The Hidden Cost of Higher Book Prices

One of the hardest decisions to make as a self-published author is what price to put on your completed work. As quickly as possible, you want to pay for the editing, cover, and three months of electricity and health insurance you just incurred. However, you also know that lower prices can mean higher volume. With the advent of KDP Select, this decision got much easier. Earning 30 percent of 99 cents per book outside the program pales in comparison to the 70 percent of 2.99 inside the program. Sales go down by less than a factor of two and you earnings go up by a factor of seven! Given user psychology about the desirability of cheap books, you may actually see a slight increase in demand for a higher price point.

Now Amazon is sharing some of its incredible sales data with the author in a beta program. They offer this service at the touch of a button as step 9 of publishing your e-book.

9. Set Your Pricing and Royalty

KDP Pricing Support (Beta)

See the relationship between price and past sales and author earnings for KDP books like yours.

View Service 

This sounds amazing. It shows you for books like yours (length, genre, your popularity as an author)  how much increasing the price should affect the demand for the produce. This is know as "elasticity of demand." Then they multiply the sales by volume for each price point to find the best spot on the profit curve. In terms of ECON 101, the example where adding more fertilizer on the field stops being profitable is called the point of diminishing returns. I can't show you the curve for one of my books because Amazon may view this as a breach of sales data, and for books that have a low sales history, the curve recommendation changes every hour. But the upshot is clear: for a strong book, you can take a hit of 30-45 percent on the volume, raise the price to 5 to 8 dollars a book, and make a lot more money. On my highest seller, if I sell 100 books a month today at $3 each, I earn $300. If I bumped the price to $8 and sold only 55, I could make $440. Why wouldn't I?

In my genres and experience, a series tends to attract ten times the readers of a stand-alone.  I like series because 70 percent of the buyers of book one spring for book two, and those loyal readers generally purchase all the books I have out in the series. I refer to this as "follow" or drag. That's a huge incentive for an author. However, the graph results from Amazon comes with an explicit warning that "You indicated this is the first book in a series. This case may be different." Because if you constrict the volume on book one by even a little, you hurt every book in your series.

While ever case is different, here is an illustration where doubling the price and profit of book one restricts volume of sales by x percent. Note that I've never seen a restriction of less than 30 percent on a recommended price increase. You can see by the chart that any decrease in volume costs you more as the length of the series increases. Even for a typical fantasy trilogy, the net effect is money out of your pocket if you follow the recommendation for book one. This drag effect is why some authors with a long series are willing to give away the first novel for 99 cents or free to hook people (the heroin model of marketing). For a short series, you can locate the acceptable audience loss level on their curve and try a partial increase. Be conservative, though. This is still a dark art, not an exact science.

% volume	% earnings	% follow	Books in series
lost	book one	lost	2	3	4	5	6	7	8
5	190	3.5	186.5	183	179.5	176	172.5	169	165.5
10	180	7	173	166	159	152	145	138	131
15	170	10.5	159.5	149	138.5	128	117.5	107	96.5
20	160	14	146	132	118	104	90	76	62
25	150	17.5	132.5	115	97.5	80	62.5	45	27.5
30	140	21	119	98	77	56	35	14	-7
35	130	24.5	105.5	81	56.5	32	7.5	-17	-41.5
40	120	28	92	64	36	8	-20	-48	-76
45	110	31.5	78.5	47	15.5	-16	-47.5	-79	-110.5
50	100	35	65	30	-5	-40	-75	-110	-145

In conclusion, while an excellent resource for an author with a long, stable sales history and a stand-alone book, Indies who want to attract as many new customers as possible will have to modify Amazon's suggestions to balance our needs.

Release of the Jezebel Series Finale

Senescence is the final stage of life, where cells can no longer regenerate--the fate that awaits us all when we stop growing and changing. The starship Sanctuary has returned home after twenty years to a strange and hostile world. Stewart is sent as an ambassador to see if Earth still has the capacity to change or whether the crew will let the world suffer the consequences of corporate policies. Billionaire geneticist Laura Zeiss holds his fate in her hands ... and thereby the planet's. Will she choose to become one of the rulers of a decaying world or risk everything to save a naive young man? When Stewart finds out her secrets, will he still want her help?

Amazon page

As the final book, this was the hardest to write. It took twice as many revisions as any book I've done before. I did a lot of research on the coming "singularity" in 2045. What impressed me most was not the new technology, which I include, but the projected increase in human suffering. Worse, most of that suffering seemed destined for women and children. Every time I'd listen to a news cast or pundit, or research another topic, I would become more appalled and angry at what women are enduring today. A lot of that anger made its way in to the story. I focused on the world's richest woman and what she tries to do within the system for decades, including a reality TV show called Ballbusters that brainstorms creative solutions to raise awareness. Then I bring in a man, from another world, who sees the injustices and objects. Because he's a man, it makes news. Science fiction, right?