Power Pricing: How should I price my eBooks?

Nathan Maharaj, Kobo’s own Director of Merchandising (otherwise known as Head Bookseller) put together some thoughts to answer the question he most often gets from publishers and authors: “How should I price my eBooks?”

The answer:

  • Price deliberately: Have a plan, and measure your results.
  • Price responsively: Be prepared to react to the market.
  • Price often: You don’t have to re-set the prices on every title every day, but be aware of opportunities and remember how quick and easy it is to change your prices in Kobo Writing Life. A few clicks, and your changes are made and will go live as quickly as possible.

It helps to remember that “price” should be treated as a verb – it’s an action that we take, rather than a noun we define.

Although we’re talking about price, setting prices isn’t the goal here: it’s maximizing revenue. Because when you don’t have a print run to capitalize and returns to hedge for, the only thing that matters is the amount of revenue you’re generating.

Rather than selling a lot of books, success is a matter of optimizing revenues by making decisions closer to the customer than ever, without the distractions of print runs, warehousing, returns, and all the other things that are neatly side-stepped with epublishing and more importantly, distract us from empathizing as closely as possible with the customer who has a need that might be satisfied by a book. Maybe your book.

Here are three quick tips garnered over three years at the helm of Kobo’s merchandising team:

Tip #1: Stop giving away money.

Nobody does this deliberately, yet it still happens all the time. This isn’t about pricing a book low: low prices are fine and you should feel free to play there, especially with the aim of boosting interest. However, while we often see a lot of tidy, attractive prices set in one currency, say $2.99 USD, they turn into something quite different when converted: $2.89 CAD, for example.  And if your Canadian fans are willing to pay $2.89 for your book, market research suggests strongly that they’d be just as willing to pay $2.99.  People like tidy, familiar prices. By leaving the CAD price as $2.89, you could be leaving money on the table. Ten cents a book may not seem like much, but when you get into greater and greater volume, it can add up quickly.

If you know for a fact through rigorous experimentation that this is the right price for the market, then by all means, keep it there. But if you suspect you might be taking less from each customer than they were willing to pay on a substantial portion of your sales, then it’s worth thinking about setting prices in multiple markets. Not every book and not every market. But if there’s a secondary market that’s important to you, chances are Kobo supports the currency directly and can accommodate your market-specific price.

 Tip #2: Price for today.

Be aware of opportunities that might get you more publicity and more traffic to your eBooks.  When you release a new book in a series, for example, it might be a good time to reduce the price of the other books in the series to encourage backlist purchases, and to help encourage new readers to pick up your other works.

This book, for example: it was doing respectably well, nice and steady, but something happened in late September that gave its revenues a small but noticeable boost:

price chart 1

Was the price of this title raised?  In fact, no.  The price of the title was lowered by 25%, and yet revenue still went up.  So what did happen?  The author released a new title, well-supported by publicity:

price chart 2

At the same time, the price of the backlist title was lowered to take advantage of the new fanbase created by the high sales of the new title. The price went down, but revenues went up! Having done this, we don’t know if the publisher will continue reducing prices to see if they can maintain their new revenue level with volume, or if they’ll test price sensitivity by pushing upwards.

But in this case, there was a clear opportunity to lower prices and gain revenue.

Tip #3: Use price to solve price problems.

There’s a lot you can do with pricing, but it doesn’t solve every problem. For some books, the only price they’ll sell at won’t work with others. It’s critical to understand, or at least have a good guess, as to whether you’re looking at a price-related problem before jumping on price as the solution.

For example, let’s look at someone who put their entire catalogue on sale for a brief period of time. Looking at the overall revenues, it looks like a big success:

price chart a

They sold a huge volume during the sale, and then went back to business as usual afterwards. No harm, no foul.

But let’s dig in a bit.

This shows the sales for their biggest seller, title #1:

price chart b

As you can see, dropping the price a long way didn’t lift sales volume by much. And after the promo period, title #1’s sales slowed considerably, taking over a month to begin crawling back up to its original levels. In fact, it never fully recovered. This was a failure, leaving money on the table and cutting short a winner in mid-stride.

Other titles fared less badly, but the only title for which this promotion was a clear hit was the title #5:

price chart c

You can clearly see where the promotional sale started, but not where it ended. This sale gave this title new life, and boosted its revenues long-term. In this case, the 5th, 6th and 7th books should have been the only titles put on sale, as these titles were the weakest sellers of the catalogue and stood to gain the most.  Titles 1-4 were already bestsellers and didn’t need the boost; in fact the sale hurt them in the end. Bestselling titles are bestsellers, and while they need their prices optimized as any other, you really shouldn’t paint all your books with the same brush.

There is still so much more to explore when it comes to pricing, but hopefully this will give you some ideas and tools to bring to bear in your own endeavors.

Remember that pricing in Kobo Writing Life can be as flexible and responsive as you are. Play around, experiment with pricing, and see what pricing your books deliberately, responsively, and often can do for you.

Comments

  1. Nice info. I’m still trying to figure out how to get readers to notice my titles on KOBO. ;)

  2. Very interesting article. I do wish you had labeled your graphs better. Is the vertical (X) axis units sold or income? I’m guessing it’s units sold, but why make me guess?

    NEAT PRICES
    Yes, I know that $2.99 is a magic number … but when I see $2.99 I think to myself, “These people think I’m a fool that doesn’t know that $2.99 is really the same as $3.00.” In other words I find any price that ends in .99 to be insulting and the ones that end in .00 respect me as an intelligent being. Perhaps I’m just weird. I wonder if anyone else feels this way?

    Anyway, I had never heard of Kobo Writing Life so it’s good to find another source for eBooks. I got here from a post on Google+ about this article. Here’s a link to it:
    https://plus.google.com/u/0/115897499581644088500/posts/VoLwoFtG7GP

    Peace,

    Rob:-]

    • Thanks for the comment, Rob – and glad you discovered Kobo Writing Life.
      We double-checked with Nathan and can confirm that the graphs represent revenue.

      “Neat prices” is a historic retail habit based on perceived psychology (typically at higher price points) that an item priced $99.99 sounds more attractive than saying $100.00, despite the fact that consumers are too intelligent to ever actually be “tricked” by that 1 cent difference.

      All we really mean when we talk “neat prices” would be using “rounded” prices rather than seemingly random price points that might look like they are auto-converted from one currency to another……ie, a $4.99 Canadian title auto-converting based on exchange rate to $5.04. Easier to make round it to $5.00 or $4.99 — and yes, the .95 / .99 thing is a long-ingrained retail phenomenon and something traditional publishing has been doing for many decade – something we didn’t invent, but something that’s part of the space we operate in.

      • One of the famous poets (whose name escapes me) call this ‘hoodwinking logic’ – that was in the days of UK pounds, shillings and pence and he referred to ‘nine and eleven’ as an example of hoodwinking logic (being one penny less than ten pounds) as I recall! (Or some similar comparison!)

  3. Great article … and something different from what else is out there in the blogosphere. I am printing this out for my ‘marketing’ folder!

    I recently listed one title on Kobo for $2.99 and it’s just sat there despite decent Goodreads positive ratings. Perhaps you might do a future article about how indie-pubs can work with Kobo to drive traffic there without spamming/annoying our readers? Amazon has everybody brainwashed they have to sign their KDP Select exclusivity contract … would love to see Kobo kick their tailfeathers.

    • Thanks, Anna. We are looking at various strategies that should help indie-publishers with increasing their sales and visibility through Kobo’s catalog. Stay tuned for posts about it on this blog and via the Kobo Writing Life monthly newsletter.

  4. Well done. I have been publishing for about two years now and find this article interesting in that it speaks of things that I’ve tried and found success with. Thank you for putting it down in Black & White for me.

  5. Excellent information. Thank you!

  6. Thanks Nathan for an informed and informative blog. Beverley

  7. I have found that a low price infers a lower level of quality. I started eBooks about three years ago on Amazon. I started pricing my books at $2.99, and sold very few. I moved all of the eBooks up to $9.99 and started selling far more. Thus, the lowest price is not always the best price.

    • I can see the logic here to a point, but I am on the fence about the strategy. In my thinking, eBooks are less costly to produce, so why charge as much or more for them than a print book? I have three books with Kobo at the moment (very recently published) and have sold one copy so far. I do believe as time goes on and I release more books the revenues will increase. I am basing my pricing on number of pages, and am still in the testing phase to see if my theory will work. :)

      • Diane, I know you are nervous about the concept. Let me offer some eBook pricing by page count (the first numbers in the parenthetical are page numbers): (18-44 S $4.49 L $4.99) (48-104 S $5.49 L $6.49) (105-124 S $5.99 L $6.99) (125-199 S $7.49 L $8.49) (200-249 S $7.99 L $8.99) (250-299 S $8.49 L $9.49) (300-349 S $9.49 L $9.99) (350-840 S $9.99 L $9.99)

        NOTE: S= Small and L= Large L= Trim that is 7×10 or larger

        You have to get your name out there as well. Share your book on Facebook with different GROUPS (i.e., Facebook Pages). Say you like a FB business page that reflects your audience, that allows you to post, and share your book. Create your own FB Page, Create your own You Tube Channel, as you are your brand. I hope this helps. If you have any other questions, just ask, as I have been very involve in this work for over three years, 35 books: Online, eBook, paperback, and hardback. I do it ALL for free. I pay NO publisher, as I am my own publisher. I had to learn it all on my own. And if I can help anyone for free, they can pass on that help too.

      • Thank you Edward for the information. I am on Facebook and do have a couple of pages and a website to showcase my work/books. I will play with the pricing a bit to see where the “sweet spot” is. I have a list of books to finish this year (at least that is my goal; they are in different stages of completion), so will be experimenting as I go along. :)

  8. I never thought about the pricing difference between say CA and USD and how that would effect sales. This was very helpful.

  9. All of the writing on the subject of eBook marketing, especially from eDistributors, is a fraud, painting a picture of sales growth strategies when for the vast ‘long tail’ of eBook authors, the very best writers of today included, have zero, that’s $0.00, in sales or very close to it with $1000′s and 100′s of man-hours wasted in self-promotion. The only people making money are the people making money off of you, the author. Google ‘the long tail.’

Trackbacks

  1. [...] Power Pricing: How Should I Price My E-Books by Nathan Maharaj (@nrmaharaj) at Kobo [...]

  2. [...] Kobo’s Director of Merchandising, addresses the issue of pricing (and adjusting pricing) in Power Pricing: How should I price my eBooks? on the Kobo Writing Life blog. The goal, he notes, is to maximize revenue, NOT setting the price or [...]

  3. [...] The Kobo Writinglife blog weighs in on Power Pricing for ebooks. [...]

  4. [...] a una conversación con Silvia Clemares, directora de Kobo en España y Portugal, llego a estas recomendaciones de Nathan Maharaj, director de ventas de Kobo, sobre cómo poner precio a los eBooks. Da ejemplos [...]

  5. [...] • Five Easy Steps for Formatting Your Book • Ensuring Your Goodreads Reviews Appear on Kobo • Pricing eBooks • Creating Links to Kobo • Working with Booksellers – a video by Mark for IndieReCon, an [...]

  6. [...] Power Pricing: How Should I Price My E-Books? (Kobo) [...]

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