Tuesday, June 28, 2011

Value Pricing - One for Self-Pubbers

I took a bunch of flack for my previous posts on self-publishing in which I criticized the business model.  I think most self publishing authors thought I was hiding a derision for the industry behind a business-minded opinion piece.

They were wrong.

Self publishing has been on my radar for years and I think it can be done, when it's done well.  But I also think it's (currently) difficult and costly to do well.  Also, rife with potential hiccups that could have far-reaching consequences for an author's career.

But just to prove that I have actually seriously considered the issue, and to maybe help out anyone with the gonads to give it a shot , I'll tell you one of the things I would do, if I were going to do it.

Assuming you can overcome the obstacles I see in the process to self-publication, there's a very, very big business decision to be made:

$$  Price  $$

I see a lot of hubbub out there right now about the $1 e-book.  I can see why authors would do it, and I can see why readers would buy it.  It's really a no-risk purchase for a reader - which in turn equates to more sales for the writer. 


Hmmm... I'm thinking that depends on what you want out of your writing career.

Quick Marketing Lesson

I'm not going to get into the intricacies here, but I want to put a concept in front of you:

When a reader pays a price for a product, their perception is that the product is worth that much.  That means:

1.  If they want something and it costs too much, their perception is that they're being screwed over and they will look for other ways to find the product cheaper or a cheaper alternative. 

2. If they need something and it's cheaper than expected, their perception is that they got a bargain.


But here's the problem:

Last Tuesday, Joe Bookbuyer purchased Ty Roth's So Shelly in hardcover for $29.95.  He read the book and liked it.  Feels like he got himself value for money.... Until he found out that Neighbor Jane also bought So Shelly in hardcover last Tuesday.  But she only paid $22.95.

Suddenly, Joe's perception of value is under attack.  Now, if he loved the book, maybe he'd be philosophical.  But regardless, what do you think Joe's going to do next time he hears about a book coming out?  Chances are, he'll be headed for the outlet Neighbor Jane used - or looking for a supplier who'll give him the product at the reduced price.

And if he can't find it at the reduced price, he's going to perceive that he's paying more than necessary for the product.

(NOTE: I'm simplifying to illustrate the point.  Value is based on more variables than price-point alone - With books it would including timing, hard / soft / digital cover, extras, special editions, etc).

We can debate the big box stores vs. indepedent or online retailers, but that's not my point.  My point is: when you price a product, you create an expectation.

Now, let's apply the Value Pricing equation to e-books:

Hypothetical Pricepoint Dilemma-Slash-Unexpected-Consequence

Author Shelly Noname has written a book and decides to release it herself via Indiepub.  Because no one knows who she is and she's happy to build a readership over time, she prices her book at $1.

She sells a few, starts to get some good reviews.  Sales take off.  Her first book sells 1,300 copies and nets her $1,000.

Author Shelly Noname is laughing all the way to the bank, right?

She writes the sequel and it sells 1,200 copies (along with an extra 500 for the first book).  Author Shelly Noname is stoked.

She's starting to get some buzz on Twitter, a few author interviews and fans cropping up.  After a few months of this (with steady, though not significant sales), she gets yet another comment from a fan about how the book is worth so much more than $1. 

So, figuring she's got a good base at this piont, she puts the price up to $9.99.  Sales slow dramatically, but on numbers she's still making the same, or maybe even a little bit more money, so she leaves it there.

But a week or two later the reviews start coming in and Author Shelly Noname notices something...

Where the vast majority of her reviews before were 4 or 5 stars, now she's got a buttload of 3 stars and a healthy sprinkling of 1's and 2's.

Figuring it's just a blip, she presses on, releasing the third book in the trilogy at the new $9.99 pricepoint.

Sales are downright low.  Reviews - when they come - are average across the board.  And those 'average' reviews are gaining momentum on the first two books which used to get raved about.

Q: What happened?  

A:The customer's perception of value was impinged.

Let's cut to the chase: In these days and times, anything you can get for $1 is a nothing.  There's no risk.  There's no perceived value.  If you can get something for $1 that is even marginally good, you're going to rave about it.  It's a bargain!  It might as well have been free.

Now apply that to a book and you've got  a recipe for fandom.   If you give people any amount of pleasure for a buck, they're going to (figuratively) kiss you on both cheeks and tell everyone you're a demigod.

Because the perception is that you gave them something for (virtually) nothing.

But as soon as the price goes up, the customer's expectations changes.  Perceptions of value on $10 are significantly different.  For $10 the customer can buy their favorite author's backlist paperbacks or go to the movies.  If your book doesn't at least punch at a similar weight (i.e. a long, enjoyable reading experience, or a couple of hours of good, pure entertainment), perception is that it wasn't value for money.

Simply put: If your book cost $5, it needs to be at least half as good as the customer's favorite to break even.

You can pretend this isn't true, but you won't be doing yourself any favors.  Go find some reviews on Goodreads for books sold at that pricepoint (or books offered on special for a short time).  You'll see comments like "A bargain at $1" or "I wouldn't have bought it for $15, but at $1.99 I thought it was really good...)

I'm not making this up.

So, my advice (for what it's worth) is this:  If you are happy to sell your product at $0.99 or $1.99 for the rest of your days, and you have the means to market it, go for it.  It's your very best chance for success.  If you can drum up some word-of-mouth publicity at that price, you'll go global.

But your book has to be good.  Not just 'pretty good for a buck'.  It needs to be Something-Incredible-For-Virtually-Nothing good.  That's what will get people excited so they tell their friends to buy it. 

A five star review on a $1 book is not created equal to a five star review on a $15 book. 

The audiences are different.  The expectations are different.  The equation is different.

If you're self-pubbing, you've either got to punch above your weight, or price below your value.  And don't put your price up until that fanbase is fanatical.

The good news?  Word on the street is that if you can achieve that, Traditional Publishing is listening.

Your Turn:  How does pricepoint affect your buying?  What's the difference between a book you wait for paperback release, and one you shell out for in hardcover?


  1. PS - My answer to that question is this: If I've read the author before, loved their book and can't wait for the next one, I'll pay the first-release price. Everyone else waits for paperback or gets rented from the Library.

  2. Wow, good advice and insight. You are traveling on the same train as I am.
    Self Pub is beckoning me also. I am in the early stages of research and yes, giving in.
    Not up.
    I pay first edition price for much-desired tomes by authors I know but only the bindings-and-paper type. E-books…eh, not so much.

  3. You've made a very strong argument here, Aimee. I'd love to hear Joe Konrath's thoughts on the points you've raised here.

    In answer to your question, I only fork out for hardcovers for my absolute favorite authors. I have a great group of reader friends so a lot of what I read is borrowed from them.

    My thoughts on your argument- I understand your point about all five star reviews not being created equal, but for me I'd say that's not the case. I'm very methodical with my reviews and believe my judgement isn't skewed by price point. I may be in the minority though. :-)

  4. Cally - I think Joe Konrath, Amanda Hocking and the like don't fall into this category.

    Joe started self-pubbing with an established audience in place. He's already on the 'favorites' list for lots of readers. The same rules don't apply.

    Amanda Hocking did it what we'd all hope for and built an audience. Her experience would be the goal for all self-pubbed authors I think, though her success is (currently) an exception. (And let's not forget, she's now got a traditional contract).

    The reality is, there will always be exceptions (like yourself with reviews - and I'm sure there's a chunk of readers who'd be objective that way). I think the take-away is look at the bigger picture and be realistic about what the 'average' experience is.

    If I did this, I'd shoot for Amanda Hocking's pinnacle, but recognize the reality is likely to be something drastically different.

  5. Just to warn ya, my comments are a little random here. ;)

    It'll be interesting to see how Amanda Hocking does with a traditional publisher. Will the fans who loved her books at 99 cents or $2.99 be willing to pay the $7+ publishing houses usually charge for ebooks?

    The nice thing about being an indie and not sharing the royalties is there's really no need to price your book at $10 or even $7. You can always give your readers a deal, because you make a nice cut at $4 or $5. You could sell 2,000 books a month at those prices and make a decent living most places. (2,000 a month sounded like a lot when I was first getting started, but it doesn't seem so out of reach now.)

    IMO, the people worth emulating are the ones using a free or 99-cent book as a loss leader (though technically you're still going to make a profit at 99 cents if you sell enough books) and then selling the rest of their novel-length works at higher prices. A couple of authors in my genre (high fantasy) doing that are Brian S. Pratt and David Dalglish. They're both making six figures a year now, not from the free/99-cent ebooks but from the following books in the series (which range from $2.99 to $5.95 as I write this).

    Anyhoo, done blabbing now. Blog on. :)

  6. Wow, this is so terrific. As someone who's seriously considering self-publishing, I appreciate your honesty. I know I'm a good writer and I know my book is good - getting better thanks to my 4 proofreaders/editors. It's not even completely finished yet and I've already started to generate a bit of buzz about it through bloggers and friends, FB and Twitter acquaintances, etc. I know all the work (and expense) involved, and I've given it a lot of thought, and done a lot of research so that I'm not going in blindly. Will I be the Nora Roberts of the epublishing world? Probably not, but a girl can always dream, right? (And of course, by dream, I mean my absolute wildest very-rarely-share-with-anyone dreams!) Pricing is still one issue I'm a bit hung up on - I've had people tell me that if I were to sell it for $1, they'd wonder at the quality and probably pass it by, even though it's basically a steal. But I also know that being basically unknown, I might get a handful of sales if I priced it equivalent to a paperback. There's got to be a happy medium, I just need to figure out what it is.

  7. I agree that Joe Konrath and Amanda Hocking are in a different league altogether. The reason I mentioned Konrath is because he is a strong advocate for complete newbies self pubbing their books at $1 to build a following, so I'd be interested in his thoughts on your argument that this price point erodes the perception of value. I am inclined to agree with you, by the way. Is all the creative toil and pain an author puts into writing a book really only worth $1? I don't think so, but will I join those authors in the race to the bottom if I do self pub? I don't know. The jury's still out on that one.

    PS I love how your blog facilitates intelligent debate. Keep it up! :-)

  8. What an interesting subject! I've never considered this before and have been thinking about this post for the past few hours. But I wonder if there'd be a difference if we were to substitute the cost of the book for the time it took to read it.

    I'm more likely to buy an indie book if it's inexpensive (one dollar, sure, but only if it sounds like something I'd read, or if I wanted to support the author), but at the same time, if it cost me one dollar or fifteen, I'm still contributing a certain amount of hours to reading it. I might have to pay attention to your theory from now on, but looking back at several of the books I've read this year (indie and not), I haven't really taken the cost into consideration when it comes to recommending it or not. I'm not going to say the 99-cent book I gave 3/5 is a bargain if I gave a $9.99 book the same rating. I spent the same amount of time reading both (more or less), and the time factor is more important when it comes to picking books, for me, because it's, well, more valuable than money. Books rarely cost more than the equivalent of a lunch out anyway, but I have only so many hours in a week.

    But quite the fascinating subject, Aimee!

  9. Firstly I review on a 'like-not like' principle. I would NEVER review better of worse because of price point.
    Secondly, as an indie published writer both in print and e-pub, I agree with Joe Konrath: that one builds a following with lower=priced starters. That's exactly what is happening to me and whilst I am a small to modest seller, I couldn't be happier because my books have been refined by a high end literary consultancy and are considered 'commercially viable.' I'm not interested at all in Big Six publication at this point in time, because almost every penny I make goes into my own bank account. Trust me, there are MANY of us out there doing it the same way.
    Thirdly: this comment says it all: "IMO, the people worth emulating are the ones using a free or 99-cent book as a loss leader (though technically you're still going to make a profit at 99 cents if you sell enough books) and then selling the rest of their novel-length works at higher prices."

  10. Cally - I think Joe is right. The lower pricepoint definitely makes it easier to find an audience and the 'loss-leader' concept works if your product is good. I just think there's some concern about telling your audience that $1 is a worthy price for a produce you spent months and thousands of hours developing. But that's not a 'bad' thing, just something to consider for down-the-road.

    Kathryn - Your time idea really got me thinking. I said in the blog I was simplifying to make the point, but you're right. The time equation would work exactly the same way - if a reader spent $9 and read for sixteen hours, they'll probably have a much better perception than a reader than spends $5 and gets to read for thirty minutes.

    Prue - I hope you didn't think the blog was implying people gave better or worse reviews because of price. If people enjoy a book, they enjoy it fullstop. What I found was people commenting in their reviews about value for money. To me, those comments indicate they adjust their expectations based on what they're paying. In fact, I know that's true because I used to work in marketing and interview customers on exactly these issues. Price does impact a person's perception of value of the product. But it won't make a person say they liked something they didn't, or visa-versa. It's more subtle than that.

  11. Amazon has just sent an email saying all my favourite mainstream writers' expensive (v.v.expensive) titles have been reduced by 60%. Interesting. Are those publishers trying to compete with the lower models and will those writers be judged because they suddenly got an awful lot cheaper?
    Just a thought.

  12. Prue - No. What I'm getting at (in terms of customer perceptions) is that when you price a high quality product at a low (bargain) price, you create an expectation in the consumer that they can and should always get the product at that price.

    If they then are required to spend more next time, the product has to see MORE valuable, otherwise they feel they're being asked to pay to much.

    Loss leaders are good - that gateway analogy someone mentioned. Reducing prices on a product which won't change is a dangerous, slippery slope. When the buyer tries to find it next time, they'll expect that low price again and potentially feel ripped off if they can't find it (or something close to it).

  13. I think you're generalising on the nature of the reading marketplace. I'm seeing writers start with Book One at 99 cents and by Book Three, and with a formidable sales record and following, they are able to ask $2.99 or$5.99
    ... and sell. Talk to a few indies who have followed that strategy and ask them what they think of the mind of their readers. I think you will be surprised.

  14. Just a final note from me:

    I want to stress that there's a difference in the price-perception between a brand new customer and a fan buyer.

    Someone who has purchased an author's work before and loved it, comes back looking for more, is a fan. They will see a higher value perception at any pricepoint than someone coming in for the first time to try a new product.

    This post applies to new readers. Someone who has no loyalty or opinion on the author or the book, but is giving it a shot.

  15. As a reader who also writes reviews, I'd say, yep, price influences if I'm happy with a book or not. For example I bought one with relatively poor proofreading from a small press for $5. If it had been $1 self-published, I might have recommended it to people on the strength of the story, with a caveat of "you need a bit of tolerance for misplaced commas" or somesuch; right now I've got half a mind writing a review ending with "I'll avoid books by publisher [Name], because apparently they do shoddy work".

    Is all the creative toil and pain an author puts into writing a book really only worth $1?
    If the book is any good, you will get more than $1, because more than one person will buy it.

    When I buy an ebook, I'm not paying for months' or years' worth of work by the author; I'm paying for a bunch of bits and bytes that will supply me with a few hours of entertainment. And if I haven't read the author before, I can't be confident I'll even get the entertainment; I might dislike their writing.

    That said, the "first one's free or cheap so you can test if you like the author's style, later works have a higher price" model seems pretty nice to me.

    Hardcover novels are way too unweildy for my taste; the only books I get in hardcover any more are coffee table or reference books.

  16. This is really interesting and made me think about pricing in a new way. Thank you for the insights.

  17. I have a little different take on this. I published ‘Bonner’s Road West’ on Amazon recently; what I hope to be the first installment in a series. I spent a lot of time in research, writing, and proofing and ended up with a 280,000 word first book. Of course, no conventional publisher is going to touch a first time author on their doorstep with a tome under their arm. Hell, I wouldn’t pay to print it myself.
    Nor was I about to sell years of work for a buck, either. Taking a clue from Dickens and Stephen King, I elected to serialize. The first volume is ninety nine cents and serves to introduce the setting and characters and give the reader a sense of where the story is going. The rest of the book is in four volumes, about 50,000 words each and ranging from $1.49 to $1.79. It’s only been available for seven weeks but the pros and cons are becoming apparent.
    On the plus side, I am finding that I have nearly one hundred percent who buy the first installment and continue through the fifth. Voila, a fan base. Additionally, I am able to tag five different books in five different categories, not possible with a single volume. Next, if I had only a single title and someone likes the book, there is no encore (in progress). Finally, as the price point is under two dollars, there is little to balk at parting with the price of admission and, when all is said and done, I have a royalty on almost eight dollars.
    On the negative side of the ledger, having five installments makes it five times harder to climb the sales numbers lists. Secondly, reviews, while good are few in number. After all, how do you comment on part of a book? Thirdly, while sales have been steadily increasing, I can’t be sure I am creating a base of followers or a base of value readers. I have been mildly ‘chided’ for the serialization but I broke the book at natural interludes, not trying to make cliff-hangers. I think, after a few more weeks, I will offer the complete book at around $6, enabling the higher royalty scale. This would allow someone to buy the ninety nine cent intro and then consider whether to take ‘the big step’ and still be money ahead. This would hopefully give me some marketing feedback as well.
    Of course, I wouldn’t recommend serializing a 50,000 word book. If a writer had a character in two books with some commonality of story, it might be worth writing a connecting chapter and going with the serialization in a pair of reasonably priced editions.