower royalty range and you end up competing against people who are on countdown deals and the rest of it. You kind of need a bit of margin.

Now, this is obviously harder if you’ve got something like a novella. I mean, I felt a bit guilty twice in my last novella in that series at $2.99 but I think, in general, I think a lot of indie publishers price their books too low. I may be controversial in this viewpoint but I think also because if you have a slightly higher price book then the paperback doesn’t look so massively expensive in comparison. That’s why I say it’s worth at least looking at $3.99, $4.99, possibly even $5.99. And I think nonfiction is more tolerant of higher prices as well.

Jyotsna: Exactly. One of my clients, I don’t remember exactly the book’s topic but I think it was about stock market and he had some unique formula which is making him a lot of money and he was adamant that his e-book would be priced at $10 and I said “Who does that?” I mean, all the other books in our general are priced at $2.99 but he said, “Look at the massive value I’m giving and the pricing itself will make my book stand out from the competition.” So that’s another way of looking at it, like-

Tim: Oh yeah.

Jyotsna: You know, and he strongly believes that by investing $10 somebody is going to learn a million dollar secret by reading his book. Then why not price it higher, that’s his way of looking at it so it’s not necessary that every book has to be just $2.99 and I see a lot of authors testing it. They increase it to $3.99.00 and if it’s still selling without any dip in sales they slightly make it into $4.99 and then if they see there’s a dip they just bring it back to $3.99. So you can just keep testing and seeing what works but I do agree, Tim, that if you always price it at $2.99 then if you want to do a New Year offer or a Christmas deal or something like that there is no lower pricing to look at, so it’s better to slightly, probably, you know, $3.99, $4.99 but depends on the, as you mentioned, on the genre and how the other books are also priced at.

Tim: And the other thing that people don’t appreciate and you do need to be, obviously, going wide, but on sites like Kobo, because when they do promotions, you can apply for promotions on cuts. Kobo’s another ebook retailer which is big in Canada, basically, they’re based in Toronto, but they’ve got like global network of and certainly places like Africa, Kobo’s a lot bigger than Amazon. Places like Malaysia, and a lot of Asia as well, they’re bigger but they have marketing teams so if you put in for promotion on Kobo, they basically say they give preference to higher value books which are discounted further.

Jyotsna: Right.

Tim: So if you’ve got a $3.99 book and then you go to Kobo and say I’m going to put that on for like $2.99 and there’s a special offer then you are not likely to get accepted but if you’re this guy with this $9.99 book and you say “Well, I’m going to do a promotion for $3.99” then there’s a very good chance that Kobo will accept you for one of their daily deals or promotional things and it’s similar with iBooks as well. They have marketing, they have basically merchandising teams and people who look through the offers and see, “Well, is this a good deal to me?” So, in some ways, like, if you’re going wide, higher pricing can make sense.

Jyotsna: Correct, yeah. So it totally depends on why and how an author is planning to use their book. Is it just to introduce readers to your brand? Then try to make it perma-free or if you’re just launching then 99 cents is OK but in the long term, you need to make money, right? Otherwise you can’t aspire to become a full time writer. So then it’s really important that you price your book well and be confident that your book is worth the price.

Yeah so let’s talk a little bit about paperbacks, Tim, now paperbacks don’t offer that level of flexibility because there is a print cost involved and Amazon tells us what should be the minimum price and the maximum price for the book, right? So would you go with somewhere close to the minimum price or do you look at the other books and price it accordingly?

Tm: Personally, it depends, is the answer. I would say that you don’t want to be going anywhere near the minimum price for paperbacks. And that is because, well, if you have any kind of, like, you create a paperback version of your book, so why have you created a paperback version?

If you’ve only created a paperback version to be available for sale on Amazon then the minimum price, close to the minimum price makes sense but if you have any aspirations at all that you may want your book to be available in bookstores, then you need to be considering that you need to be raising your prices quite considerably because on Amazon you’ve got basically the print cost of the book, so for example, my new social media networking book, I’m selling it for $10.00, the paperback version. The author copies, if I order author copies I pay like $2.50 I think, so that is the cost of printing the book. So you say, “Well why I’ve got this like $7.50 sort of like margin there?

At some stage, and I haven’t done it at the moment, I’m going to look to go to Ingramspark, I could do this on Createspace but it makes sense to do it on IngramSpark. To make it orderable and available in bookstores, you know, the thing about bookstore pricing is that typically a bookstore will take 50 to 55 percent of the price of your book to pay them, because it’s not a cheap thing, I mean, we have these romantic ideas about bookstores but they need to make money themselves, so like, on that $10.00 sale, $5.50 will probably, if it sells in a bookstore, $5.50 will go to the bookstore.

And then if they don’t sell, then they can return you the book, which basically will mean you destroy it, in the end of the day, you could take them back, the old dog-eared copies that have been sitting in the book and try and resell them yourself but. So then you’ve got like, well, so that means that between that $2.00 print cost and $4.50 that I got that will still be a profit margin for me.

But if I put it in the minimum, if I sold the book for like $5.00. I would have no money whatsoever from selling in the bookstore so I would suggest to most people to price their paperback books as if they are going to sell in the bookstore and they will make some money. I mean, you know, this is why the big publishing come companies are still so competitive in paper because they can afford cheaper print costs because they’re doing print runs, so that $2.00 might go down to $1.50 or $1.

They’ve also got merchandising teams you can go around the bookstores and encourage the bookstores to order their books. But I think for most self-publishers, work out what the price should be for a bookstore distribution and that is the price that you make it available on Amazon, because I think the people are also less sensitive to price in paperback, people expect to pay more.

Jyotsna: People understand the value of paperback, right?

Tim: Yeah.

Jyotsna: Sometimes a person looks at the paperback pricing and it’s a $15 and the ebook is for $2.99, if they can’t afford the paperback, it actually helps in selling the ebook, so either way, as long as somebody reads the book, it’s good.

Tim : Oh yeah.

Jyotsna: Making it too cheap will not bring the distinction between the ebook and the paperback, so I think it’s a good idea to price it slightly higher or considerably higher than the minimum price that Amazon tells you and next, looking at the audiobook, I think that there we have no choice, right? Amazon sets the price.

Tim: Uh, yeah.

Jyotsna: Depending, I think on the length of the audio book they’ve come up with the pricing so we just have to accept that the only thing we can decide is whether to keep 40 percent royalty or 25 percent based on the exclusivity that we give to Amazon, so if we give them the exclusivity then we earn 40 percent of the price of the audio book, or if we want to distribute it in other places then we get to keep only 25 percent. I think that’s the only freedom we have right now, we can’t choose the price, right?

Tim: Yeah, well my understanding is that, and I still need to get around to doing an audiobook, I’ve got one almost set up which is based on my podcast episodes, actually. There are sites like Find A Way Voices that let you distribute to loads of other platforms and Audible are not the only audiobook platform however they are like ridiculously, like, large market shares of 80 percent something like that.

My understanding is that Find A Way Voices you can set the price on the other, some of the other retailers. And whether that price matches with Amazon, I don’t know. I don’t, I suspect you’re right, it’s still a very murky, they are very profitable, apparently and people are making a lot of money from audiobooks but you are very much in Audible’s sorts of, because the last, I mean, I’ve got an Audible subscription and I use credit so I get a credit every month. So a lot of your audiobook income is not people buying the book outright, it’s not like an ebook, it’s people, in effect, renting your book. So, it is an interesting area, audiobook pricing, you have very little control.

Jyotsna: Correct, yeah. But it’s definitely a great source of income so-

Tim: Oh yeah.

Jyotsna: Have you come across this other model, Tim, where you won’t see it inside Amazon but Authors do it on their Facebook pages and other profiles where they tell that, “Hey, I have a new book that’s coming out and I would love to give you the paperback away for free, you just have to pay for the shipping.

So we pay $10.00 or $7.00 for shipping and we end up getting the paperback but I was following some of these guys to just check, how are they actually making money because it was printing and shipping and it just charging us for the shipping so I got to know that out of 100 people who buy the book for free and just pay the shipping, a percentage of them, maybe 10 or 20 percent of them end up buying something else on the next landing page, which could be a course or something else that’s sold by the author, so it’s actually like a funnel.

So on the top of the funnel they get this paperback for free and the shipping would just cover part of the cost but so many of them end up buying something of a higher value from the author, so the idea is this author wants their physical book to be present in people’s bookshelves so, you know, it creates a different kind of connect, rather than just giving away an ebook for free. So I’m trying to try something like that, Tim, I know it’s a lot of work, though.

Tim: Well, I hadn’t heard of that before at all, to be honest, though I have given out an awful lot of copies of this book in the last, I gave out about 20, well, no, I actually sold 17 at a conference in Nottingham and I gave out about 8-

Jyotsna: At a conference.

Tim: 10 in the US. So, I can see, because if your book is kind of nonfiction or it’s like first in series then I could see it could make sense, I mean, it’s the same principle as the free ebook. Obviously, you’ve got like this, I mean, if you’re asking people to pay for shipping anyway, then I’m kind of like, “Why aren’t you just asking them for like one dollar or something like that, at least make some money out of it?”

Jyotsna: But I think it’s just the human psychology, when we realize it’s a free book and we’re just covering the shipping, people just assume that they’re paying nothing, though they are paying $10. It’s just the way our mind works and smart marketers and authors make use of that and if they have something, especially this works well for non fiction authors, if they have an online course for $300 or $500, a small percentage of people end up buying that and that’s how they make all the money back and a lot more.

Tim: Yeah, but a lot of authors are making their money from things that aren’t books, I mean, and the thing that I think a lot of self publishers end up in other products because they realize that actually other products are a lot easier to sell than books most of the time. If you can sell like 5 people some month long training course thing for a thousand dollars, that’s going to be, you’re going to have to sell an awful lot of books to make that same amount of money so if you have to give away or splurge loads of copies to get, if you spend $2000 on giving away books but then you get $5000.00 of people doing your training course, that makes sense. And a lot of self-publishers end up doing courses or training or like role play fantasy things wherever, like a fiction author would do and I mean, fiction, in some ways, is tougher to make those kind, I suppose you could have like a club where you all would dress up as elves or something. Kind of nonfiction is a lot easier for making money on those other areas, so you’re right, I mean, the book can be a mega business card, really, at the end of the day.

Jyotsna: True. That was a very interesting discussion, Tim and I hope all you listeners and watchers got a lot of value out of this episode and we’ll see you next month. Meanwhile, don’t forget to subscribe to our YouTube channel and we have a couple of other shows like a Q & A podcast, and an Advance Salon so make sure you tune into those as well and we want to see you next month. Bye.

Tim: Bye.

, , , , , , , ,

No comments yet.

Leave a Reply