I’ve been thinking a lot of Amazon’s Kindle self publishing pricing lately. Why is it $2.99 seems to be the recommended best price for an eBook on Amazon? In my conversations with a few colleagues, they’ve asked why I always “race to the bottom” when pricing quality ebooks and tutorials.
A lot of the blogs (including Steve Scott’s) point to the $2.99 price from Amazon eBooks yet there are other books in the Best Seller categories selling well at price points above the $2.99 price point. When I first published my book – Project Management Interview Questions Made Easy – I benefited from the new book exposure phenomenon that Amazon provide. I sold the book at $2.99 and then gradually increased the price. The book has been selling consistently on Amazon for the past 2 years and by no means am I retiring on this one book, but I’ll take the couple of hundred bucks it generates each month. After all, it is a portfolio approach to “build a catalog business”.
To test my colleague’s theories about “racing to the bottom”, I wanted to run a few different price tests to see if pricing really does matter for a book that solves a specific need or want. I wanted the tests to help answer the following questions:
- What is the optimal price for one of my books which addresses a direct market need?
- Why always race to the bottom for $2.99 for the 70% royalty?
- Would a .99 cent test skyrocket my book?
- How many more books would I sell at $0.99 and what would the 30% royalties earned?
- Do I need to rethink the pricing approach?
The following are the results of my price testing over the past few months.
Establishing the Baseline
From January to June 2014, I kept the price set a $3.99 and the sales and monthly 70% royalty for the US Market were as follows:
|Jan 2014||Feb 2014||Mar 2014||Apr 2014||May 2014||Jun 2014|
For future price test comparisons, the average sales for the six months is:
Average Sales Jan – June @ $3.99 Price with 70% Royalty: 50
Average Monthly Income Jan – Jun: $140
With the baseline in place, I ran a $0.99 price test in July and a $4.99 price test in August.
The $0.99 Kindle Price Test
I wondered if reducing the price would generate a significant boost in sales even though the 35% royalty would mean a dip in revenue. The July results were:
July $.99 Price Test with 35% Royalty
Overall I improved sales by reaching 48% new readers however I lost 82% of the average royalty. In my book, I include an email opt-in opportunity to download additional templates so I also increased the number of subscribers to my email list. I picked up a few more reviews so that’s always helpful.
In my portfolio of project management books, I sell 2 other books priced at $4.99 and in July, I saw a 35% and 140% increase in sales however, the total amount earned for the 3 books didn’t beat the overall portfolio monthly average.
$0.99 Conclusion: Great price point for exposure, not great for revenue
The $4.99 Kindle Price Test
In August, I wanted to see if I increased the price point by 25% if there would be a positive or a negative impact on sales and overall profitability. The August results were:
August $4.99 Price Test with 70% Royalty
Compared to the monthly average of 50 units and $140 in royalties, I have 38% fewer sales and lost 10% of monthly royalties. I am comparing it to the monthly average whose earlier months performed better. In May and June, the royalties were lower than August’s $4.99 price point.
$4.99 Conclusion : $3.99 performed better by 10%
Kindle Self Publishing Price Test Summary
Below is the summary of all monthly sales and price tests.
|Jan 2014||Feb 2014||Mar 2014||Apr 2014||May 2014||Jun 2014||Jul 2014||Aug 2014|
The table below summarizes the tests
|Price Test Summary||Units||Sales|
|Average @ $3.99 (Control)||50||$140|
|$0.99 Price Test||74||$26|
|$4.99 Price Test||36||$126|
Based on the data, I’m doing a disservice by offering the book at $0.99 and underperforming at a price point that’s 25% higher. after reviewing the results, I’m going to take the following actions in October.
- Test the $2.99 price point again in October.
- Assuming $2.99 underperforms (as it had in past months), I’ll raise the price back to $3.99
All three of my Kindle eBooks provide tutorials or step by step solutions to solve project management problems using software tools or project management processes. It is definitely a niche that sells but doesn’t sell a ton on the Kindle market. Depending on the October test, I’ll actually leave the KDP Select program and sell these same tutorials at a $24.99 price point on my own website. I’ll add additional templates and supporting material that isn’t included as easily on the Kindle platform.
Future titles that are not tutorial based will remain on the Kindle platform at the $3.99 price point and serve as lead generation to my http://www.tacticalprojectmanagement.com site
What has been your experience?
I hope you found these Kindle self publishing price tests useful. I’d be interested in hearing your own results. Please comment below in the blog and help answer the following questions:
- Has a $0.99 price test led to an overall improvement in your Kindle royalty portfolio?
- What has been your optimal Kindle Price point for your market?
I’ll let you know how the October $2.99 price test goes!