On the subject of e-books and pricing, whereas last night I hit the high end, Mike Shatzkin has come out with a blog post addressing the low end. He points to a story on CNet about it, and Slashdot links a couple of stories (on J.A. Konrath’s blog and The Technium) too. Essentially, self-publishing writers are starting to discover the loss-leader advantage in one of those magic-number prices.

Amazon and Barnes & Noble’s self-publishing system gives authors a much bigger chunk of the retail price (70%) at $2.99 and up than at 99 cents (35%). But Joe Konrath reports that he went from selling 40 copies of an e-book per day at $2.99 to selling 620 copies of it per day at 99 cents. That works out to a change from $83.72/day of royalties at the higher price to $214.83/day—over 2 1/2 times as much—at the lower price.

And Shatzkin points to the marketing lessons learned by author Christopher Smith, as explained in the CNet article. Smith prices his e-books at 99 cents for long enough for the greater sales to shoot them up into the high ranks of Amazon’s best-seller lists, then raises the price back to $2.99 and takes in greater per-sale royalties until they fall back off the list. Then he lowers the price to 99 cents again. Lather, rinse, repeat.

Shatzkin notes that, ironically enough, one of Smith’s biggest fans is Stephen King, who experimented early on with e-book self-publishing (his biggest “failure” only netted him about $464,000, which just goes to show how differently bestselling authors gauge success and failure than the rest of us mere mortals). King gave Smith a blurb recommendation that proved very helpful.

Might Smith return the favor for King by teaching him the revenue-maximization techniques he’s developed so King can get back into the self-publishing experimentation game? I think that possibility encapsulates the major publishers’ biggest nightmare. Publishers are going to have a devil of a time defending their 25% royalty rate into the future, which just feels intuitively unfair to authors. They can get away with it for the time being because print sales still matter. But they won’t for long and if publishers don’t use their scale to do a better job managing dynamic pricing to extract the maximum revenue from ebook sales than an author might do on his or her own, the challenge of retaining their top talent will become even more difficult.

He’s talking about the same publishers who imposed agency pricing because they thought $9.99 wasn’t a high enough price for their e-books. My predictions of impending doom made in last night’s post still hold.


  1. Nicely written article Chris… though I don’t really understand the sentence “Essentially, self-publishing writers are starting to discover the loss-leader advantage in one of those magic-number prices.” ?

    Very interesting strategy by Christopher Smith.

  2. What this article doesn’t say is that the author’s take of a $2.99 book at Amazon is about the same as the author’s take of a typically priced traditionally published hardback, usually a couple of dollars.

    If the author goes the self-publishing route, he makes just as much per book but attracts many more readers and keeps those readers much happier. Purchasing the next new book from an author is a no brainer when you got the first one for free, $.99 or $2.99, really liked it, and the next one is similarly priced.

  3. So if self published ebook authors at the magic 0.99 price point is making 0.35 per unit sold they are are making the equivalent of about a 4% royalty on a traditional $16.99 trade paperback without the advance. On a 7.99 mass market paperback that is an 8.5% royalty with no advance.

    What remains to be seen is whether the value of the download increase at 0.99 offsets the devalue of the book property to the purchaser. What Mr Konrath or Shatzkin do not mention is that at 0.99 a much greater percentage of those downloads may never actually get read. When you price a book the same as a ringtone I would not expect it to be treated by the purchaser any better than a ringtone – easily deleted or forgotten (I have seen my daughter download 0.99 ringtones and discard them like taking a book off the shelf reading the backcover then putting it back).

  4. I hummed and hawed over buying Nathan Lowell’s Quarter Share. I’d already listened to the excellent free audiobook, and wasn’t sure if I’d get the same enjoyment out of a second reading).
    However, when I saw the price ($1.99!) it was a no brainer. At $0.99 I would have probably bought one or two for a friend.
    Even better, at $0.99 the incentives for piracy are very low. Books aren’t like album tracks, even the most voracious reader is going to take a day or two to plow through a novel. More realistically, it’s 1-2 books a month for most “keen readers” who have jobs and lives outside.
    At $0.99 every few weeks/month, it’s simply not worth the bother of finding a pirated book (which may be rife with spelling and formatting errors – although paid ebooks from major imprints aren’t immune from that either), converting it, and getting it on your device.
    Now I don’t know if $0.99 is a sustainable level for all authors (for Mass market fiction it might be, for technical or specialist books with a small potential audience, possibly not), but it is certainly a way to move volume and build a readership.

  5. After reading the material, I’ve been mulling over trying it as an experiment myself. But at $2.99, my books aren’t so high-priced that they are likely to scare too many people away… and the article doesn’t address the perception by many that a .99 cent book isn’t a high-quality book.

    Finally, having a .99 cent book isn’t useful if no one can find it… the biggest problem plaguing most indie authors. But I’ll give it more thought.

  6. There’s always a catch : self published authors can and do earn higher royalties off of ebooks, but then again, because they’re self published consumers won’t generally spend more than 99 cents and possibly $2.99 for the Stephenie Meyers & James Pattersons of the self publishing world (Amanda Hocking, John Locke).

    Consumers are watching and when they see the million-sellers still selling their ebooks at $2.99 tops,they (for the most part) expect the rest of self publishing to cost 99 cents (or less than what the top sellers charge). A dead zone for writers.