In the first Business Basics for Authors post, I talked about how ebook pricing affects the number of books an author sells.
Higher price=fewer sales, but more profit per unit sold
Lower Price=more sales, but lower profit per unit sold
So what does this mean for me? How do I price my book? Do I set my list price as $1 million under the theory that it just takes one sale to make my career? Or do I price at $.99 under the theory that I’ll attract a 3 million buyers?
Authors can do either, but the smartest option is to find the sweet spot where you get the highest number of sales and earn the highest amount per book sold, thus generating the highest revenue possible. In 2011, Dave Slusher at Evil Genius Chronicles analyzed book sales data posted by JA Konrath in 2010 to find the sweet spot of his pricing vs. revenue numbers. Read his post if you’d like a more in-depth analysis than what I’m going to post here.
Here is a chart of what Slusher found regarding Konrath’s sales numbers. The top of the curve is the sweet spot.
I can hear you: “Jennifer, that’s a lovely little chart, but what does it really mean, and how do I apply it to my situation?”
What it means: If Konrath gives his book away free, he gets no money. If he prices at $1, he earns $1250ish (because lots of people buy at $1, but he only earns $.35 per unit). If he prices at $9, he earns about $500 (because fewer people buy at the price point but he earns $6.30 per unit). But if he prices at $3, he will earn more than $2,000 because he has found the sweet spot where people are willing to buy and where he makes the most possible per book.
How it applies: This data is unique to JA Konrath, and while it might serve as a good starting point for you, the only way to find the unique sweet spot for your book in your genre in a particular market is to experiment with your price and keep records. Figure out how much money you earned at each price point, and you will find your sweet spot.
Sweet spots will change as market forces act, and that is what we’ll be talking about in the next in the Business Basics for Authors series.