Guest Blog: Pricing Books, By Steve Umstead

Today’s blog post is from fellow author and friend Steve Umstead, creator of the Evan Gabriel series. The topic? The conundrums an author goes through in pricing his or her books. I think this one’s very illuminating, both for readers who wonder why the heck the prices for books vary so much, and for authors who are grappling with this pesky problem.

Let’s read what Steve has to say:

Author Steve Umstead

One of the best things about being a self-published author is determining my own price for my books.

One of the worst things about being a self-published author is determining my own price for my books.

Same statement, one word changed, with a massive difference in meaning. And both statements are absolutely true. Pricing is one of the best weapons in the marketing arsenal we have against the big name authors and publishers, yet pricing is still such a crapshoot, it’s been causing angst in the community for as long as I can remember. Why?

No. One. Knows. The. Sweet. Spot.

Simple as that. Here are some theories I’ve seen bandied about (always wanted to use that term…) along with my thoughts on each:

THEORY: Price as low as you can; because you’re new and no one knows you, you have to go low to draw the interest of readers.

ME: I hate this one. I strongly believe there is a price vs quality consideration that buyers take into account when making a purchase, and that holds true for cars, houses, coffee, and ebooks. If the price is too low, the buyer (reader) may expect poor quality, and may avoid the purchase (likewise – if they’ve bought at $.99 and read a piece of crap, they stay away from that price point in the future). And buyers who invest more in a product will invest more time/effort in using (reading) it. The perception of higher price is higher quality (yes, the Kia can get you to work just like that Lexus, but the perceived — and possibly real — quality difference is there). To me, low price implies cheap, low quality, bargain bin products, a category I don’t want my books in, whether readers “know who I am” or not. A reader who really wants to read a book will pay for it; I don’t see $.99 as the magic answer to beat the Stephen Kings and James Pattersons of the world when readers make their choice.

THEORY: Give your book away for free to gain readers and receive reviews.

ME: Ooh, don’t get me started on KDP Select. I wasn’t in favor of it from day one, and in the past few months the “benefits” of that program have essentially collapsed. No more huge sales bump when coming off free. But back to free in general: My strong opinion is authors with only one book should avoid free like the plague. Why? The vast majority of the giveaways (don’t you dare call them sales…) are picked up by freebie scoopers (my term), and the vast majority of them are never read. If I sell (for a cost!) 1,000 books and receive 20 reviews, that’s fantastic. Give away 1,000 copies? A book may garner one review, if it’s lucky. So why do it? I have no idea… I cringe when I see an author’s sole work being given away for free. Use free as another weapon in the arsenal, as a lead-in to other works. Not works down the road, works now – if you have one book out and the next is a year away, those freebie scoopers won’t remember you…

THEORY: A book should cost more than a cup of coffee, since it lasts longer and can provide more enjoyment.

ME: Okay, I’m with Dean Wesley Smith on this… to a point. A book should be worth more than a disposable commodity, even a gourmet one. But that’s not necessarily how the market sees it, as the market hasn’t yet been trained to see it that way. Everyone knows a large latte at Starbucks will cost them close to five bucks. But everyone also knows there are thousands upon thousands of books, even full length novels, that cost less than a third of that. Did Starbucks have a hard time from day one convincing coffee drinkers to shell out $5 instead of the $2 at Dunkin Donuts down the street? Probably. But eventually they did, and eventually (hopefully) as the market dictates higher prices, ebook readers will expect it.

THEORY: A book should be priced based on the effort and time put into it, almost like an hourly wage.

ME: Meh – this does have some validity, as everyone wants to be paid for their work, but one of the basic tenets of free market economics is this: A product is worth what the market will bear – not a penny more or penny less. One can say a book should be worth $10 because of the time spent writing it, but if the market says books that length/genre/rating/etc are worth $3, 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. Perhaps Picasso spent 40 hours on creating a masterpiece that ends up being worth $80 million – is his rate $2 million per hour? No, and neither should an author say “I spent 160 hours in writing this, and I should charge $10 for each one, so I can make…[crazy math here]. Don’t forget, an ebook will be on the ‘shelves’ in perpetuity for that one-time production of it.

THEORY: Price your book at $2.99 at the most, since that’s as low as you can go and still receive the higher 70% royalty.

ME: Not bad, not bad… but my personal opinion is that readers have gotten savvy to what’s out there, and the $.99 and $2.99 price points have become the de facto pricing for self-published authors. And let’s face it, the self-published industry still somewhat has a stigma about it of poor quality. So pricing a book at one of those two points tells a potential reader the author is self-published. Stand out from the crowd.

THEORY: Pricing is rising, and the book distributors are weighing higher priced books heavier than lower.

ME: Now we’re on to something. Edward Robertson (www.edwardwrobertson.com) did a very good analysis of Amazon’s ranking system in relation to book pricing over several months, and his conclusion is that the low priced and free books aren’t weighted nearly as much as higher priced (sorry, KDP Select – another nail in the coffin). This makes a great deal of sense. Amazon is a business, and a very smart one at that. I’d put their algorithms up against Google’s any day of the week. They want to make money, so they want higher priced (and more popular) books to show up more often in searches. Perhaps they’ve seen the light that cheap/free isn’t making any long term money or reader loyalty.

So what does this all boil down to? I have the magic answer, the great secret, the end-all, be-all, right here:

I. HAVE. NO. IDEA.

The market is a fickle thing, and changes direction on a dime or whim. But maybe the real key is this:

One of the best things about being a self-published author is determining my own price for my books.

Change your price. Raise it. Lower it. Make it end in .33. Make it based on the day of the week. Combine two books into one volume and offer a discount. Have a weekend sale. Throw the spaghetti against the wall and see what sticks. It’s the best tool we have in the arsenal.

Thanks, Steve!

I’m in agreement with most of what Steve has to say. After going through the pricing exercise a number of times myself, I’ve come to the conclusion that there’s not necessarily any one “right” price for a book. It might vary, given the circumstances, and Steve’s admonition to authors to experiment with the price is, in my opinion, the smart thing to do.

As for freebies, KDP Select was great at the beginning. I’ll happily admit that I took full advantage of it when it first came out, and it largely saved me from having to go back to my day job last winter (2011) after my books sales took a steep nosedive last fall (if you’ll pardon the pun). Unfortunately, as Steve pointed out, the benefits of having a book in KDP Select have waned. Some folks are still having good luck with the program, which requires the electronic version of a book be published exclusively on Amazon for 90 days at a time, but after my sales began picking up on Barnes & Noble and KDP Selects returns dwindled to zip, I bailed out of it.

But I have found a great use for freebies: hooking readers into a series. Hey, why not? It’s great for readers, because they get one or two entire books for free as a trial run, and if they like it they’re much more likely to go on and buy the other books. I’ve sold a lot more books that way than selling all the books for a given price, even with the first book at $0.99 (which also gets into what Steve noted about perceived quality based on price). And you can offer books for free in various ways without being constrained by exclusive programs like Amazon’s KDP Select.

So, authors and readers, any comments on Steve’s notions? Let’s cook up some spaghetti and toss at him to see if it’ll stick!