Labotomy of a Writer

One thing many Indie authors wonder about is how to price their books. $0.99? $2.99? There are many options – and just as many reasons – to price your book a certain way. In the end, authors have to find a price that makes both the author and the reader happy.

THE MATH

Now, the first thing I did when deciding the price for my debut novel, is do the math. My book is currently out as ebook but I also will be providing print versions, so I’ll show you the math equations for both here.

First, before doing any math, I did some research to discover how much Amazon and many other distributors would cost to show my book. Then, I also discovered how much it would cost to print it. (Not everyone will need to do this as many will only do ebooks, which is fine.)

So, here is all the information I gathered (numbers are just examples.):

• Amazon fee: 20% for print, 30% for ebooks. ***Other distribution sites are about the same, so I only did the math once.***

• Cost to print: $6.46 for paperback, $8.32 for hardcover ***Note: this will vary depending on how long your book is and what printer you use, so make sure you do the research into this! I just want to give you an example.***

Once I had all the information, I sat down with my calculator and figured it all out. Here are my notes.

Paperback

• $13.95 sale price — (20% Amazon fee = $2.79)
$13.95 – $2.79 – $6.46 = $4.70 profit

• $12.95 sale price — (20% Amazon fee = $2.59)
$12.95 – $2.59 – $6.46 = $3.90 profit

• $11.95 sale price — (20% Amazon fee = $2.39)
$11.95 -$2.39 – $6.46 = $3.10 profit

Hardcover

• $15.95 sale price — (20% Amazon free = $3.19)
$15.95 – $3.19 – $8.32 = $4.44 profit

• $14.95 sale price — (20% Amazon fee = $2.99)
$14.95 – $2.99 – $8.32 = $3.64 profit

• $13.95 sale price — (20% Amazon fee = $2.79)
$13.95 – $2.79 – $8.32 = $2.84 profit

E-Book

• $4.99 sale price — (30% Amazon fee = $1.50)
$4.99 – $1.50 = $3.49 profit

• $2.99 sale price — (30% Amazon fee = $0.90)
$2.99 – $0.90 = $2.09 profit

• $0.99 sale price — (30% Amazon fee = $0.30)
$0.99 – $0.30 = $0.63 profit

UPDATE 11-3-11: It was brought to attention that I forgot that Amazon takes 30% of ebooks priced between $2.99 and $9.99. Any retail price outside that range, they take 65%. So, here is the corrected equation if one priced their book at $0.99

• $0.99 sale price — (65% Amazon fee = $0.64)
$0.99 – $0.64 = $0.35 profit

EXTRA NOTE: The percentages I mention above as the “Amazon fee” in the equations is what Amazon takes. The author gets what’s left from 100%. So, if it says Amazon fee is 30%, that means the author gets 70%.

THINGS TO THINK ABOUT

Now, that you have all the math figured out and can see the numbers, now is the time to figure out your personal reason for choosing a price. So, here are a few things to think about.

Profit vs Sales numbers

Obviously, the lower the price you set your book, the likely hood that you’ll have more sales numbers at the end of the month. But, your sales won’t be as much if you set the book at a higher price, yet you may get more profit out of the deal by the time it’s over and done with.

Writer vs Reader

Okay, I know as a writer the biggest thing for us (or most of us I should say) is that people are reading our books. We didn’t get into this just for the money. But, this is a business and businesses need to make a profit. So, sit down with your math figures and figure out what profit amount you’d like to get. But don’t forget to consider the reader as well. Consider how much they are willing to pay for your book.

A fellow indie author told me to make sure I make at least $3.00 profit on my print books. Also, based on discussions and articles I’ve read, readers run the gamut on their opinions of what price to pay for books, ebooks especially. Some will never pay for a $0.99 priced book thinking it isn’t that good, thus why it is so low in price. Others will never pay more than $0.99 with the idea that an ebook that doesn’t kill trees etc isn’t worth the cost to them.

As the writer (and publisher) you need to decide what works best for you and your target audience. And remember, as an Indie author you CAN change your price later if you discover that a different price range might be better for both you and your readers.

Writer vs Publisher

Okay, as the Indie author, you are also the publisher. It can be hard wearing all these different hats, but it is important for you to consider all sides of yourself before making a final decision.

You as the writer want to connect with your readers, get them to read your book. However, the publisher side – the one that did all the formatting, cover art, etc – wants to be compensated for the hard work they put into the book.

So again, sit down and really think about what would be best for both your writer and your publisher side. How can you maximize both profit and sales? You might need to play around with different prices before you find the right one. But that’s a good part of being Indie. You can change the price all you like!

There are so many other things to think about when determining the price of your book. But I think this covers the major ones. I had a little tougher go of it since I decided to donate portions of my royalties to a charity organization. I had to factor in that aspect of the whole deal as well.

In the end it’s all about what feels right to you. And I stress again, that you can try other options as time goes on. You aren’t stuck with a price once you set it. You can even go down to setting your book for free if you like!

Determining price isn’t a light decision to make. I sat down with my crit partners and my husband, telling them all the details before I made my final decision. And, I’m still open to more ideas and options as time goes along. I might change the price of my book in a few months if things don’t turn out like I hoped – and I must be open-minded to do that.

NOW – there is one thing I didn’t mention. You can do all the math you want, but LightningSource, for your print books, when going to their distributors asks you to set a SUGGESTED retail price. That means that Amazon, Barnes&Noble etc don’t have to sell it as the price you want. They can set it for higher or lower. You control your profit by setting the “Distributor Discount Price” or the Whole Sale Price. The industry standard is 55% off the retail price.

Confused? I was too.

Okay, retail is the price that book is sold for. Wholesale is the price of the book that the distributor (aka the book store) pays for your book to stock it on their shelves. So, let’s do some math to see this.

Suggested retail price: $14.95
Distributor Discount: 55% ($8.22)
$14.95 – $8.22 = $6.73 wholesale

Got that so far? Okay, so Amazon will buy your book for $6.73 cents. They set the price to whatever they want, even if you suggest to sell it for $14.95 they can sell it for more or less. You have no control over this unless you distribute to Amazon directly, rather than going through LSI.

Now to determine your royalties, you take the wholesale price minus the cost to print your book. The print cost changes based on size, type of cover, and page count. The cost to print my book, Cleanse Fire, in paperback is $4.17 through LSI.

So, $6.73 – $4.17 = $2.56 (my profit)

See how that works?

I know it’s a bit confusing but I did the math, talked with LSI on the phone, and finally it clicked. Read over my example here again if you need to. Leave a comment if you are confused as well! I’ll try my best to answer your questions.

What about you? How did you determine your price and why? What other things did you consider in your decision? Leave a comment! I’d love to hear how other authors are doing it.

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