When an author or publisher uploads their work to Amazon (and the rest of the e-tailers), they are free to choose the price that they sell at. With most companies, the minimum price you can sell at is 99 cents. Until recently, only a small portion of writers were choosing to sell their work at this price, mostly new writers, without an established audience, hoping to build a following.
On paper, that’s a good strategy, although other writers have complained that this was a race to the bottom, and that they were being priced out of the market.
At first, Amazon paid a 35% royalty across the board, so authors were free to experiment with a variety of price points, and find the level that maximised their revenues. Many authors were pricing at $1.99 and $2.99, comfortable that they were still significantly cheaper than trade published books, but happy that they were making enough sales at a reasonable royalty rate.
Many would run a sale at 99 cent for a week. The increase in volume would make up for the lower price as fans of bargain books spread the word, and the authors climbed the sales rankings. Once they had done so, they would raise the price again, hoping that increased visibility would hold their position.
In January 2010, Amazon announced that they would double the royalties to 70%, if authors price their work between $2.99 and $9.99.
Predictably, there was a rush to the $2.99 price point, as it was the lowest price where you could gain the higher royalty rate, but not too expensive to dissuade all impulse buyers and bargain hunters. Writers could now make over $2 a book at this price, which should offset any lost sales from increasing their price.
Many of those who had written a series still kept the first book at 99 cent as a kind of ‘loss leader’, attempting to lure readers in, hoping they would then continue with the series, paying $2.99 or more for the rest. Amanda Hocking had huge success with this exact strategy, selling around 1 million e-books, netting her approximately $2 million, in less than a year, and many writers adopted her pricing policy.
John Locke changed all of that.
When Locke looked at the traditional publishing market, he thought it would be next-to-impossible to crack. Even if he did beat the odds and get a deal, the competition in the marketplace, and especially in his genre, was fierce. He would have to convince agents, editors, booksellers, and if he got that far, readers, that he was as good as James Patterson. Not an easy sell.
But when Amazon launched their digital publishing platform, he saw an opportunity. He wrote a series of thrillers and decided to price the whole lot at 99 cent. He wanted to be the greatest 99 cent writer in the world. He figured that now James Patterson, selling at $9.99, would have to prove he was 10 times better than John Locke.
As with many of the indie author success stories, he didn’t sell much at first. By September 2010, he had made a grand total of $47. That’s not a typo. But as many self-published writers noticed, something happened around November last year, and his sales took off.
In the first two month of 2011, he sold over 300,000 e-books at 99 cent, netting him over $100,000. In the figures just released for March, he went bigger again, selling 369,000 e-books in just one month.
Clearly, John Locke’s strategy was that the increased volume of sales would outweigh receiving the lower royalty rate. He’s only making 35 cents a book, but he is selling a hell of a lot of books. Many authors decided to try and replicate his success, and now a glut of writers selling at 99 cents.
Many publishers and traditionally-published writers decry this, arguing that it devalues the whole concept of what a novel is worth. And they have a point. Readers are now being conditioned to pay a lot less for books. Trade publishing houses are fighting hard to hold the upper line. Most of them are pricing their e-books at around $9.99, and while some are selling cheaper than that, there are significant numbers of new releases being priced up to $14.99.
And because Amazon still has the power to heavily discount hardback and paperback releases, we are often left with the counter-intuitive situation where trade-published e-books are more expensive than hardbacks. Readers have reacted badly, giving one-star reviews on these books, even if they haven’t purchased them.
Some self-published writers are throwing their hands in the air too. In genres such as high fantasy, historical fiction, and literary fiction, where writers tend not to be as prolific as, say, thriller writers, they feel like they cannot compete, as they don’t have as many titles where they can sell in volume and reduce price.
A few industry commentators have declared the end of paid-for content, and that writers will have to get used to giving their work away for free and finding other income streams, just as musicians often make more money from touring and merchandise.
I don’t agree, and I don’t really see what the fuss is about. Trade publishers have been selling surplus books to discount booksellers for years. I discovered Michael Chabon in a $5 store, and both he, and his publisher, seem to be doing alright.
And just as there have always been high-end publishers, regular publishers, and discount publishers, there has always been dollar theatres and day-old bread. That bread is probably fine, and John Locke is said to be a hell of a writer for 99 cents, but discounted goods don’t necessarily crowd out the rest of the marketplace.
It’s all about positioning and perception. If you make the reader think that your work is overpriced at $1.99 or $2.99 (and poor covers, editing, formatting, openings, descriptions, and marketing will certainly help with this) then yes, you will struggle to compete with cheaper books.
However, if you do everything in your power to make your book look like it came from one of the big New York publishers, if you run a clever marketing campaign, if you have professionally designed covers, a great opening that readers can sample, descriptions that will hook people in, and if your work has been professionally edited, you can price your work at $2.99 and higher, and not only survive, but thrive.
Michael Sullivan is a great example of this. He wrote a six-book fantasy series called The Riyria Revelations. Go and look at one of his books on Amazon. Together with his wife and publicist, Robin Sullivan, they set up a company, Ridan Publishing, and published Michael’s books. Everything was done with the highest level of professionalism. To me, these books look as good, if not better, than anything coming from a trade publisher.
Because of this approach, they have been able to price the books at $4.99 (that’s a $3.49 per-book cut for the author), and they have sold truckloads. This is because when your book looks like it came from one of the big publishers, $4.99 is a bargain, and people love bargains. They were even able to price the fifth book in the series at $6.99, and readers were happy to pay it.
EDIT: As one of the commenters below pointed out, Robin Sullivan experimented with lower price points, and sales actually dropped.
The lesson here is this. You need to decide what kind of publisher you are going to be. If you have a large backlist, or if you are very prolific, or if you think you can stand out in the crowd at 99 cents, then that could be a viable strategy for you.
However, if you are less prolific, or if you are writing in a genre that hasn’t fully taken off yet, or if you can put the time (and some money) into positioning your book as a quality purchase by making it look as good as anything coming from New York, a quality purchase rather than an impulse purchase, there is no need to fear the 99 cent e-book.
There are no guarantees with any strategy, but remember this: there are still a ton of people paying $14.99 for Michael Connolly. Why? Because they think it’s worth it.