How price impacts sales
Let's consider Amazon first since they sell 70% of the world's ebooks.
Amazon offer the following royalties to authors:
- Free ebooks - obviously $0.00 royalty.
- $0.99 to $2.98 ebooks - 35% of book price.
- $2.99 to $9.99 ebooks - 70% of price less a delivery charge of $0.15 per megabyte of file size.
- $10 and over - 35% of book price.
Let's see how much that works out at per ebook. We'll choose a romance ebook with a file size of about 4 MB size - that's about 112,000 words, the file size readers seem to prefer but bigger than most.
- Free ebooks - obviously $0.00 royalty.
- $0.99 ebooks - $0.35
- $1.99 ebooks - $0.70
- $2.99 ebooks - $1.49
- $3.99 ebooks - $2.19
- $4.99 ebooks - $2.89
- $5.99 ebooks - $3.59
- $6.99 ebooks - $4.29
- $7.99 ebooks - $4.99
- $8.99 ebooks - $5.69
- $9.99 ebooks - $6.39
- $10.00 ebooks - $3.50
- $18.29 ebooks - $6.40
Notice how if you increase the price by a cent from $9.99 to $10.00 you earn far less in royalties? That's because any ebook more than $9.99 earns only a 35% royalty. In fact it's only at $18.29 that this ebook would earn more than if it was priced $9.99.
You won't be surprised to find that by far the most popular book price is free. In fact according to Mark Coker of Smashwords in a 2013 report a free ebook is downloaded 91 times as many times as a priced ebook. Note. downloads do not necessarily mean the ebook has been read.
In general, the lower the cost, the more copies an ebook sells. I looked at a graph that Mark Coker produced in the same 2013 report and added the row in red to compare the royalties an author could expect at each price point compared with a $10 ebook.
It's not hard to see that the optimum price point for a normal sized ebook is $3.99. This price gives an author room to discount an ebook as a $2.99 sale price without having to go into the 35% royalty rate.
Notice how these prices all end in '.99'? We all know in reality there is little difference between $3.99 and $4.00 but no matter how much we are aware of this we perceive $3.99 as being a bargain compared with $4.00. Salesmen have been aware of this since the start of money. A house priced 399,995 is far more likely to sell than one priced 400,000. Apple used to round up all ebook prices to the next 99 cents but had to stop doing this in 2016 when they lost a court case and were banned from using the agency model (where publishers set the prices) for ebooks. Today it is authors who set the prices there and many authors still use the 99 cent model for prices.
If you find this guide useful...
Can you help me out?
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It's the first book of a series of 9 books (so far) which tell the story of how life on Earth was saved from a cataclysmic extinction when a rogue planetoid collides with Earth in 7141. This first book deals with how humanity was made immortal, giving us the incentive to do something about an event so far in the future.
Take a touch of humour, add some genetic science and nanotechnology. Steep with conspiracy and stir in murder and despair. Season with romance between three people in a secret location. Garnish with morality.
The result is 'Immortality Gene', the first in a novel series by John and Shelia Chapman. The ebook of book 1 is FREE and available at multiple retailers
Is it always best to choose the 70% royalty rate?
You would think this is an obvious choice but the answer depends on if your book contains a lot of graphics. Graphics increase file size dramatically and with that the download charges
As you can see selecting the 35% royalty rate will earn more.
Or maybe a free online interactive adventure story?
Back in 1982 early text only adventure games were being written for home computers. One such game was 'Castle of Riddles' written by Peter Killworth and published by Acornsoft. Now it's been re-written and greatly expanded with added images and sound. Play it on your computer, tablet or even a phone.
Check it out at https://jaydax.co.uk/corr
what about other e-retailers?
Smashwords seems to offer royalty rates of as much as 85% but to get this rate you would have to not allow affiliate payments. This is done on a per book basis. Without opting out or changing affiliate payments the author will get 74% royalty. (I offer a 35% affiliate rate on most of my ebooks there.)
Most of the other e-retailers offer a similar royalty rate structure to Amazon for direct submission by the author. This can be reduced if the author publishes through a book aggrigator such as Draft2Digital, Smashwords, PublishDrive or others. It can be time consuming to publish to each e-retailer directly so to me, I don't mind using a book aggrigator's services for e-retailers apart from Amazon.
What about self-published paper books?
The last paper book I published was a test of the latest version of Amazon Print. A collection of four short time travel stories called Time After Time. It's a slender volume of 105 pages with four full colour pages and Amazon charges £2.95 ($3.84) to print it. Amazon have a royalty calculator page at https://kdp.amazon.com/en_US/royalty-calculator. Using that I find I need to charge £7.65 ($9.75) to get about the same royalty as the £2.35 ($2.99) ebook
Do I expect to sell many paperbacks? No, but having them available makes the ebook price look very attractive. Amazon will say 'Save 69%.' on the ebook's page.
As an Amazon Associate, I earn from qualifying purchases.
Want a short story instead?
I've written a number of short time travel stories. Each is 99p/99¢ and great for taking a break from writing.
Check them out at http://iwadasn.info
Traditional Publishing And Their Crazy Prices
Take a look at this traditionally published best seller sold at Amazon. (A pet gripe of mine.)
Compare the Kindle ebook price with the paperback price. The publishers, Transworld Digital, which is owned by Penguin Random House, has the nerve to charge £0.99 more than the paperback price and that's the reason I will never buy it unless I find it in a second hand store at 50p. Ebooks should always cost less than any new paper book!
Here's why:
| Paper books | E-books | |
|---|---|---|
| 1 | Requires an author | Requires an author |
| 2 | Requires an editor | Requires an editor |
| 3 | Requires formatting | Requires formatting |
| 4 | Trees need to be felled (requires oil) | Not required |
| 5 | Timber needs to be transported to papermill (requires oil) | Not required |
| 6 | Papermill manufactures paper with some waste sludge (requires some oil) | Not required |
| 7 | Sludge needs to be disposed of (requires oil) | Not required |
| 8 | Paper needs transporting to printer (requires oil) | Not required |
| 9 | Ink needs manufacturing (requires oil) | Not required |
| 10 | Books need to be printed (requires oil) | Not required |
| 11 | Books need to be transported to distribution depot (requires oil) | Not required |
| 12 | Sales team need to visit retail outlets (requires oil) | Not required |
| 13 | Books need to be transported to retail outlets (requires oil) | Not required |
| 14 | Customer needs transport to bookstore and back (requires oil) | E-books are delivered direct to reader electronically. |
| 15 | Surplus unsold books need transport back to printer (requires oil) | Not required |
| 16 | Surplus requires storage or redistribution or pulping (requires oil) | Not required |
| 17 | Book pulp requires cleaning of toxic ink and disposal of the toxins (requires oil) | Not required |
As you can see most of the tasks needed for a paper book are not required for an ebook. This makes them less expensive and more environmentally friendly too. Making an ebook more expensive than a paper book is simply wrong.