Why Would Anyone Sell A Book For $0.99?
Seriously though, why have so many authors (myself included) decided to sell their books for $0.99? If that question peaks your interest, then buckle up, because I'm about to go deep on all things pricing related. So deep. Before I officially dive into the weeds here, I wanted to point out the reason I'm making this post at this particular moment. If you pop over to the product page of my brand spanking new release (if you're reading this on July 7, 2021, at least), you'll see it's priced at $2.99. Exhibit A. It's not $0.99 like every single book I've ever launched before it. I thought that decision deserved a blog post, so here we are. And here we go!
Explaining this is going to require making a few educational detours. Once I've shared the requisite background knowledge, you'll be ready to fully digest my final, closing argument. Yes, I just watched a legal documentary yesterday and I'm getting too excited with all the fake legal jargon. But the first very important note about pricing books on Amazon is the two available royalty rates. Any book priced below $2.99 can only earn 30% royalties for the author. In other words, the author gets 30% and Amazon gets 70% of every purchase. Books priced $2.99 and up can choose to earn 70% royalties, meaning a $2.99 book earns authors $2.05 per sale compared to the $0.33 or so they get from a $0.99 sale at the 30% royalty rate. That's a lot of percentages and numbers, so look at this example to really see the difference. 3000 sales of a $0.99 book will earn the author about $891. 3000 sales of a $2.99 book will earn the author about $6150 I know what most of you are probably thinking at this point. "Duh, Penelope. When you charge people more money for something, you don't have to sell the same amount to earn more." That's true, of course. But the royalty rate here is the real focal point I wanted to highlight. If it was simply "charging more earns more," then we'd do the same comparison if authors earned 70% at $0.99. 3000 sales of a $0.99 book (if we were allowed to get 70% royalties at this price) would earn the author about $2079. So we've established that a sale at $0.99 doesn't just earn less than a $2.99 sale, it earns disproportionally less because of the reduced royalty rate. Let's continue our little educational tour here before we the part where I try to convince you that $2.99 is the way of the future (I'm being dramatic, but please, keep reading. I hate talking to myself). Kindle Unlimited and Pages Read All the numbers above are honestly kind of bleak. As you can probably guess, it's pretty hard to sell 3,000 copies of most books. I consider myself a pretty successful author and when I go back to look at my historical numbers... I've got about 15 books that either sold less than 3,000 copies since launch or have just barely eeked over that line in the 3,500/4,500 range. And keep in mind these are all books I've launched at $0.99! So we're not talking about $6,000+ earned from 15 books, we're talking about less then $1000 per book earned through sales royalties. Like I said, this would be a pretty bleak story if it wasn't for a secret savior... Pages read! Yes, every book I've written is also enrolled in Kindle Unlimited, which means I get fractions of a penny for every page a KU subscriber reads of my work. Those fractions of a penny wind up equally about $2 per book if a KU user borrows and reads the whole thing. That means authors like myself who publish in KU are kind of fighting a war on two fronts. We want to earn sales for our books, but we also want borrows so we get pages read. There's just one more stop before I can kind of tie all of this together and make my final argument. Stick with me! The All Powerful And All Terrifying Amazon Algorithm
Does it sound like I'm scared of the algorithm? That's because I am. The algorithm, for the unfamiliar, is a set of calculations that are always evolving behind the scenes of Amazon's website. It collects every imaginable scrap of data we feed into it when we purchase, browse, or view ads on other platforms and uses that to find better ways to sell products. Sounds a bit nefarious, I know. Basically, the algorithm wants to sell you as many things as it possibly can when you visit the Amazon website. As an author, one of my jobs is trying to convince the algorithm to want to sell you my books! So how do you do that? Well, short of some obvious and bannable tactics, you can't trick the algorithm. The best thing you can do is feed it information. This is where the $0.99 strategy starts to creep back into the story. At $0.99, it's not as hard to convince someone to take a risk in buying your book. That means you're going to get more sales for every promotion you run. A newsletter that might generate 15-30 sales at $2.99 could get you 70-100 at $0.99. As I mentioned above, you'd still be better off royalty wise to get those 15-30 sales at $2.99, but if you want to show the algorithm that you're selling something people are excited about... well, it gets more complicated. That's what selling at $0.99 is all about. You're essentially trying to create a big rush of momentum in sales that the algorithm can't ignore. It'll see all the action and realize it should be helping to maximize the number of eyes on your book. Then Amazon starts pushing you and suggesting you to people, which ends up dwarfing any advertising you can do on your own and the book is suddenly a success. At $2.99 and above, it's harder to generate each individual sale which means it's harder to get caught up in that algorithm fueled wave of momentum. Tying It All Together
Consider yourself educated in a crash course on self publishing strategy on Amazon. You're welcome. You're also ready to understand my argument, so here goes. Launching a book at $0.99 is a high risk, high reward gamble. If your $0.99 launch is highly appealing to readers and gets a lot of sales from early advertising efforts, it will probably take off and be successful. But very few books are appealing enough to readers to actually cross that threshold. In my experience, you need books to sell hundreds and hundreds of copies per day for the better part of 14-20 days to have any hope of the algorithm deciding to jump in and start helping out (It used to be a much shorter window before the algo jumped in, but for whatever reason it's more like 14+ days now). I know most of you reading this have probably never tried to publish anything or maybe never want to, but let me tell you what you have to do to sell hundreds and hundreds of copies of a book per day without Amazon helping you. Spend money.
I feel like it's almost taboo to admit that? But that's what I'm admitting. Books unfortunately don't sell themselves unless they are the %.0001 rare unicorn books. The problem is it doesn't really matter how good your book is to a certain extent. Our job as authors is essentially to force feed our book to enough people to sort of "prove" to Amazon that it's a good product. The issue with $0.99 here is all that force feeding is not cost effective. Whether you price at $0.99 or $19.99, you still need to find a way to heavily motivate people to buy your book early on. The difference is if you're advertising a $2.99 or $3.99 book, you can technically afford to spend $2.98 for every sale you generate and you're still not losing money. Look at Facebook advertising, for example. The way Facebook charges per ads is either cost per click, or cost per impression. So you pay when someone clicks your ads or you pay when they see them. Let's just use cost per click (CPC) to keep it simple. If I'm advertising a $0.99 book, I have to remember that each sale is $0.30 profit. To keep the numbers clean and easy, let's say my ad ends up costing me $0.15 per click, which would be a pretty good ad. That means I'd need 50% of people who click my ad to buy my book for it to be profitable. Note: I'm ignoring potential profits from my FB ads leading to a KU borrow and the pages read from it because we can't see borrows and have no way to track if we're getting them from FB ads. It's also even between $0.99 and $2.99 here, so I'm just going to leave it out of the equation to keep from getting too sidetracked. If I'm advertising a $2.99 book, on the other hand, I know each sale is $2.05 profit. That means my same $0.15 CPC ad only needs to generate one sale for every 13 clicks to be profitable. Way too many numbers, Penelope. My brain melted. Can you summarize?
The basic problem is there's almost no cost-effective way to advertise a $0.99 book. That means the only viable strategy when launching at $0.99 is to gamble that the book is a wild success and Amazon starts aggressively pushing it to readers. On the other hand, a $2.99 book can be advertised effectively even without Amazon's help. That means each book isn't some wild, stressful gamble.
So that's about as much as I can think of to get into on the topic of $0.99 versus $2.99+. Basically, pricing a book at $2.99 doesn't mean it's going to succeed by any means. After all, my example of $0.15 CPC may not pan out. Maybe you get $0.15 CPC on your ads but your book only sells one copy per 25 clicks. Or maybe the CPC comes in higher at $0.30 or something, etc. But if you write a book people want to read, the point is it's possible to do cost-effective advertising on your own at $2.99+. It's borderline impossible to do any kind of cost-effective advertising at $0.99. Because of that, it's a losing game where authors have to put all their trust and hope in Amazon swooping in to carry their book to success after a costly initial investment. I feel like I threw way too many numbers around in this post for it to be comprehensible, but I hope if you were interested this at least helped shed some light on the topic. If you have any questions or think I missed something, shoot me an email at firstname.lastname@example.org and we can chat! Thanks for reading, xx Penelope