Friday, February 24, 2012

Emotionless Pricing

Please welcome author Karen Baney for today's post.

Pricing for indie authors shouldn’t be an emotional task.  Yet, for many of us it is.

Is my price too high?  Is it too low?  Should I bump it up because I’m getting a bunch of sales right now?  Should I lower it because I haven’t moved a book in weeks?  These are the questions that keep us up at night.

Wouldn’t it be wonderful if we could take the worry and stress out of pricing?

The good news is:  You can.

My Philosophy on Pricing

Pick a price and ride the wave.  In a nutshell, that’s my philosophy on pricing. 

But, there’s more to it than that.  In an article called Pricing Strategy, I give some methodical approaches on how to determine a price and what factors play into pricing.

But, today I want to look at another aspect: How often should you change the price of your book?  Just because you can change price whenever you want, doesn’t mean that you should.  Avoid the temptation to make frequent price changes.

Starting Out Low

If you are a new author and you are trying to get your name out there, it makes perfect sense to start with a lower promotional price.  But, train your brain to think of it as exactly that:  a promotional price.

The reality is that many authors start out with a low price and they just keep it there, afraid to upset the apple cart and lose sales.  If I move from $0.99 to $2.99, I’m scared that I won’t sell any more books.

Selling Less Can Make You More

While you could sell fewer books at a higher price, you have to ask yourself:  Is that really a bad thing?  Consider this:

If you sell 100 books at $0.99 at 35% royalties, your total royalties = $31.50.

If you sell only 25 books at $2.99 at 70% royalties, your total royalties = $50.75.

If you sell only 25 books at $5.99 at 70% royalties, your total royalties = $103.25.

Is this making sense?  Do you see how you can make more money by selling fewer books?  What if we add an extra zero onto the equation?

1000 at $0.99 at 35% royalty = $315.00

250 at $2.99 at 70% royalty = $507.50

250 at $5.99 at 70% royalty = $1,032.50

Now we’re talking.  I could certainly use another grand.  How about you?

Let’s think even bigger for a second.  What would happen if you signed up for KDP Select.  Then you had a few free days.  Following those free days you hit your marketing outlets (blog, social media, whatever) with lots of activity to keep the momentum going.  What if you priced your book at $5.99 and actually sold 1,000 copies?

Can you say:  $4,130.00 royalty check?  I can.

Tying It All Together

See, when we focus so much on the number of books sold versus the number and price combination, we can make emotional decisions.  We can decide to drop our price to $0.99 to move more books so we can feel better.  Or, we think we’re on an upswing, so we lower the price so we can sell even more.  What really happens is that we end up leaving money on the table because of fear or a lack of self confidence.

Indie authors:  Be bold.  Take a look at the big picture.  Avoid making emotional decisions about pricing.  Consider how both price and number of books sold can play together to help you achieve your financial goals with your writing career.

Self-published author, Karen Baney, enjoys sharing information to help authors learn about the Business of Writing.  She holds a Masters of Business Administration from Arizona State University and has worked in various business related career fields for the past 20 years.  She writes Christian Historical Fiction and Contemporary Romance novels.  For more information about Karen’s books, visit her Amazon Page and for more great articles by Karen, visit her blog at Everything Author.


Darla Sue Dollman said...

Logical advice. Thank you!

Deborah M said...

Great post Karen - thank you for the info!