After all the comments on the last post about electronic pricing, it became very, very clear to me that indie fiction writers seem to think that pricing an electronic book is done in a vacuum. They just make up some number that feels right or is what they heard and then stick to that price without any thought of customers or history of publishing or what anyone else in publishing is doing.
And most importantly, writers give almost no thought to the perception of the buyers. The decision is often made on pricing because it’s what the writer likes, or how the writer personally buys, or what the writer can afford. That’s usually as far as the thinking goes.
And worse yet, indie books are often priced because a writer doesn’t think their work is worth the same as a traditionally published book. That’s just flat sad.
Of course, all the confusion makes sense considering how new all this is and that indie publishers are just writers who (before now) never once thought about how a price got put on a book, electronic or paper. Just not something that comes up in the “training” of being a fiction writer.
Honestly, as a writer, I can’t remember ever having a conversation longer than a minute about pricing of any of my books in thirty years of writing. Just never happened. However, when I was the publisher of Pulphouse Publishing Inc., pricing was a constant topic from before we published our first book. Hmmmm….
And then, of course, over the last few years, we had major bloggers who pushed the 99 cent idea and the cheaper-the-better idea in a race to take all indie publishers to the bottom of the electronic pricing structure. This race even went so far as having indie writers figuring out ways to give their books away before Kindle allowed it.
Yeah, it got that bad and still is among some groups of indie writers.
As is normal with most fiction writers, any thoughts of logical business just flew out the window with the sudden new power and control over their own work.
Thankfully, that strange, no-thought pricing trend is starting to shift as more and more indie writers are understanding they have to run their own publishing companies, even though they only publish their own work. A publisher is a publisher is a publisher.
And some of us writers feel our work and our time has value, which is also changing the discussion.
Book Pricing: Some Minor History
A few short years ago most paper books were sold in real brick and mortar stores or large box stores. Then came electronic books and electronic bookstores and the world started to shift.
A few short years ago the major publishers and some of us smaller publishers (Pulphouse Publishing Inc. for example) had the knowledge and the ability to access the book distribution system. Most writers thought it far, far too complex to worry about. Then came electronic books and electronic bookstores and the world started to shift.
A few short years ago three things happened. Distribution directly to the readers became possible, the silliness of thinking of self-publishing as a bad thing got shot in the head after fifty years of life, and some midlist writers finally got completely sick of the bad contracts and even worse treatment from traditional publishers.
A few short years ago some writers started going directly to readers with electronic books (helped along greatly by the KDP program and the brains of Mark Coker at Smashwords). And some of us jumped on early and got publishing and talking and teaching other writers how to climb on board. And the focus was on electronic books because they are so darned simple to produce and get to readers (even with the costs I’ll talk about below.)
A few short years ago, even though electronic publishing at the time was only a few percent of all books sold, indie writers seemed to latch onto that area of book sales with all their focus because it was easy. And honestly, even at a small percent of available readers buying electronic books, the money was stunning for some writers.
And now, two plus years later, we find ourselves here, almost to the new normal in publishing.
Today, traditional publishers are making large profits and print books are still being produced (no matter how much some writers wanted that to stop). Electronic books have exploded to 20% of the total book market and is looking like it will level in a few years around 30%. Stunning growth when looked at with a business reality and in a short time frame.
And finally, today indie writers are starting to catch a clue that the future for their personal publishing company is in doing both electronic and paper books (just as traditional publishers are doing) and reaching 100% of their reading public. And thanks to indie publishers, the number of paper books went up 6% this last year (2011). Again, amazing growth and only starting.
So Back to Pricing
When a publisher (all traditional and some small presses and very few indie publishers) sets a price for a paper book, the publisher (in general) looks at the following factors in a profit-and-loss calculation:
1) Costs of product (author)
2) Costs of production and overhead
3) Costs of distribution (discounts including bookstore percentage and shipping)
4) Desired profit levels after all costs
In traditional publishing, those factors are worked into a profit-and-loss sheet with projected (hoped for) sales over a fairly short period of time. (Remember, to traditional publishers, books are still just like fruit that spoils. That’s still how most of their accounting systems work.)
To a small or mid-size press, the concern is getting the money spent on the book back as soon as possible and then letting the book sales grow over time for the profit. So small and midsize presses tend to walk a line between indie and traditional presses in this area, with books being both fruit and nonperishable goods at the same time.
Most indie presses, meaning writers self-publishing, tend to take a longer-term look. That’s also what I have talked a lot about here. Get in for the long haul and let the money just flow every month, even though it may only be a trickle for a year or two or more. Just keep writing and thinking long-term. Books don’t spoil when you own the copyright.
But indie presses, how do you set your book prices with the above factors?
Actually pretty simple, but it requires some math, so hold on…
Indie Press Calculations
1) Cost of product.
This is the cost of the time it took you to write the book at a reasonable rate, the cost of the overhead of your office space, cost of supplies, and so on. (Yeah, I know, you ignore that, but stop being naive and start giving your time and your work some value. If you don’t, no one else will.)
2) Cost of production and overhead.
This is the cost of your time to do covers, both paper and electronic, the cost of proofing your book, cost of your time formatting, the cost of your time uploading your book to all the sources. And if you must, the cost of your time for promotion.
3) Cost of Distribution.
For paper, figure a bookstore discount of 50% of retail cover price and a distribution fee of between 5 and 10% to get it to the bookstores through an indie distributor. (This is outside the extended and Kindle distribution on CreateSpace. I will be talking about the wave of indie distributors to bookstores over the next six months.)
For electronic, figure the discount of the major electronic bookstores and distributors. For example, in the $2.99 to $9.99 range you get just under 70% from Kindle for most sales. Smashwords takes 10% of similar numbers, and so on. (If you are pricing your novel under $2.99, I have a hunch this post won’t help you because you don’t have enough common business sense to even get the best discount for your work.)
4) Desired profit levels after all costs.
Figure all your costs, figure how much from each source with each price you would be getting, and then figure where your money comes back to you and when you books start breaking into a profit per sale. To do this, just as traditional publishers, you have to make a guess at sales.
(I have the numbers I use below that have proven over time to be fairly close for writers with more than a few books up under the same name. Not all. Some do more, some do less. So figure your own guess as to future sales and remember, it is a guess. And as I have talked about before, for the calculations below my time is worth at least $50.00 per hour when working for myself. I tend to charge $250 per hour and more when working for others. Not kidding. Write and edit as much as I have over the decades and you can get that rate as well. Or better.)
For example:
Three months to write a novel. 80,000 words. 80 hours at 1,000 words per hour plus 20 hours to fix mistakes makes the hours spent at a nice round 100 hours. No supplies for ease of calculation. $50.00 per hour x 100 hours = $5,000.00. (Do your own math at your own hourly rate and time to write a finished novel but please don’t mention it here. We’ve been though all that.)
Cost of production is $20.00 for a good cover art and twenty hours to build the covers and format the book for both paper and electronic and launch it in both electronic and paper. $25.00 for extended service on CreateSpace and $100.00 for proofing costs. Cost total then is $50.00 per hour x 20 hours = $1,000.00 plus $20.00 plus $100.00 plus $25.00 = $1,145.00.
Total Costs of the novel is $6,145.00. Keep that number firmly in mind.
Next Step: Costs of distribution. First look at your page length of your paper book and calculate your price plus $2.00 profit for all sales in extended distribution. (There is a chart on CreateSpace that helps with this.)
For an 80,000 word novel and decent trim and font sizes, this will usually take the price of a trade paper to the $17.99 range, which is fine in a trade paper.
Say your book publisher costs are $5.00 per book from CreateSpace (you get this exact number when you order the first proof). Retail cover price is $17.99. Give a bookstore 50% max and a distributor another 10% of that and what do you have left over? 40% of course.
$17.99 x 40% = $7.19 minus the $5.00 costs is a profit margin per book of $2.19 before creation expenses in steps one and two.
(This is pretty close to the edge for my tastes for novels because in many instances there will be group shipping costs involved which will range from $.60 to $.85 per book. But for this example, you get the idea. And sometimes shipping costs will be paid by the buyer or the distributor, so that’s not on every book.)
Again, each book will be different, but make sure you have that level of margin on both the extended distribution systems through CreateSpace and the outside distribution to bookstores. That will make sure you also have the same profit margin or better on other distribution methods as well as they emerge. And this also gives you a much bigger profit margin when the book sells directly through Amazon or CreateSpace.
Setting Electronic Prices
So back to the point of all this finally: Setting your electronic book price.
You have a paper edition of your book on sale for $17.99. Each paper sale will return at least $2.00 back against the $6,145.00 costs of doing your book. ($145.00 out of pocket costs, $6,000 time costs.)
So that will take about 3,070 paper book sales to return your investment in money and time completely. Possible, given enough years and some luck. But now we can add in the electronic sales to cut those years down some.
Note!!!! When setting your electronic price, never forget that your paper book is listed and shows up at $17.99 on Amazon and B&N and iBookstore and Kobo and other places.
Now, are you going to want to price your electronic novel at 99 cents and link it to the $17.99 book with the same cover and title????
Of course not. That would just shout problems to every reader who sees it. And kill the sales on both sides.
The range of electronic book pricing that goes naturally with a $15.99 to $18.99 paper edition is $6.99 to $8.99 electronic.
In other words, readers like electronic editions OF NOVELS to be a little less than half of the paper edition. Generally.
Not a lot less, but a little less than half if the book is a full novel length. (I will mention shorter collections below.)
That price range feels right to book buyers and feels like a deal to electronic book buyers.
For example, this is what every buyer will see on all electronic bookstores.
TRADE PAPER…$17.99
KINDLE EDITION… $7.99
So what do the electronic buyers think? “Wow, good deal on that Kindle edition.” And more likely they won’t give it much thought at all because it looks natural and professional.
But any price too far under that for the electronic edition gives the readers a bad feeling. And makes them question the quality. And then not buy either edition.
In other words, set your electronic price in relationship to your own trade paper edition.
Also it would not hurt to make sure that your price looks comparable to electronic editions put out by traditional publishers.
In this instance, price is NOT an advantage. You cut your price too much and you cut your sales as well.
Electronic book prices are not set in a vacuum.
To finish off the math.
Electronic… $7.99 x 65% = $5.19 profit per book before set expenses of costs and time to produce.
(This is an assumption of sales…make up your own for your own profit and loss statement.) Sell 25 electronic copies and 25 paper copies per month (worldwide and assuming you are distributing to bookstores).
So, now having the data to use for the 4th question, how soon will your set costs and time costs be back in your pocket?
Electronic… 25 copies x $5.19 = $129.75
Paper… 25 copies x $2.19 = $54.75 (adjust for higher rates on sales direct or through Kindle and/or less copies sold. This is just an average for this example.)
Total income per month (assuming these sales numbers) is $129.75 + $54.75 = $184.50 per month.
$2,214.00 per year.
Less than three years to recoup your set and time costs at that level of sales. And all sales from there are just pure profit after production and distribution costs.
(I can say this right now, since a number of you questioned my math on the short fiction post. WMG Publishing Inc, without any real bookstore distribution yet, is doing better than this number on four author names and a dozen different books. I used very low numbers here for my calculation.)
As promised, let me give you an example of a 20,000 word five-story collection.
Using the same calculations as above….
With a decent trim size (5.5 x 8.5) and decent font (not too large or too small), a 20,000 word collection will run about 110 pages or so in a paper edition. Price the paper collection at $7.99or $8.99 to keep it in the same price range as the major digest magazine prices of the same look.
Your cost is about $2.20 for that book from CreateSpace. Extended distribution will get you about $1.00, which is fine for a short collection. (Longer collections should be priced like a novel for the most part.)
$7.99 x 40% = $3.20. Minus $2.20 = $1.00 profit per sale on outside distribution, about the same as the extended distribution number.
Now move to electronic pricing.
Remember you have a $7.99 – $8.99 trade paper edition on the screen. What electronic book price will look good and normal to a book buyer?
$4.99. That looks fine even though it isn’t exactly under half the price. At these low prices, book buyers do not expect the half price for electronic, but they do expect the price to be considerably less than the paper and near half price.
This is what every buyer will see on all electronic bookstores for a short collection.
TRADE PAPER…$7.99
KINDLE EDITION… $4.99
Looks fine and reasonable and professional.
Summary
Electronic pricing should not be done in a vacuum.
I know all of us started this indie publishing road just pricing our books with no consideration to anything but how we felt and what we would buy. And a lot of us followed some seemingly-good advice to price our books and stories into the bargain bin on some strange thinking that we were in competition with traditional publishers.
Books and publishers are not in competition except to publish the best fiction possible. But honestly, that’s up to the writers to write great stories and the publishers to get them into the hands of as many readers in as many forms as possible.
Sound familiar since you are now wearing both hats as an indie publisher?
I have grown to hate the price discussions because all I tend to get is comments like “I don’t feel like pricing my books that high.” Or, “My mother would never buy a book priced that high.” Please, hold on those comments this time, would you?
In my opinion, it’s now time for some logical thinking when pricing electronic indie books. That’s the kind of discussion I would love to have.
Also, I am sorry to bust a real tightly-held myth about traditional publishing, but electronic books DO HAVE COSTS for traditional publishers. They have author costs, employee costs, expensive overhead, art, proofing and so on. All very real out-of-pocket costs for a traditional publisher.
So should traditional publishers just give those electronic books away for 99 cents and hope to get all the money back on the paper books only? Of course not. Electronic books are just another way to distribute books to readers and need to be figured into any profit and loss calculation.
And why electronic books are near the half price of a paper book is because of the costs of production of a paper book and the costs of delivery of a paper book and the return system that is still somewhat in place for traditional publishers. The costs are still there, but not as much and readers know that, which is why readers expect the lower electronic prices, but don’t expect them to be too low.
The vast majority of traditional-published books follow the basics I laid out above and price their electronic books to a profit and loss calculation, trying to predict sales and time of sales just as I did above. And for the same reasons.
Are there exceptions in both directions? Yes, and I don’t want to hear about them here to be honest.
So when pricing your next novel, do the calculations for your time. What kind of hourly wage do you get at work? Use the same number for your writing and production time. Add in exact costs, and then figure out how long at each price level it will take you to earn back that money.
A hint: Three years is a good time period. And what traditional publishers tend to use on their profit and loss statements.
Stop pricing your ebooks because it “just feels right” or “because I’m afraid I’m not worth more” or “because I’m afraid to go that high.”
Use math, use basic business practices to understand the value of the product, the art, that you create.
I’m having a blast with both the writing and the publishing these days. But that doesn’t mean I don’t want to be paid for my writing and my work.
I value my books and my writing and my time. I will price my books like the were priced when I sold them to a traditional publisher. Readers are used to that.
And I want to make the publisher’s slice of the pie as well for my work as a publisher.
And that’s even more fun, to be honest.
Have I said lately how much I love this new world?
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Copyright © 2012 Dean Wesley Smith
Cover art copyright Philcold/Dreamstime
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This chapter is now part of my inventory in my Magic Bakery. I’m giving you this small slice as a sample. I’m giving you a taste, but not selling any of the pie.
In fact, this article is about 3,100 words long. I could have written a short story in the same amount of time.
If you feel this helped you in any way, toss a tip into the tip jar on the way out of the Magic Bakery.
If you can’t afford to donate, please feel free to pass this chapter along to others who might get some help from it.
And I would like to thank all the fine folks who have donated over this last year. I don’t always get a chance to respond, but the donations and the comments both after the posts and privately are really keeping me going on this. Thanks!
Tip Jar: Go To Paypal
Hunh. We got to similar places by different roads. Basically by back-calculating from the fact that book sales tend to be a Zipf distribution (google my name and http://www.AllAnalytics.com and Zipf for an explanation), I came up with two numbers: an Amazon rank of around 165,000-195,000 represents one sale per week for paper books, and 180,000-220,000 is about one sale per week for electronic. So I looked at the price ratios of a few books that had 2:1 paper:electronic sales ratios, and it pretty much came in at electronic being 35-45% of trade paperback (by far the most common format for indies).
When it came time to price RAISE THE GIPPER!, my lightning-output topical satire (written between Feb 21 and Apr 20 and probably only funny till November, Republicans raise Zombie Reagan as the alternative to Mitt), I just looked at the prices of paperback political humor books that seemed to be aimed as election year gift books, found the trade pb’s were mostly at around $11-$14, picked the legendary 5/6 price point that marketeers learn indicates “quality”to buyers, figured 40% of that, rounded to the nearest .99, and came up with $4.99. (no pb of it planned at this point; it really has a shelf life like leaf lettuce, I think, though I’ll certainly leave it up for sale afterward).
Oh, and I have no idea what my mother would have paid for it. As for what I ask people to pay, when I’m wearing my market researcher hat and doing consulting gigs, my answer really is “How much do I think they have?”+20%, as a start.
Thanks, John. Very interesting approach. I like it. Thanks!
I have been selling a paperback for $14.95 on createspace that they discount to $11.79… I made an ebook version a few months ago and was selling it for $4.99. I raised the the price to $5.99 and my sales for both went up. After reading this today I just raised it to $7.99… the argument in your post here that a cheap ebook causes some to ask questions when they see the prices together makes a lot of sense…
Fascinating stuff — once again.
In part, based on your earlier discussion of pricing, I increased the Smashwords/Kindle price of my novel by a dollar to $3.99. Interestingly there was a dramatic fall off of sales in the UK — where hitherto sales ran at around two copies sold for each sale in the States. Sales in the U.S. increased, (by around 50%) and, now, three months after the price increase, UK sales are coming back to around 50% of what they were before — however, sales in the U.S. are now double those of the UK (and fifteen times those of sales in France, Germany, Spain and Italy combined).
What’s my take on this?
I think, perhaps, in the US the 99c bargain bin has virtually run its course —US customers/readers are now more wise to the less than stellar quality on offer at 99c. Whereas the UK readership (about two years behind the States in terms of adoption) has yet to have its fill of discount fiction. Also, European e-book readers have to pay tax — which adds 15% to the price — whereas there is no tax on print books.
And, Europe? Well, a much more complex picture. Adoption rates lower — much fewer e-publishers, much less content in native languages, and, in Spain at least, an embedded culture of free entertainment downloads. (Which is why many US TV, motion picture and music distributors severely restrict the viability of content — thus, ironically, obliging yet more people to go looking for pirated material.)
Anyway …
A quick query, Dean — how do you calculate and incorporate costs of review copies of both electronic and print editions in the above pricing formula? Is it reckoned as a promotional cost — or lost sales cost? How many free e and print versions do you suggest could be made available for web and print reviews?
Many thanks.
Haarison, I think your idea that the 99 cent bargain bin has run its course here is right. And yes, UK is a few years behind and Europe another year. But catching up quickly.
As for review copies, with print review copies, called Advanced Reading Copies or ARCs, we sent out twenty with the last front list title. And will do the same with the front list titles this fall. As for sending out electronic review copies, we do that to anyone who asks to be honest. No costs.
But for the paper, there is costs and we count that into a promotion slot on the profit and loss for the book. We will also do some ads in magazines and such down the road, so those will count as promotion as well. But we will only do ads to tell fans a new book is available in the same series, not try to push a new book that stands alone.
Promotion is best left to writing and publishing the next book. We spend almost no time on it, to be honest, and none of us at WMG Publishing Inc. see much reason to change that.
That’s interesting. Right now the only things selling in the UK are my $0.99 and $1.99 shorts, while the only thing selling in America is the $4.99 novel; I briefly sold it for $0.99 but sales increased when I raised the price to $4.99.
Maybe it’s time to raise prices again and see what happens, particularly now I have a PoD version of the novel available.
Edward, when you raise your price off of $4.99, watch how that compares to the POD price. If you POD with the same title and cover is $15.99, you might want to go to $6.99 on the electronic and then make sure after a few weeks Amazon and B&N have them linked together.
I just finished reading three academic price-theory books (not specific to publishing), and all emphasize the importance of the psychology of “price anchor.” That means the last price a buyer sees before your product’s price. Exactly as you recommend, having a paper book priced higher than the ebook is a compelling boost to your chance to make a sale. Even if you never sell a single paper book, having that higher price anchor right there on your page will make you more money, assuming you rationally price your ebook as you explain. Excellent post as always.
Jeff, exactly. Thanks. And yes, even if you don’t sell any, or just a few, it’s another source, another possible cash stream, and helps the purchase of your electronic books. “Price Anchoring” is a really important aspect of pricing anything. You see this concept a great deal in retail stores if a person pays attention, which often they don’t. For most of us as customers, it just goes in subconsciously and we don’t even know why we react a certain way to a price.
Thank you for this much needed business lesson.
I’ve been struggling with pricing and my own insecurities for a while now, this post of yours opened my eyes to look more clearly. I can feel I write crap, but even so I should not price my (e-)books lower, I should allow the market to judge my writing and bear with it. By keep thinking less of my own product, I’ll be dragging myself down with no chance to improve upon myself by stepping up and do the work required. We humans tend to wallow too much in our own fears and paralyze ourselves in a position we don’t really want to be but are afraid to step out off.
I’ll think this through and do something I’ve neglected to do, I’ll put together a business plan for my writing/publishing and work more diligently on it and invest any coin available to make my work the best I can afford to make. I’ll try not to drag myself down anymore with feeling insecure. If I write crap, then it won’t sell and I’ll have to deal with that, but it won’t be because I didn’t do the work needed
I’ll probably work out my own way how to proceed with this, but I’m sure I’ll price my work more to the real work I put in and less on emotions I might feel.
A. Rosaria, thank you for saying that. Very clear and very healthy, in my opinion. Now, don’t forget to have fun as well. (grin)
Thank you, Dean. Posts like this make you worth your weight in tritium.
I’m a bit puzzled by the pricing on the 5 story collection. You’ve been talking for a while now about pricing shorts at $2.99 because of the 35%-70% royalty jump. Pricing a four or five-story bundle at $4.99 for the ebook and $7.99 for the TP seems low to me, unless the shorts are priced lower, say at the $1.99 level. I haven’t personally tried selling there; it might be worth playing with just to see.
Personally, I’m quite happy selling shorts at $2.99. I’ve taken your “Magic Bakery” advice and created four-story bundles (~20k words) of these which I have priced at $7.99. That’s a number I pulled out of the air, but seems to work. I sell a decent number of them every month, with no returns or complaints in the reviews about pricing.
Under those circumstances, would you consider pricing the TP edition higher, or would you leave it about the same to match the digest magazine pricing and reduce the pricing on the electronic editions?
Sawyer Grey, when pricing the paper on a short collection, we wanted the $1.00 profit margin from the extended and bookstore distribution systems. And in paper, they look like a think, solid issue of a digest magazine at a trim size of 5.5 x 8.5 inches. And those digests sell for about $6.99. So getting the $1.00 profit margin, the $7.99 to $9.99 trade paper size (depending on length and pages) seemed right for the short collection. The next price point of value is $12.99 (the ones between make no difference to buyers) and to be honest, the paper books feel nifty and feel like a fair value at the $7.99 to $9.99 range.
Then, in pricing the electronic, looking at a $7.99 trade paper, the right price is $4.99 to the buyer’s perception.
So yes, you can buy all five short stories for $14.95 (2.99 x 5) or buy all of them together for $4.99 or in trade paper for $7.99.
But also remember, in our short stories, if we have stories under 7,000 words, we double up the stories, so the reader is actually getting 10 stories for $14.99 in most cases. Five stories for $4.99. Again, a deal, granted, but nature of not pricing in a vacuum.
Thanks, Dean.
I need to revisit my market research. It’s been a couple of years since we’ve done the math. When we did the revenue-demand curve back in 2010, we found that the higher prices cut demand to the point where not only were we earning less, we were reaching fewer readers (which resulted in reduced word of mouth).
Further, prices below about $3.50 resulted in fewer sales than $4.99 so not only less profit per unit, fewer units total.
That data is out of date now and I suspect we’ll be trying new price points over the next year.
Nathan, the key is doing the paper editions of the work as well. Give the higher anchor point on the pricing. That way $4.99 will almost look too cheap. Do the paper editions and link them.
Oh, we do paper editions, too.
We sell 10 to 1 ebook over paper. Trade paper runs in the $13.95-14.95 range depending on page count. It’s priced so the profit per unit sold is the same whether it’s ebook or paperback.
One thing we don’t do is pursue bookstore sales. I’m selling a few thousand paperbacks a year online (only 5-6000 units across the five current titles so 90% of my income is on ebooks) but the downside risks on bookstores have never seemed worth the benefit.
We’re listed in the big catalogs but bookstore sales aren’t really something we’ve factored into the marketing. The potential for just a couple of extra sales a month with the possibility of getting a bad order and taking a bath on returns was a bet that never seemed worth the ante.
I’m willing to be disproved on that, but I’m not seeing a big upside to pursuing a bookstore shelf.
Your choice, Nathan. I just don’t agree. Right now our ebook sales on titles we have in paper are about the same as yours, about 10 to 1 in favor of ebooks. I expect in two years, after we get the bookstore network up and running and the indie distributing going, that our sales will be 10 to 1 in the other direction. I’ll keep reporting in.
By the way, if you don’t accept returns and set your prices right for that kind of discount to bookstores, not sure how you can take a bath on returns?? Or when you have stores pay ahead, how can you take a bath on a bad order??? I get confused, so help me on that.
Here at WMG Publishing we do not do warehousing of books, only POD, we do not have an accounts payable, and we do not accept returns. But we also give a discount (45% to 50% and some free shipping) that is set for that sort of policies.
Dear Dean,
Thanks for another great post. I only have one book up so far (with another due out in a month or so), but it’s selling pretty well. Like every one else, I agonize over pricing. Several months ago, I decided I had a big enough reader base (enough of whom had been kind enough to write me), that I didn’t have to make the decision alone. I decided to ask the readers. I sent out an email basically asking them what they considered a fair price for my work. Bear in mind that most of these folks had purchased Deadly Straits (100K or about 400 pages) at prices between $1.49 and $2.99 (most at $2.99).
I sent out approximately 150 emails, and got a 70% response. Responses as follows:
Average Suggested Price = $6.64 to $8.01
32% of replies indicated a fair price of +$9.99
A significant number volunteered the view that at $2.99, I was “selling myself short.”
I considered the above, along with the fact that this was to some degree, “preaching to the choir,” in that I was polling people who had read and liked the book enough to contact me. Therefore, while I was confident I could raise prices somewhat, I also had to consider the potential reader who still didn’t know me from Adam. I decided to raise the price to $4.95, a price point that was less than or equal to the lowest price suggested by 90% of respondents. I made that change on 1 April. As anticipated, sales volume dipped initially, but total revenue held steady for the month. Volume recovered slowly, not to the point that it was before, but enough that overall monthly revenue increased by approximately 25% over the old price point of $2.99.
Worthy of note is than NO ONE suggested a price below $2.99, and only two people went that low, suggesting a ‘range of $2.99 to 3.99.’
I would encourage others to poll their own readers if they have access to them, or at to at least experiment with different price points. If your story resonates with readers, they are a lot more willing to support you than most writers think. At least that’s my view.
Admittedly, sales of one book are probably not something to bet the farm on, but I thought the experience might be helpful to others.
Sincerely,
Bob
Thank you for writing something sensible about pricing. Several lifetimes ago I earned a degree in economics and everything you are saying here is Econ 101 and 102. Our time spent writing has value and has to be part of the consideration.
The time we spend writing is time that could be spent earning money another way. I wouldn’t walking into McDonalds and start flipping burgers as a volunteer. Why should writing be different? If I don’t value the time and effort I spend in both learning how to create a good book and in creating one, why should I expect anyone else to? A workman is worth his wages.
I wish I could write an 80K word novel as fast as you do, but having only been at this gig a fraction of the time you have, I think that is to be expected. You keep giving me hope for the long term.
Thank you.
While I agree the time/effort spent creating the product should be part of the selling price, what Economics also states is that a product is worth what the market will bear, not a penny more or penny less. (I’m paraphrasing – I started college as Econ major but switched to Marketing when several Econ classes went off the rails in turning consumers into numbers instead of actual people!)
One can say a book should be worth $10 because of the time I spent writing it, but if the market says books that length/genre/rating/etc are worth $5, that $10 won’t fly. Hopefully we’re seeing the market turning in a positive direction, but it’s not as simple as charging what we think it’s worth based on production costs…
Steve, you missed the point I’m afraid. No book is the same. So there is no market for your book until it sells. That’s what drives New York crazy and has for a hundred years. They have to make a guess at sales of any product, which is also why we get so many clones of a bestseller. For example, who knew that a British School Fantasy novel would be the top selling books on the planet? That idea had been done to death for decades before JK picked it up. So sorry, your books have no set market value and you can’t think that way with them. Books are not interchangeable. Period.
And second point you missed is setting the price on your own costs has another factor to it. The second factor is the expected time for return of costs. If you have a set desire to price your books at 99 cents, then the factor that must be changed to earn back the $6,000 costs from my example in the post is the years it will take. And the number of copies needed to sell. If you think you will only sell 25 copies per month at 99 cents, making 35 cents per sale, than your total income is $8.75 per month. To get that $6,000 costs back at that price will take you about 57 years. I like the three to four year time frame better, and that’s the time frame traditional profit and loss calculations take into account.
Let me give you an example of how I used to do this with traditional publishers. I figured I always wanted to make a minimum of $7,000 per month on my writing. Just my bottom line number. So a number of times I got offered novel projects to write for $4,000 or $5,000 bucks. I would look at the project and decide how long it would take me to write.
If the $5,000 novel offer would take me two months to write, I always turned it down. If the $5,000 novel project would take me two weeks to write, I took the project. I always did the same calculation for my time value that I am suggesting everyone do for their own business. It’s just standard business.
Very helpful, Dean, and good business.
May I ask: what are WMG’s plans for your short collections and print? Can I assume that you are not going to release 20,000 word collections, but instead wait and bundle into novel length collections at novel costs? What are the plans?
Thom, I think we already have about 25 or so 20,000 range word collection in electronic form and are working over this next month or two to get them all into print and their prices raised and stable. And doing more. I think, if memory serves, right now we only have two larger collections. We will be doing a lot more this next year, as well as editing a series of new anthologies in a new project that will be announced in a few weeks. Yes, we are coming back to editing. Stay tuned.
Thanks Dean. A follow up question.
I’m trying to figure out what to do with print versions of the Duos I’m releasing with A/B covers at between 7-10K words for $2.99. In looking at your answers to our posts, it looks like you have no print versions of your $2.99 duos, and are instead bundling 5 stories at about 20-25k words and a price ratio of ebook/trade of $4.99/7.99. Am I reading this right?
Thanks,
T
Thom, yes. For a collection of five stories, we are doing $4.99/$7.99. (Again, when we get them all done which will take a month or two to fix the books already up.)
However if you decide to do a print of two stories which would be possible, but just wouldn’t have a wide enough spine for print on the spine, (I honestly have also considered doing that but have never tried it) I think the right structure would be $2.99/$6.99. I doubt anything under $6.99 would work for the extended distribution of the print. And I sure wouldn’t expect to make many sales of the print version on that. At least not without some hook or another with a series of them.
Fun world of possible options.
Well thought out post Dean… and John. Dean, have you seen this slideshow of information by Coker over at Smashwords
http://blog.smashwords.com/2012/04/can-ebook-data-reveal-new-viral.html
(I’m sure you have, though I didn’t see it posted up—I might have missed it)? It’s pretty informative. It gives a little on prices and points to the 2.99 and 5.99 as being sticking points (nothing on the factor you mentioned of having the paperback next to it, which, with a quick glance seems like it would provide a higher anchor for the reader). Just something to consider.
Nelson, yeah, I saw that and even though I agree with most of the points he makes in that, you are right, the anchor price of a trade paper listed with the electronic book pushes the price upwards. Coker was working as if electronic books existed in a vacuum and from his point and business, they do, but in reality they just don’t. And he makes no, or little, nod at the costs of producing a book, meaning author time and so on. Again, thinking of pricing of electronic in a vacuum, without a profit-and-loss business thought. But, keeping that is mind, it is worth looking at. Mark is always worth following on just about everything he talks about. Thanks for pointing it out.
I like the relatively conservative assumptions you make on sales, both on this post and on the short story one. I always like to deal in attainable reality. I wonder if the writers who have been self-employed in other businesses don’t have an easier time than those who had other jobs or were traditionally-published authors. Estimating sales, deciding how much to spend on a story/book, and similar items are all business-management choices, all completely unrelated to the craft/skill/art of writing.
I think it would help a lot of authors to consider the value of an income stream. If you publish something that makes $200 a month it may not sound like a lot of money. But if you can reasonably expect that to continue on an ongoing basis you have really created an income stream that has a pretty significant value to you.
Look at lotteries, where they will pay you over 20 years or give you about half the amount in a lump sum. The present value of that $1,000,000 over 20 years is about $500,000 today (very roughly). $200 a month for 20 years is $48,000, and half of that is $24,000. I also went to bankrate.com and used the annuity calculator to determine the amount you would need to pay to buy an annuity giving you $200 a month for 20 years. The result was a little over $30,000. Of course, if you go out longer than 20 years the value increases.
Of course, this assumes that a story or book remaining in print forever will continue to sell at this rate. There is no guarantee, of course. On the other hand, if an author is going to publish more and more work and build a larger audience over time, and with the growth of the e-book market, there is at least as much reason to think the income will be higher in the future.
This may be a pointless exercise, but I thought it might be interesting for some authors to look at the financial value of the income streams they create, even when they are not selling tons of books.
Jay, I agree completely and even though I had never said it that way, I’ve preached that a lot around here in different ways. Income streams have fantastic value and Kris and I have always worked to set up income streams and increase the number of them. I never understood any professional writer who had all their money dependent on one income source. Too scary for my system. So thanks, very good point and well said.
I decided along time ago to put value to my work. If I want to make a living at it I have to and why shouldn’t I? I have no intention of doing the 99 cent thing or doing free. I write erotic romance and I looked at the prices that other writers are charging and it’s all over the place. I think I will fall into the 5.99 to 8.99 range. My novels are all over 80,000 words. What I would charge for a print I don’t know. I’m a little lost there.
Vera, your price on the print will come clear when you do the layout, decide on a trim size, decide on a font size and margins and so on. That way you can see what you need to charge to get the $2.00 extended distribution profit. For most 80-100,000 word novels trimmed at 6 inch by 9 inch, the cover price will range from $16.99 to $18.99, which is pretty standard price for a nice trade paper.
Very interesting post, thank you. Just a word, not on pricing but about this sentence : “Electronic books have exploded to 20% of the total book market and is looking like it will level in a few years around 30%”.
I do not dismiss the importance of POD sales (I earn most of my self-published income with POD). But for indies who write their books in specific genres or subgenres, what matter most is not the 20 or 30% of the total book market, which includes books like religious books, but the percentage of each given genre. Right now, I think there is more than 30% electronic books of the total SF book market.
The best information is what helps making the best informed decisions. Still, I would advise doing POD books, because you don’t want to keep all your eggs in the same basket.
Hm. When I brought out my first paperback, my market research consisted of looking at what similar sized books sold for on the Internet and at my local brick-and-mortar store. The idea was that, like a car manufacturer, you have to know what the going price in the general market for your product is. Of course every book is different, I know we’re not producing widgets here, but I do believe book buyers have a certain price range in mind when they’re shopping. That price range is set by what they see on the shelves: if 90% of the trade paperbacks in a book store are priced at $15.99, she’s going to think that’s more or less the price she will be paying for my trade paperback book of similar size and page number. I took notes on a large number of books in the same size/page range as mine, averaged them out, and plugged that number into my spreadsheet (costs of production, etc).
I guess that means I was working “backward” from your concept here, where the price is determined by the spreadsheet. But I think we got to the same place.
Dean, I noticed a couple of things in the post that I hope you can talk about a little more.
The first is that you don’t consider the ebook market or average prices there when pricing the ebook, but rather base it off of the paper edition. I understand and agree with all of that in a world where paper books still hold 80% of the market. Do you recommend selling each short story or novelette as a paper stand-alone as well, or only in collections? At what length would you start selling a paper version? How does your estimation change for shorter ebooks that aren’t also in paper form but are longer than short stories?
I’m also seeing that while word count affects your pricing, it doesn’t track along a straight line by any means. A 5,000 word short story ebook goes for half or just under half of the price of a full-length novel ebook, despite having 1/16th the length. Production costs and time don’t seem to account for all of that difference. Do you think length is a reasonable metric for cost scaling? You price your longer ebooks off of the paper version’s price, which has nothing to do with a short story ebook’s pricing, so I’m wondering how you view the relationship between the two approaches when there are different length works in electronic format.
Knowing your thoughts about this would really help me with pricing the stuff I write that falls between 5k and 80k words. I haven’t written enough or sold enough to feel comfortable setting an hourly wage for myself or predicting sales, so I’m hoping for a logical rule of thumb to start with. (I will never price below $2.99, though. I’d just as soon sell 1/6 as many books as Mr. Discounter and make the same money.)
Jim, good questions. Let me see if I can make sense of any of them.
Do we consider the market or average prices of all ebooks when setting our prices? Not a lot. I look at how the traditional publisher’s standard (not the extremes)prices are. Most fall between the $6.99 to $9.99 levels for novels. So we do look at that, but I can see no reason to look at how other indie writers are pricing their books because of what I talked about in this post. Most indie writers (not all) just don’t understand the publishing business and the business of selling books. (Two different things.)
To start with, AT WMG Publishing Inc., we do take into account word length, but only in certain areas and user certain conditions. We base it more on the work beyond that.
For example, we won’t sell a short story (after all is cleared out in a few months of the old system) under $2.99. If the story is under the 7,000 word range, then we add in another story or other added content that stands alone. Why 7,000 words? It really isn’t a random number that publishers of anthologies and others have just been tossing out, although it may seem that way. It’s because of story structure, actually. A writer can hold a single event into the 7,000 word range, but much past that and try/fail cycles start coming in and often different viewpoints and longer story structure. In other words, a story becomes more complex past the 7,000 word area. (Not always, but mostly.)
So when you get up into the novella length (over 12,000 words by my thinking, but officially over 15,000 words) you have a more complex story structure that mirrors a novel in short form. That’s why the Oxford Dictionary calls a novella “A short novel.” So for moving into that structure, a reader will be willing to pay more. (They won’t know why, but the story will feel more complex and thus of more value.)
When adding in a second short story with a first short story, the reader gets two hits for the price, and that (for most readers) makes up for the lack of complex story structure.
Also, it takes more time to write and produce a novella, thus the higher price as well. Back to this post again to see how that is figured. You should value your time. Just silly not to and is telling everyone, including those around you, that your writing is not a business but just a hobby. Even if your hourly rate puts you into debt on each story and book, let it. And then realize when that number clears in three or four years, you made that much per hour. Trust me, giving value to your own time will make all the difference in the world.
Do I think every short story should have a paper edition? Nope. And I tried that successfully at Pulphouse Publishing Inc. where we did this really nifty run of books called “Short Story Paperbacks.” We did 60 sf titles and 10 mystery titles and I had a blast, putting short stories into their own small mass-market-sized paperbacks, only about 40 pages long. We even did on 40 of them a limited hardback edition signed and limited to 100 copies. We had some of the best authors on the planet in the series and sold them in 1990 for $20 for the hardback and $1.99 for the paperback. Some of those books now bring a couple hundred each at auction. Great fun, but at the moment I wouldn’t suggest doing that with your own short fiction, although it is possible. For example, I could easily take this pricing post and the one on short fiction, combine them into about 10,000 words, do an intro, and put it out as both an electronic and paper book. I might, actually, combined with a third pricing post I am working on.
But I would suggest, at the moment, to keep your short stories in paper collections.
As for comparing prices of a 20,000 word collection to the price of a 80,000 word novel, you forget one major aspect of publishing. Each book, no matter what, has a base cost to produce. As I said in the post, you need to calculate all the time into the equation and expenses. What I want is that base cost back, as does any publisher. Got to keep the doors open.
So a novel will have more time spent in production, but both a collection and a novel will have about the same basic costs of cover, time to launch, proof, and so on. The novel will have more, sure, but not a lot more. So (using the calculations in this post) say a collection’s base cost is $3.00 per copy and a novel’s base cost is $5.00 per copy. (You don’t count in distribution costs on base costs.) Why would you charge 16 times more for the novel in any business world? Or undercut your collection price? You would not for any reasonable business model and customers would not expect you to except on sale events. So keep your prices figured on your own desired profit margin and keep them inside the normal ranges of traditional publisher prices.
So I think a reasonable metric for cost scaling is just what I outlined in this post. Figure your time, figure you want with small sales, the money back in three or four years, figure the costs of the paperback, and stay around the half-price number for the electronic. It’s called a profit and loss calculation. All businesses do them, not just publishing.
And buy following it and keeping your paper and electronic prices in a reasonable position to each other, it will make your stuff look professional and earn you some decent money and eventually a living off your fiction, if you can spend enough time in the chair writing and getting better at craft, that is.
Hope that helped in some way. If I missed something or am not clear, feel free to ask more again.
Thanks, your answers did clear things up, especially about the structure of the story being told. I didn’t mean that a novel should be 16x the cost, just that the length was that much higher and yet (obviously) no one charges that much more. I’m trying to get a grip on what the curve between short story prices and novel prices looks like.
I would like to know what you think is the minimum length for a paper version to be worthwhile. Is it the 20,000 word length you mention for a collection? Having that print list price scratched out is a great sales tool, even if it doesn’t sell one copy.
Great post!
I think I will need to raise the cost of my first ebook novel yet again. I didn’t realize it was such a doorstopper until I poured it into InDesign last week. (I’m working on the POD edition.) It came to 626 pages. Yikes!
When I used the CreateSpace calculator, that generated a price for trade paper at close to $22. But I was figuring 40% and 45% discounts for bookstores. I’ll get a higher price, if I should be using 50% for booksellers and 10% for distribution.
In any case, the current price of $7.99 for the ebook will look too low next to $22 or more for the trade paper.
Thanks for the info! I’ll be putting a price on my POD cover file next week. And I would have put the wrong one without this.
J.M., first see if you can lower the font and leading sizes. You don’t want them too small or too tight, but dropping that page count even under 600 will save you a ton of money on book costs and shipping and so much more. And make sure your trim is 6 x 9 inches as well. Also, pull your font to a minus 10 in tightness overall. That also will help and not hurt the look and readability.
See just a few tiny parts of what we are going to be covering in the POD workshop in late September. (grin) So much fun, so many options in book design.
Thanks! When I saw that 50%, I started thinking about test printing a page at 1 pt less type size and 1 pt less leading. Now, with your recommendation, I definitely will. If I add in the -10 tightness (thanks, I would not have thought of that), I’m sure I can get it well under 600.
If only I can get InDesign to “see” the Type Embellishment One LET font (it is refusing currently), I’ll be good to go!
Thank you! Excellent advice!
I should have printed a sample page FIRST!
When I did so this morning, the type was huge. I tried reducing type and leading by 1. Still too large. By another point. Still not quite right, but close.
If CreateSpace will let me use 9.8 point type, that’s perfect. If not, I’ll have to go with 10.
In any case, not only will I get under 600 pages, I should be able to get under 500.
Feeling a great sense of relief! Now I’ll just need to recalibrate my spine size and adjust the cover file. An easy fix.
Thanks, Dean. Really appreciate your leadership and generosity.
(BTW, I solved the “missing” font problem as well. I think my first POD edition is getting closer! Except . . . it needs a better blurb! Oh, wait. I’m attending your blurb workshop! Perfect!)
(Grin!)
470 pages.
Yeah, J.M.!!! Way to go.
Grin! Thanks!
Here’s my math.
The cost of a CreateSpace trade paper in the 6×9 trim with 470 pages is $6.49.
If the retail price of the book is $20.99, then extended distribution gives me $10.50 for the bookseller and $2.10 for the distributor.
Which leaves $1.90 for me. Except when I pay shipping of $.80, yielding $1.10 for me.
Is that margin too slim?
Does the ebook then need to be $9.99?
I imagine I will be learning much of this in Think Like a Publisher. Obviously I should have scheduled my POD tasks *after* the workshop!
I like that you characterized that race to the bottom as “no-thinking pricing.” I often refer to it as the fearful strategy–not doing the right thing out of fear of being rejected by the marketplace. One of the most common problems that afflict people in the writing profession is that they underestimate the value of their craft. I see this in the copywriting and editing business all the time. The market will never run out of those who will practically give away their hard work and then wonder why they’re constantly struggling. Writing is a profession. The product, when it’s done right, is professional piece of work. Charge accordingly.
Dean, I am also interested in your thoughts on the bundling strategy that I see in your five-pack series of shorts. How did that come about? Were these stories originally sold individually or have they always been sold strictly in a bundle?
Patrick, we put all the stories up individually and then also put them in the five story collections. (We are changing the “Five Pack” look we started with at first, but will still be doing five story collection.) As for how we put them together, just general topic. For example, I had a bunch of stories with aliens in them, so I picked five and did a collection. Or character collections like the Poker Boy collections or the Jukebox collections.
So stories are up if people just want one story and up if they want similar stories. We are very clear to put the story titles in the descriptions as well in case someone has already read three of them they can just go find the other two.
Was that what you were asking?
Sure was. Many thanks. Sounds like a smart strategy. Do you find that the “Five Pack” collections tend to appeal most to returning readers?
Patrick, not a clue. I just don’t have the ability with 260 items up to even begin to track that. (grin)
“Cost Plus Pricing” is the method of trying to deduce your production costs and then tacking on a ‘profit’. That model has gotten a lot of companies in serious trouble. Year after year their internal costs go up and they just pass it along with another ‘plus’. Pretty soon the company has built a diving board hanging over a cliff and walking out farther over the chasm by nailing on new boards.
Classic case were the Detroit automakers in the 70′s & 80′s fighting against the Asian imports. The imports at the time were using a model called “Target Pricing”. You first figure out what price the customer is willing to pay or can pay and only then, working backward, design the machine so you ensure you make a profit at that lower price point.
Change the players. Traditional Publishers are clearly working the cost plus model and show the usual market problems. Independent ebook authors are straining their heads over what is really a Target Pricing market mechanism.
The important target is what price will move the highest velocity of dollars (a huge pile of 99cent books, a swell of five dollar books, or a trickle of thirty dollar works)? Amazon’s ability to offer Free downloads has killed the 99cent magic of prior years – turning the 99cent option into the buyer’s bargain bin with attached quality concerns. At the moment, and it will be shifting continually, it appears five dollar independent books are selling better than lower price points and certainly better than ten dollar publisher offerings. But a lot of discussion still on what the magic target is.
An anecdote to add to the general discussion: anticipating a significant series of forced waiting times I decided I needed a physical book. I happened to be in a mass retailer going by their little reading shop. I bought a $6 fiction hardcover by ‘famous author “with” unknown author’ (chuckling to myself about who’s the publisher brand?). I also bought an $8 guitar magazine that has advertising on every other page.
That got me thinking I either need to go into the indie magazine publishing world or figure out how to put advertisements in my ebooks every five hundred words. Either case could be intriguing.
J. Gordon, I suppose I both agree and disagree. Your way of looking at pricing with “Cost Plus” and “Target” pricing is good and solid economics.
Where I have a problem with what you said is the idea that there is a “magic target” for book pricing in book publishing. I believe there never will be one and people should stop even using that phrase and stop looking. It’s like chasing the pot of gold at the end of a rainbow. (Indie writers think “If I could just price my books perfectly, find that magic target, I would be rich. Nope!)
I just don’t remember there ever being a magic target in publishing and I can’t imagine with what I have seen in indie and electronic publishing that there is one now. (Granted, sometimes a blogger can shout loud enough and get enough followers to make a “magic target” up out of thin air, as what happened early on to indie publishers. But that doesn’t make it real outside of the readers of the blog.)
If all books were produced the same, if all books looked the same, if all readers were the same, if all publishers followed the exact same production method, if all bookstores looked identical, then I might be agreeing there is a “magic target” for book pricing. But nothing is the same in this business from writer to writer, publisher to publisher, reader to reader.
One buyer’s magic price is 99 cents for a novel and they won’t and can’t afford to go higher. (All those comments I keep getting here with that personal information). Another buyer’s magic target is $4.99, another is $7.99. AND IT’S ALL MADE UP. It’s all personal to each buyer. And thankfully, not all buyers and not all books are the same.
This post was an attempt to bring that “magic target” out of make-believe, to kill the idea it exists, and bring in some sanity as to production costs and buyer awareness to pricing.
So we don’t agree at all on that, and I flat think that looking for some “magic pricing target” is just bad business in publishing. Sorry. There is a reason traditional publishers for over a hundred years or more have worked on the cost-plus method of pricing. It’s because no book, no reader, no bookstore, and no author is like any other. Thus the only thing that is similar across all books is the costs of production. And a wild guess as to how many will sell to help set the price.
“If I could just price my books perfectly, find that magic target, I would be rich.”
Just write a good book. It’s faster!
Excellent post, Dean. So far, JC and I have only put up three self-published works (#4 is in the final stages), but they are newly written, original stories set in the Noble Dead world, running between 12,000 and 26,000 words. JC puts a good deal of work into the covers.
We’ve priced them all at $3.00.
Anything less than that would not make this worth the time we’re putting into the projects.
Exactly, Barb. You and JC know how to value your time. Have fun.
Thanks for this information on pricing. It’s still something I find complex, probably because those of us based in the UK have to do calculations into dollars to set prices on US distribution systems (which then back-calculate them into sterling so the prices make sense to UK expectations).
For example, one of the last paperbacks I bought cost £7.99. In order to make sense of that price on the paperback of my novel, I have to calculate how much £7.99 is in US dollars, then see whether CreateSpace will let me play at that level for the size of my book.
And ebooks: if you let Amazon calculate the non-US ebook prices, a 99c Kindle ebook comes in at 77p – about the same price as a double Snickers bar – and the 77p includes VAT at 15% of whatever the exchange rate made of the 99c. Ebook prices which look regular on Amazon US ($0.99-$5.99) just look a bit odd on Amazon UK, but I suppose UK readers are used to this.
For most of my reading life, a book that sold for five dollars would sell for five pounds. Given the exchange rate, American publishers are costing themselves a lot of money by not knowing that.
Great stuff, and an excellent point about eBook and print prices complementing each other. You came at in a way I hadn’t quite got around.
Off-topic, but in re: POD – I know you use Lynda.com for InDesign training, but did they have a template for books/collections or did you have to make up one for yourself from scratch?
I’m just about to roll into learning all that, and I think it’s going to be a fun challenge. I just need to do it.
David,
We just set up our templates from scratch. We have a template for 5.5 x 8.5 and another for basic 6 x 9. And then once we do the layout and design decisions for each series, we set a template for that series as well, both for the covers and for the interior. InDesign is easy that way. And yes, Lynda.com. I like the program “Essentials for CS6 Indesign (or CS5)” on Lynda.com. The instructor is clear and the small programs are broke into 4-6 minute segments.
Thanks. That seems manageable.
“Average Suggested Price = $6.64 to $8.01
32% of replies indicated a fair price of +$9.99
A significant number volunteered the view that at $2.99, I was “selling myself short.”
I considered the above, along with the fact that this was to some degree, “preaching to the choir,” in that I was polling people who had read and liked the book enough to contact me. Therefore, while I was confident I could raise prices somewhat, I also had to consider the potential reader who still didn’t know me from Adam. I decided to raise the price to $4.95, a price point that was less than or equal to the lowest price suggested by 90% of respondents.”
Bob, it worries me some when I see writers asking the reader where they should set their prices. I don’t think this is a good practice. It is one response to the feeling of ‘pricing in a void’, and not yet feeling certain of the value of your work.
If a reader tells you to set a good price for your book, it’s because they’ve been educated by someone else what a fair price for a good book is. Someone else who started by figuring out how much the book cost to make and what they would need to charge to keep the lights on.
Remember that reader is not in business. The reader does not know what the costs are. Many will assume that the production costs are ridiculously low – for instance, that it only costs a dollar to print a paperback. Unfortunately, many will know assume that they know at least as much as you do about appropriate pricing, just because you asked them.
Having said that, I think you collected some valuable information. You now have information that describes your reader profile – and what proportions are in each of the ‘buyer’ categories… bargain, value and premium. Your results sound very promising to me. Despite your low historically prices, you have relatively few ‘bargain’ buyers, and many ‘value’ and ‘premium’ – over 30% said $10! This is wonderful. And then you set your price increase at the lowest end.
If a media outlet does a voluntary-response poll on a controversial issue and then reports that “80% of citizens agree with Position A!” We discount that 80% because we know that it was only the people who really cared about the issue that responded, and it doesn’t represent the average of all citizens.
It sounds like you applied this kind of logic to how you used your results to set your price. It sounds like you discounted the information from the ‘choir’ some because they choose to respond, self-selecting as people who obviously like your book a lot and therefore are biased. Well, duh. These are your fans. And actually, unlike political opinion polls, you should be giving their opinion more weight, not less, because they care. They are the folks willing to lay down cash for your book. Frankly, who cares what anyone else thinks?
Having a lower price than you would have otherwise set, to accommodate the ‘reader who doesn’t know you from Adam’ … hmm. you’re assuming that the lower price will encourage buying. Don’t know if that’s the case.
Speaking strictly as a reader now, in the ‘value/premium’ group, I don’t care about 4.99 vs 6.99. If I love the sample, and there are some strong reviews by people who did a good job of describing why they liked it, and is consistent with the sample I read… I’ll get it. If they have a number of clearly obsessed and rabid fans, I will probably check the book out at the library even if I wasn’t crazy about the sample, or download it if/when it’s free, to see if I’m missing anything.
Jay said:
“I wonder if the writers who have been self-employed in other businesses don’t have an easier time…”
I think so, and not just because they probably already have some business skill-sets; it’s the mindset that is really important. Self-employed people have practice taking ownership and responsibility for their business. In this mindset, a person will find out what they need to do to make their business successful. If they don’t have skills, they will learn them. If they don’t have information, they will figure out how to get it. They will not expect anyone else to do it for them (unless they are delegating tasks to someone they are paying) and they will not expect that the challenges of their business are theirs to own and solve.
I lot of the comments I see on other blogs strike me as people who are used to being employees and don’t have the mindset to transition to being self-employed. They want the security and comfort of having someone tell them whether or not their work was good enough and what they should do next.
“Unfortunately, many will know assume that they know at least as much as you do about appropriate pricing, just because you asked them.”
I get what you’re saying here, but you’re missing something. Economically, price is a function of what the seller is willing to sell for AND what the buyer is willing to pay. This is (one reason) why businesses sponsor market analysis studies all the time. It does no good just to compute one’s costs for a project and put it on the market if those costs dictate charging a price that customers are unwilling to pay. On the other hand, if a customer is willing to pay a lot more than you’re charging, you’re leaving money on the table. So I wouldn’t discount the wisdom of this guy asking his customers what they are willing to pay. It’s a smart move, if you ask me.
Dean,
My $2.99 ebook has been doing well for me (has now mainly run its course in the US, but was selling well in the UK for the past few months). I did a POD and initially set it at $7.99, but that only gives me 62 cents for Expanded Distribution, so I’ll need to go with $8.99-9.99. (Is there a reason you like $2 for ED and won’t go below $1)?
I’m reluctant to raise my ebook price, since the UK is 1-2 y behind+VAT and yes, I’m worried about jinxing my ebook sales, since I’ve only sold about 40 print and many times that in ebook.
Does $2.99-3.99 ebook and $8.99-9.99 print look too out of whack for you?
Thanks,
Melissa
Melissa, the main reason we set the $2.00 expanded distribution number for NOVELS is because when you are then indie distributing your book into bookstores, you have a margin for shipping on some orders and that allows a 50% discount to stores on larger orders. (45% on smaller orders and they pay shipping.) It’s how the CreateSpace calculations work that also work well for the coming indie distribution programs as well. I will talk about those coming up this summer, but a friend came back from BEA earlier this month and said he talked with six or seven brand new indie distributors. All just starting up.
However, that said, for shorter works that can be priced at $6.99 to $9.99 trade paper, having $1.00 for extended works fine. Much under that and you will have indie distribution problems to bookstores. Just not enough margin. All of our shorter novellas in book form and collections are around $1.00 extended distribution as I said in the post.
As for $2.99 electronic and $8.99 paper being a little out of whack to the buyer, it sure feels that way to me. Even $3.99 feels too low to be honest. So my sense is that if you do have a paper, raise the electronic price when the paper goes live. I know it doesn’t “feel” right to you, but it doesn’t feel right for the buyers if you have a $7.99 to $9.99 trade paper and only have the ebook at $2.99. And buyers win. (grin)
And I have no idea what you mean by a book “running its course.” Are you thinking that your book is now spoiled like a brown banana? That’s book as produce thinking. Sure, at the moment your sales might be ebbing until you bring out something new or a new batch of readers find it, or you raise your prices and that brings more readers. Stop thinking of your books as something that spoils. Sales go up and down in retail. Just ride with the waves.
Probably because I’m tired (and not overly intelligent when I’m not!) I’m not sure what you;re saying about the $2 ED margin.
Unless I am confusing 2 issues, I thought you (the author) would be paying the author cost to ship to book stores. In other words (made up numbers) your $15 createsoace book costs you 5, you offer 50% discount for twenty copies with free shipping and make $2.50/book minus ship costs..
Are you saying you are just trying to (roughly) match that with the ED through createspace?
And can we stop using ED for short? Reminds me of the Bob Dole erectile dysfunction commercials…
Joemontana, what I am saying is that if you use the shortcut of the chart on CreateSpace and set your trim, your page count, and your price to get about a $2.00 extended distribution payout, you will be safe on the indie distribution side of things as well.
There is a wave of indie distributors coming and all of us want to be a part of that, trust me. And to do that, you have to have certain guidelines with your pricing and an understanding of what indie bookstores (and B&N for that matter) want in discounts from a publisher and distributor. I’m just saying the extended distribution at $2.00 for a novel gets you safely in that area. ($1.00 for a shorter $7.99-$9.99 book.)
If you, the publisher, sold directly to an indie bookstore, not using a distributor, the math goes like this:
Step One: $17.99 novel. Bookstore orders ten copies of your books to get free shipping and 50% discount. ($17.99 x 10 = $179.90 x 50% = $89.95) Bookstore pays you $89.95.
Step Two: You go on CreateSpace and order ten copies at your $5.00 cost and ship them to the bookstore directly from CreateSpace, never touching a book.
Your costs are 10 x $5.00 = $50.00 plus about 80 cents per book shipping so a total of $58.00. You Pay CreateSpace and e-mail the bookstore telling them their books are on the way and should arrive on the date CreateSpace gives you.
Step Three: Your gross profit is $89.95 – $58.00 = $31.95. Or about $3.19 per book. And you never touched a book.
Gross profit is 17.7% before your time for writing and costs of production.
If an indie distributor gets into the picture, take off another 10% or $8.99. That leaves you with a gross profit of $31.95 – $8.99 = $22.96 for ten books, just over $2.20 per book, about the same as extended distribution would give you as well.
Makes sense?
Dean, am I right that in this new world as a publisher you do not take returns? All sales final to bookstores?
Thom, exactly. All sales final to bookstores. That’s why you have to give them a slightly higher discount and also if they order enough copies, free shipping, which is why also you have to set your prices with all that in mind.
For those of you interested, CreateSpace does do a slight return system, as does LightningSource, but they are minor and do not apply to any kind of calculation. And the book does not get destroyed in the return and is resold. And you never know it is happening, honestly. So no reason to worry about it at all. From your own press, and with any indie distributor, just flat state no returns. That way the bookstore can discount the book down as they want.
By the way, in 1987 Kris and I started Pulphouse Publishing and flat stated then no returns. This is nothing new.
And by the way, if you try to calculate in returns, none of the math I did works at all. Indie publishers can not get POD books cheaply enough to do a returns system. You would have to move to the warehouse model of distribution and large web presses.
makes perfect sense!
Thanks for taking the time, Dean!
So, if I understand correctly, Dean, you use the print-to-publisher service from LightningSource or the equivalent from CS, and not the print-to-order service?
No, we use the print to order service, Lassal. The print to publisher service is what is called the “warehouse” distribution method, meaning the publisher makes a wild guess as to how many books they are going to sell, orders that many, and pays for them up front and then stores them in a warehouse or garage. Nope, not doing that.
We use the POD service from CreateSpace, which does NOT have a print to publisher service like LightningSource does. Print to Order is what we use. No other way really works in this new day unless you have more money than sense and a large, large garage.
Hi Dean, yes, I thought you’d use the print to order procedure. But then I wen to Lightningsource an I read the definition at LS:
Print to Order
And print to publisher:
Somehow the second one was the one that fit to your procedure. Or maybe my English is not really up to it …
(I am in Germany – LS is a better option here than Createspace)
Sorry if I am starting a huge confusion here.
Lassal, with that definition, more than likely it’s like the CreateSpace wholesale program. That doesn’t sound like a warehouse at all. Thanks for that information. Actually, just tonight I put a book up through CreateSpace and noticed the new wholesale sales channel for publishers, so more than likely the same thing. Great they are adding in these options for all of us. Thanks for clearing that up for me. Honestly haven’t explored Lightening Source for about five months and in this new world, that’s forever. (grin)
A lot seems to be changing and it is rather confusing for a start-up.
I just found this update from Aaron Shepard, called In Pursuit of Plan B , in which he deviates from his former concept in order to adapt to the changes.
Thanks, Lassal. Yes, I agree with that post you linked to and have said all along that indie publishers have to get their book prices up, should start with CreateSpace, and only use LightningSouce for overseas and specialty books and hardbacks. The link suggests a plan that uses both and I agree. Worth the read, but folks, ignore his talk about short discounting. Just silly.
Thanks, Dean. I’ll give the $3.99 a try, since I’ve got nothing to lose, really, except my books-as-produce thinking.
And thanks for your detailed math about the $1-2 threshold, below. I will ponder it until it makes its way into my brain. Thanks again!
I can’t overemphasize research.
1) Paper versus E: Find 10-30 books that people would buy instead of your book. Look at their paperback/ebook ratio of sales on Amazon and B&N (it will be the inverse of the ratios of their ranks, thanks to Dr. Zipf), rounded to a single digit. Pick the ratios you like, and see what the price ratios are for that.
2) Just E or just paper: Find 50-100 books that people would buy instead of your book. (They can include that first 30). If you don’t think you have 100 competitors you’re either defining very narrowly or not looking hard enough; pull some good keywords from the descriptions of the ones you did find, and google that list with “amazon.” Remember that a reader who likes midget cat ninja space opera may also be in the market for erotic elf-versus-orc urban fantasy. Get the price distribution. People will perceive the fifth hexile as the place to look for quality and the third hexile as the place to shop for bargains; price according to the message you want to send.
Your analysis is, as always informative. I know this blog is about pricing, but one set of your numbers bothers me. You talk about always publishing shorts at around 7k words, but then put together collections of five stories that run 20k words. That wouldn’t matter so much, except that the analysis for your collections is based on about 20k words, whereas your five stories (and mine, which is why the questioning) are going to run 35k, and that significantly alters the analysis, even starting with the idea that we are talking probably 45 hours of writing and editing time which is worth $2250, using your numbers (45 x $50 = $2,250), rather than $1250. Furthermore, a 35k collection will be longer in print, and that seems to screw up all the numbers considerably. So I suppose my question is, are you really thinking 20k worth of short stories (which is more like three stories), or five story collections?
Ed, all my five story collections run between 20,000 and 25,000 words because I just don’t write 7,000 word stories. I usually have one at that length in every collection, then a couple at 3,000 and so on.
What I was saying about 7,000 word stories is that if I have a story under 7,000 words, I add in a second full story to get it up to 7,000 to 10,000 word range for the $2.99 price. Over 7,000 words, I let the story sell alone for $2.99.
You are correct that a 35 thousand word collection would have different numbers than I figured, a different price for both electronic and for paper. You can do the math on that. (grin) I have not had one that long yet, and our larger collections are closer to 50,000 words. I know the math for that size and it works like a novel would work pretty much.
That’s quite interesting, I generally do 10k stories and it offers some interesting perspective. I also agree with your thoughts on pricing and general practice at that range. I seems to be the norm with that word length.
Interesting post. Don’t forget, my peps, that your calculation will be different for other markets. The UK, for instance, responds well to slightly lower prices on Amazon (I beat you youngsters were just clicking ‘set to US price’for everything without thinking people in those countries don’t set there prices on the US one.) My experience is that a $2.99 ebook sells well in the UK at £1.99. My US sales dropped after some very heavy and successful promotion (promos via KDP select with a focus on selling a target collection), which taught me a ton a out in-book linking. Interestingly enough my UK sales have increased and noticeably so on books I set to £1.99! Your mileage may vary.
You know, I never bother to do the math, except what I’m making monthly and my potential year to date. My day job pays the bills and the book money goes in the bank. The only money I spend is about $20 on $1.30 cover images at Fotolia.com, so I never bother as I don’t claim tax on it for various reasons and I think of my dough from the retailers as profit. That said, my pace is high. If it takes 6 hours to make the product in full the cost is very minimal. If I did a novel worth of words a month instead one a week then I would be pretty careful about costs and probably be working the day job much, much more.
By guessing at sales and dividing your fixed costs by that prediction and carrying those averaged fixed costs in the rest of your profit calculations it appears you are supporting a position that book prices are inelastic. Is that a fair representation?
I’ve seen anecdotal evidence that eBook prices are elastic. Wouldn’t the best price to use be the one that maximizes royalties? If lowering the price causes the volume to increase enough to more than make up for the lower per unit royalty, wouldn’t that be the correct business decision?
Isn’t the pricing decision completely independent of the fixed costs, except perhaps to decide to not publish if the profit at the best price is still too low?
Rich
Rich, not really. Every profit and loss statement done by any publisher has areas that can be changed, open lines like promotion budget that can have a different number plugged into it to change the cost of a book.
One thing about paper books, because of the costs of production and costs of materials and costs of shipping, their prices have a set range.
What I was trying to get across was buyer perception for electronic pricing. Of course you can price your book into the bargain bin at 99 cents. Or you can price it way, way too high at $12.99 or higher. So in that way of looking at things, your electronic books are very, very elastic. But just as with paper books, there ARE costs involved with electronic books. And author time has value even though most beginning authors do not believe so.
Here is where your question goes wrong. You asked, “If lowering the price causes the volume to increase enough to more than make up for the lower per unit royalty, wouldn’t that be the correct business decision?”
If all books were exactly the same, written exactly at the same skill level, written with the exact same ability to hold a reader, with the exact same topic, then yes, price would make a difference. But price does not make much of a difference in publishing books past the three areas of dividing out readers into bargain buyers, normal buyers, and collectors of expensive books. Those three categories of buyers have been in publishing for a long time.
The key for each publisher is to decide where they want to market their books, how long they want to wait to get a return on their time and money, and then find that right spot in the middle of that group. And the key with having a correctly priced paper book is that it gives the perception that a correctly priced electronic book is fairly priced.
So in a perfect world, price makes a difference, but one of the great myths of indie publishing is that is makes a difference in book selling. It might, a little, but not enough to cover the spread. A 99 cent short story must sell 6 times as many copies to make the same amount of money as a $2.99 story. A 99 cent novel must sell 10 times the number of a novel priced at $4.99. To make the same amount of money.
The key with books is always writing a great book that readers want to read and will pay for. You write a crap book and price just won’t matter at all. But you write a great book that is a hell of a good read and readers will pay a fair price, a price they “Perceive” as fair.
But the key is always the book, the storytelling. Books are not the same and pricing of them is not independent of the fixed costs. (Except to beginning writers who have no sense of the value of their own time.)
One point I need to make that I keep forgetting to make. Remember we are still early in this electronic publishing world. And many of the writers starting off had dead stories and novels just sitting in file drawers. We had already been paid for the work we did on those books. So in the early days we forgot in our rush to even get pennies out of those dead books that they still had value. It’s only as this indie publishing matures and people like me are writing directly for it that the time costs are starting to come back into the picture. Traditional publishers have always shouted that there are costs with electronic books. Now indie writers are starting to understand as well.
Thanks for the pricing posts, Dean. You’ve convinced me to raise my ebook prices. I put my most recent sci-fi thriller up for 5.99 and got more sales from Smashwords than I ever have. I almost never get sales there. I also raised my short story prices up to 2.99. I’ll have to re-examine everything when I put things out in print, but it’s promising. Thanks again.
Interesting discussions and a lot of food for thought. Especially regarding POD price points in relation to e-book pricing. I’ve only tried two POD’s so far, might be time to start experimenting with that again.
I’m planning on having my first published novel available this fall, which ties into two shorts and a novella, and I’m pretty excited to see what happens with that. Thanks for sharing all the info and keeping the discussion going Dean!
I’ll take this from the other side, from the reader, because of a couple of ebooks I just recently picked up.
They just happened to be a couple of Kris’.
I had a little extra money a couple of weeks ago and did a mini-splurge. I knew exactly what I wanted – the latest in Kris’ Retrieval Artist series (Anniversary Day) and then noticed there was a short novel (Paavo Deshin) which I thought might add a little something extra to my reading of the series. (It did.)
The first thing I noticed was that Anniversary Day was priced at $7.99; the others I had bought at $4.99. I did vaguely remember you and Kris saying you were going to raise prices, so it wasn’t a complete shock. The first thought was “Ugh, do I want to pay $7.99 for this?” I quickly decided YES, I HAD TO HAVE IT.
My second thought was “Wait a minute. I used to spend $6.99 for pb’s, what’s an extra buck?” I tacked on the Paavo Deshin short novel and voila, I was a happy camper.
Boy, am I glad I didn’t wuss out over 1 dollar.
Dean,
I’ve been thinking a lot about pricing and this post. I’d like to share two ideas:
1 – I din’t find in your analysis any use of a time discount rate (present value analysis). It would make more sense to have the usual financial analysis practive of valuating 1$ earned one year from now at a little less than 1$ earned now. I’m currently using 15% a year (it’s a very very very conservative figure).
2 – It would make more sense to fix the price tag at a point known to be sellable, and then figure out how much time/money it would be worth investing in the book given expected sales and discount rate, as the length of a book (and time spent in editing and creating a “perfect” cover or blurb) is a variable far more flexible and controlable than the market’s acceptable price range.
Using the two ideas above and your usual estimate of about 5 sales/title/month, and supposing a 50$/hour wage, I reached the conclusion bellow:
Price(ebook) Hours Words
2.99 (short story) -> 16h -> 10,400 words
4.99 (short novella) -> 28h -> 18,200 words
5.99 (a little longer novella) -> 33h -> 22,000 words
8.99 (novel)-> 50h -> 32,500 words
The word count is based on my expected average of about 650 published words/hour (including editing, cover, and kdp/smashwords setup in the average).
From these figures it seems impractical for me to write and publish novels (32,000 words seems too short for a 8.99$ novel), while short stories and short novellas look like more attractive investments. The 2.99-4.99 price range is also the accepted range for the Kindle Singles program, so I think I should spend most of my time on titles within the 10k-20k word range.
Of course this reflects my own particular scenario. People expecting larger sales or smaller returns may find different conclusions. You could use a smaller yearly discount rate. If you can write faster, then the length of the books could be considerably larger so that novels become more practical.
By far the most critical and most difficult to assess variable are the expected sales. When one is just starting to write and publish that number is almost impossible to figure. As the years pass it may become quite predictable.
I’d like to know what you think about all this.
Lucas,
I like how you thought this through. Clearly you have real world business experience and applying that to your writing is going to take you a long ways.
And I agree with your conclusions and how you came at them. I have been saying for some time now that the longer novels, books past 50,000 words, unless the story just demands it, are not worth writer’s and reader’s time. And honestly, some of what you detailed out is why so many major bestsellers have their books priced up around $14.99 electronic and I think Rowling is even breaking the $30.00 barrier with her new novel.
For longer books, to a writer, unless you can get a huge advance from a traditional publisher, the per-hour value just isn’t there.
So honestly, I am spot on your pricing and word counts. I do think $8.99 for 30,000 words a little high, and at that upper level is where the calculation breaks down. (And other factors can be added in as well, such at topic and length of time applied to return and so on.
So thanks. I like your calculations. They really show the loss of hourly rate in the longer novels, that’s for sure.
I’m about to self-pub my first novel (115k words), and I think I’ve finally landed on $5.99 for eBook since I’m a first time author and don’t feel comfortable reaching for $7.99. But at the moment it looks like I’m sitting at 340 pages, and am trying to figure out if it’s reasonable to reach beyond $14.99 for trade, considering $5.99 as its counterpoint.
Do those two numbers seem to be a stretch?
Love the blog, by the by. Thanks for all the great info!
Ryan, the $14.99 price point isn’t going to give you much of a profit from extended distribution for that page length. There is no “customer” difference between $14.99 and $15.99 and $15.99 would fine with the $5.99. In fact, where the two editions are linked, it will make the electronic edition look like a deal.
Does the EDC give that many more sales to make it worth considering its payout? I’m more concerned about being able to compete with other trade paperbacks on Amazon that are already getting cut down to $10 from well known authors.
Ryan, you have to get out of the thinking that all books are the same and thus can only compete on pricing. Your book is your book, another writer’s book is not on an even footing or even in the same ball park as your book, even in the same genre. If you price your trade at $1.99 and it isn’t what a reader wants to read, no one will buy it. You price it at $22.99 and it’s a book a lot of readers want to read, they will buy it.
Every book is different. Price your books, both electronic and paper, so that your business calculations work out. Stop comparing to other writers. That way is just wrong and also lies madness.
Picasso is different from Rockwell and is different from Canty. You can’t compare them and you can’t price them like a box of cereal. So stop thinking that.
Can you tell I’m finally getting disgusted at young writers thinking my books are the same as King’s books or their books and thus should be always priced the same like a box of cereal? (grin) Use cost of production, cost of your time, and perception to the buyer to set your prices.
Thanks for this in depth discussion on prices! I have a few ebooks up (short stories) and am working to put together my first POD. I know this isn’t really addressed in your post, but how are you handling covers? Do you design all your own, commission a basic illustration and then create the cover using it, or commission out the whole thing? Does this ever factor into your pricing?
Also I see plenty of information on Createspace for using Word to format the book, but very little information about using InDesign. What are the benefits of using InDesign rather than Word?
Oh, wow, Judy, the difference in InDesign and Word for laying out books for POD is like the difference between a kid’s wagon and a high performance racing car. Can’t compare them. Both get you to the same place, but all professional book and magazine designers use InDesign. Word just takes a ton of time.
However, laying out books for electronic is best done in Word.
I design all my own covers and have from the start, and wow, now after two years of practice and study, I can sure see the problems with my early stuff and am working slowly to change them all out. Allyson Longuiera, the Publisher of WMG Publishing Inc. has major degrees in graphic design as well and she and I are always working to improve our covers. And that’s all in the details.
The thing with publishing and doing covers is that you can’t be afraid to fail. It can always be fixed later or redone later. So we use art we buy from royalty free sites like I-Stockphoto or Dreamstime and we design the covers in InDesign or PowerPoint.
The learning curve on cover design is steep at first, but gets to be great fun after a time. We are teaching a POD workshop with cover design in it this fall and also next spring again in May, I think. Check under the “Workshop” tab above.
Hi Dean,
I haven’t been by in … geez, forever. I feel like I’ve missed out on so much good stuff and I still haven’t found what I came here looking for (a link to insert into a branding blog I’m doing on NOT doing line extension and instead, creating a new pen name so as to NOT dilute your brand after building it). I know you love pen names
I know you have the link I need.
But then I see this! WOW! I’m an engineer (technically, a bonafide rocket scientist *grin*) so I do loves me some numbers-crunching but these numbers are amazing to scan. I did not do any of this. You know how I came up with my number of $7.99 for Smashwords and $8.99 for Amazon? I calculated my royalties per sale and used your much-denounced “gut” method. I simply cannot afford to earn less than $5 per sale and while $5.99 might be a nice little price point, my first novel is 232,000 words long. That’s like a DOUBLE book. No frakkin way I’m GIVING that away for a mere $5.99–and that’s a giveaway. I actually had it raised a dollar for Amazon because (a) lower royalties than Smashwords and (b) they charge me heftier delivery costs so adding a dollar to the cover price “mostly” compensated for earning less (I’m definitely getting the 35% rate half the time when my customers buy from the dot com and are not in the US)
Right now I’m literally giving it away at Smashwords (during their site wide promo) and Amazon has me discounted to $5.99 but when I finish my promo tomorrow and raise the price back up, I’ll go into KDP and FORCE the price back up by resetting it to $8.99 Now I know I cannot actually “force” Amazon to stop discounting my prices but if the $7.99 price propagates out from Smashwords, I’d like to know where they claim to see it competitively matched.
I think I’d love to see you write an udpated article about another issue you touched on (more than once, IIRC) and your wife touched on as well: royalty payments–and the non-payment of same, especially by Amazon. They just don’t pay “on time, in full” and don’t really seem to care. Whereas Smashwords is not only 100% on time and in full, Smashwords sends out these nifty little reminders to check your payment data before their cutoff date to start running their processing scripts. Smashwords is thinking of *US* instead of taking the PayPal “I can use your money for days and you cannot stop me” approach that Amazon KDP seems to have adopted. Really, I’ve seen posts all over the KDP Community forums (the ones behind the Dashboard) with people NOT getting paid and not having any issues in their account…just not getting paid.
My personal experience was interesting. I have two pen names, this one and my real name. My real name pen name has a book she never promotes that seems to sell itself once a month. It’s priced way too low as a motivation to me to redo the cover. I have it at $3.99 so it earns me pennies per sale. In this quarter I earned $12.88 and guess what? That payment went through on June 28th like clockwork. This “Friday” pen name, however, for my SciFi novel at $7.99 (reduced a few weeks ago to $5.99 at Amazon’s “matching” discount) has not been paid a cent. Ever. I earned a few hundred dollars since releasing the book in April, 2012. I’ve worked very hard at promoting it and soliciting reviews and staying active in the reader communities to make myself and my book “discoverable.” Smashwords has earned me more money through it’s storefront and distribution channels but they don’t owe me a payment until August 1st. I’m 100% confident that Smashwords will pay. Amazon hasn’t and probably WON’T and I have no recourse. They’re screwing around with the numbers, changing them at will, too.
I’m serious. I started keeping pencil and paper records every 12 hrs of my Amazon sales and (since I was so active daily with my reader community) started noting when people said they had bought a book from Kindle or from Smashwords and with only a few dozen sales a week, it was pretty easy to track every last one of my sales these first 3 months. I had maybe 6 I couldn’t account for personally. Amazon’s “sales to date” and “last 6 weeks royalty reports” numbers changed. They update those reports every weekend, officially, but the numbers were changing …from morning to evening, going down. I never had a single return to my knowledge so how does Amazon change sales numbers? I mean, I had sales reported one day and then that night they were gone.
I’d love to hear your investigative reporting on this subject
I mean you MUST have some stories to tell of your own experiences with Amazon’s KDP reporting platform over the last 2 years. The changes they effected when they launched the Select program last December aren’t the issue. I mean the regular KDP reports. I’d love to hear from someone with more than one book, more than one year, more than one hundred earned 
because really, what’s the point of scaling up on a platform that doesn’t pay royalties unless you earn only pennies?
Okay, now I need to stop reading your fantastic blog and find that link to one of your articles on pen names. I know you have a few (articles and names
-Friday
@phoenicianbooks
Friday, zero issue and not much of a topic. There are always mistakes in any accounting programs, especially one this large. And compared to New York publishers, Amazon is perfect and a saint. Sorry, just never heard or seen on issue on this and we have 258 titles up as of this morning.
My suggestion is not worry about it and focus on writing more.
What I find interesting is that nonfiction indies (especially those which are offered as PDFs on the author’s website) are the exact opposite of the price-’em-low trend. $25-75 or more does not seem to be unusual for what is often little more than a pamphlet of 30 pages. Perhaps fiction writers need to take a look at the other side of the bookstore.
Personally, I’m working on both.
7/26/12
Hi Dean,
I’ve been getting so much from your posts — even to the extent it’s been cutting into my writing time! Here’s something that caught my eye over at Passive Guy about how trad pub e-book pricing can hurt writers. It was posted on the Smashwords Blog. Here’s the link:
http://blog.smashwords.com/2012/07/how-traditional-publisher-could-harm.html
Interesting, especially if you click on the second chart and see that books priced from $5.00 to $5.99 make the most money. Hmmm, I think I’ve been saying that. Also realize that post is slanted traditional. But interesting read.
Yes, the $5.00-5.99 column caught my eye immediately. I’ve been mulling over how to price my non-fiction books for maximum profit, and that price range was one I felt would be close to optimum. Very gratifying to get some independent validation on that.
A friend introduced me to your site—He’s right, you are brilliant.
I’ve made my living in sales for the last 40 years, and the most common mistake people make is to undervalue themselves & drop price too quickly.
Thank you for explaining so clearly that ultimately we set our own value, and if we don’t believe we are worth anything, why should anyone else?
I hope all the hardworking writers who read how selling too low will reduce their number of sales really study your words and make them part of their psych.