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?”
- 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:
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:
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:
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:
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:
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.