Good morning, everyone!

Today marks exactly four weeks until the release of Forged in Dreams and Magick, and it’s the perfect time to talk about a very important book-publishing decision.

The price of a book.

Do authors take this decision lightly? Is it arbitrary? Are there blindfolds and dart boards involved?

Not in my world.

There are many components of creating a book, and each one deserves proper attention with research and sound reasoning. While I spent my time over the last year writing and researching, I read along the way from many sources that the four most important elements of a successful book are the story, book description, cover, and price.

Although price is listed last in the list, I centered my attention around price earlier this year. Before I sent the story off to the editor. Before I had polished the book description. Before I had begun to research cover designers.

That is just how important the price of a book is to me. I’ll share with you why, what I found, and what I decided.

Price in a Business Model

I suppose to be perfectly honest, I’d been researching price about twenty years ago. In my last year of obtaining a BSBA, we took a required course on business operations.

The entire semester was a rather unorthodox. The mission? Simple. Be the best team of six in selling widgets. (Yes, I kid you not. Widgets.) First place went to the company who made the most net profit.

We spent very little time in the classroom and an enormous amount of time in a computer lab with archaic machines (even for that time) blinking white cursors at us on black screens. Planning and strategy meetings were held in the business school lounge and the student union.

Of course, my team had to have two fashion divas on it {coughs}, so we ensured our widget was a luxury widget. There might (or might not) have been spying on the other teams to be sure that our widget was the highest-priced, highest-quality widget. {hides my mission impossible gear}

Now, we knew we had our work cut out for us. It only stood to reason that a well-run company with a low-priced product would sell well all on its own. The masses could afford the lowest price widget even if their product quality was sub-par. Our challenge was to compensate for our high price with the best strategy possible. From our budget, we apportioned a great amount of money to developing the best product. We spent the appropriate amount of money into distribution to reach those customers we were targeting. And we spent a large amount of money on marketing.

Miraculously, we came in second. I say miraculously, because in our bravado of thinking we could come out on top even though we’d emulated what every elite brand worldwide had ever done, we’d guessed wrong. Our thinking was flawed.

Guess who won first place in the semester? Who was always destined to win first place? The lowest-priced widget. The entire semester was designed to teach us all that nugget of information.

Aha! So, does that mean the lowest priced book will always make an author the most money possible?

Not exactly, my friends.

Keep reading . . .

Imputed Value

My research earlier this year on price and marketing included reading every article I could find from all sources, but mostly included self-publishing authors, Digital Book World, Publisher’s Weekly, The Huffington Post, Forbes, and the most important and ongoing one of all . . . diligent weekly scanning of the Amazon Best Sellers lists and an occasional glance at the New York Times Best Sellers list.

I first read about Imputed Value in Elle Lothlorien’s fabulous guest post on Joe Konrath’s A Newbie’s Guide to Publishing: Why Your Novel is a Tall, 6-Pump Vanilla, Breve Latte Grande, Extra Hot, Heavy Whipping Cream, Extra Dry Cappuccino (Or It Should Be).

Well, hell. If any of you have read Forged in Dreams and Magick’s early reviews on Goodreads, my book IS all that.

Tall? An alpha-male buffet.

Extra hot? Oh, the scorching, emotionally charged sex scenes . . .

Ooops . . . I digressed.

Lothlorien’s article beautifully illustrates the importance of price from the concept of the inherent value of the item. In other words, a higher price will command more attention simply because it’s perceived to have greater worth.

The college student in me flared to life, and I saw that she was on to something. But with that fashion-diva, second-place win under my education belt, I felt further research, thought, and study were in order.

Considering the Reader

In the fledgling stages of my consideration of book pricing, my first thoughts have been to the reader. The future buyers of my books have been a major factor in consideration of price all along.

That’s right. Ahead of my lining my pocket, I’m thinking of how the reader will be able to afford my book. I think it should be an important consideration of every single author.

I am that reader too.

I’m the reader who is so in love with her husband that when he argued against buying Clive Cussler’s latest release because it cost $12.99, I confiscated his Kindle and downloaded it as my “gift” to him.

I’m the reader who is so addicted to Karen Marie Moning’s writing, I wait on the edge of my seat for her new release and swallow the hard pill of the $14.99 Kindle price to be able to read it immediately.

I’m the reader who just discovered Nalini Singh’s incredible writing in her Psy/Changeling Series who blinks hard every time I download the next book in her already twelve-book series, each one at the Kindle cost of $7.99. You do the math. {hears my credit card groan}

Who decides those outrageously high prices?

I’ll give you a hint. It’s not the authors.

Publishers decide what you will pay for their books. More on publishers in just a moment . . .

In considering the reader, I’ve made a lot of decisions. Because I chose to self publish, I was able to have total control over the process: I wrote the best story possible by running it through several rounds of my own deep edits before my beta readers ever had the chance to give their opinion. I created the best book possible by hiring a professional editor, a professional proofreader, and a professional to do the formatting. I created the best cover possible by hiring a design professional known to create spectacular covers.

When putting the reader first with regard to price, I did not consider the writing hours logged in the over two years it took to write, edit, and promote the book. I did not consider the awards the book has garnered. I am not considering the early rave reviews the book is receiving.

Why? Because the fact that I could charge more for the book makes no difference to me. I want to ensure that readers can buy something of quality for a low price.

They are making the important decision to buy my book, and I want readers who do so to be glad they made the choice in every way.

A final consideration to the reader, which I felt was an important one, is the great amount of savings I realize in the book’s price versus net by being a self-published author. Rather than pocket those savings myself, my intention the entire time has always been to pass those savings on to the reader.

The Department of Justice: Apple, Publishers, and the Price-fixing Case

If you’re a writer, reader, or book blogger, and you haven’t caught wind of the Department of Justice cracking down against Apple and the big five publishers in Apple’s attempt to gain a competitive (and illegal) advantage over Amazon, visit this article and press release on Digital Book World: Department of Justice Wins Antitrust Suit Against Apple. I hope you take the time to read the article. It’s eye-opening.

The decisions of heavyweights in the industry affect the consumer. Us. The readers.

A snippet from the article’s included press release:

““As the department’s litigation team established at trial, Apple executives hoped to ensure that its e-book business would be free from retail price competition, causing consumers throughout the country to pay higher prices for many e-books. The evidence showed that the prices of the conspiring publishers’ e-books increased by an average of 18 percent as a result of the collusive effort led by Apple.”

Don’t despair! Digital Book World also has another fabulous article: Why Ebook Best-Seller Prices Will Continue to Decrease.

Did you happen to catch the last reason listed? {smiles slowly} . . . “3. The rise of self-publishing.”

MmmHmmm . . .

Best Seller Lists

As I mentioned earlier, I’ve been scanning the Amazon Best Sellers lists and occasionally glancing at the New York Times Best Sellers list. I say occasional, because I only jumped over there a half a dozen times out of curiosity to see how staying power at the top spots in Amazon’s list translated into placement on the New York Times list.

What did I learn? What can any of you learn?

What I learned is that class in college taught me well. And keeping a watchful eye those lists, I continued to be a very diligent student.

I only watched a hand full of genre lists on Amazon. Namely those categories where my book would be listed, those categories of other books I read, and the hottest best sellers. Those include, under the category of romance: time travel, fantasy and futuristic, erotic, contemporary, and under the category of literature and fiction’s genre fiction: action adventure and coming of age.

(By the way, choosing categories is an entirely different research topic that came to light by watching those lists. I’ll likely share my findings on category selection in an upcoming Transparency in Self-Publishing Series post.)

By watching the lists on a daily or sometimes weekly basis, I learned something very valuable. Most of the time, the top of the list was dominated by books priced $3.99 or under. Any time a well-known best-selling author released a book, it sometimes rose to the top to take the number one spot in its category. If it did, it didn’t stay there long. Lower priced books edged out higher priced books. Those lower priced books, held their spots the longest.

In fact, as I’m typing this post at 10am EST on August 26, 2013, in the romance category, only two titles are greater than $4.99: Risky Business by Nora Roberts is at #13 priced at $5.38 and Burn by Maya Banks is #19 priced at $8.89.

The rest of the titles break out as follows:

8 at $ .99
5 at $3.99
2 at $4.99
2 at $2.99
1 at $1.99

If you watch those lists as I have, you see the same trend happen over and over again.

In the world of price, where the almighty dollar is king, the customers are speaking with power. The cream, as chosen by the reading public, floats to the top. The heavy-priced, even best-selling titles, sink.

The Best Price for a Book

There is no magic price for a book that guarantees the book’s success. Big publishers have been searching for years for the perfect recipe for a best seller, but they haven’t found it yet. Various elements increase the odds of a book’s success. My opinion is that after you write the best story possible, create the most compelling book description, and design an eye-catching book cover, price is the next most important element and carries a large amount of influence, perhaps equal or marginally greater in weight to a reader than each the other three to a debut author, a self-published author, or even a best-selling author.

I say equal or marginally greater influence, because cost is dictating purchasing behavior by readers. I see it on my Twitter timeline. Some are balking at $8.99. Some draw the line at $5.99. Many buy so many books, they have only a few of their favorite authors on auto-buy above $3.99.

Remember when I mentioned that I wanted to pass my cost savings on to the reader? Let me walk you through what I meant by that:

If I went through a big-five publisher at $9.99, it would only net me $.99 at the traditional 10%.

That’s right, 10% on the old-school contracts with publishers. (Now I heard some authors are fighting for 50% of digital sales. But most are losing. I’ve read the most business savvy are striking deals in the 30-35% range. Let’s be generous and assume 30%.) That brings the net to an author up to $3.00. Yay! Don’t celebrate yet. In most circumstances, agents serve as gatekeepers into the big publishers. They take 15%. So now we’re down to $2.55 net profit. before costs and taxes.

Well, guess what?

If I price my book at $3.99, at Amazon, I make about 70% of my list price, which is $2.79.
At Barnes and Noble the royalty is 65%, which at $3.99 makes me $2.59.
Both are equal to or greater than the net I would make at a big publishing house.

That calculation, and the fact that I wanted to pass the self-publishing savings on to my readers, swayed my decision to price at $3.99.

But then, I saw an article that set in stone the decision. The article, New Smashwords Survey Helps Authors Sell More Ebooks by Mark Coker, is a gold mine of information for us price-researching types. In particular, I love the yield graph results described in #6 and their closer look at it in #7:

“I predict that within three years, over 50% of the New York Times bestselling ebooks will be self-published ebooks. It’s possible I’m being too conservative.”

The gist of the entire article, however, demonstrates the point made by my wise instructor so many years ago in college.

{smiles slowly}

You can have the best book, the best description, the best cover, and the best marketing. But only if you have it priced low enough for the greatest amount of readers to buy it, will your book sell well.

Quality AND Low Price

Both quality and low price equals value to a consumer in any product or service. It means we the buyer are getting a good deal.

Please remember the value you receive when buying well-written books at low prices. In fact, write a great review of the books that you discover and love. Your taking the time to do so, helps in each book’s success. Which helps authors keep those book prices down. Which, in turn, helps readers to be able to afford to buy more books. And so on . . .

Eventually, as we celebrate and exercise the power we as readers and self-published authors have in our buying power, the book industry will take notice. They will realize that it’s not in raising prices for them to win that is key.

It’s in lowering prices so that everyone wins that is the most important pricing decision of all.

I hope you’ve all enjoyed my foray into The Price of a Book.

Let me know what you think!

Your humble shoe,

~ Kat

© 2013 by Kat Bastion