35 COMMENTS

Data Guy on Price Points

The following comes from a comment DG responded to on a prior story. The graphs are too good to sit buried down there, so I’m reposting here. Follow the links to see the bar graphs.

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Here’s what the authorearnings.com data from July can tell us about comparative sales at different Kindle ebook price points. Taking the Top 500 Best Sellers at each price point and eliminating the top 10 from each, we see:

$9.99 ebooks outsell $14.99 ebooks by a huge margin in units.

$9.99 ebooks outsell $14.99 ebooks by a huge DOLLAR margin, too, despite their lower price.

Even when looking only at the Top 10 (outliers) for each price point, the pricing sweet spot at $9.99 or above seems to be $10.99 (with $9.99 running a close second).

The Top 10 bestselling ebooks at $12.99 and $14.99 generate fewer gross DOLLARS (as well as selling fewer units) than the Top 10 at $9.99 and $10.99.

But… $4.99 beats $9.99 across the board. $4.99 sells more units AND brings in more gross DOLLARS than any other price point. This is true even for the Top 10 Best Selling outliers at each price point.

Once again, we see that lower ebook prices = higher author earnings.

The Top 500 Best Selling Kindle books priced at $4.99 are out-earning those at $9.99, $10.99, $12.99, $14.99, and every other price point.

(Below the Top 10, $3.99 runs a close second to $4.99.)

35 responses to “Data Guy on Price Points”

  1. Merrill Heath Avatar
    Merrill Heath

    Most of the ebooks published by Amazon imprints are priced at $4.99. So, is this a chicken-or-the-egg situation? Does Amazon price their books at $4.99 because that’s the sweet spot? Or is that the sweet spot because virtually all of the books Amazon publishes are priced at $4.99?

    Reply
    1. Terrence OBrien Avatar
      Terrence OBrien

      I think the unit sales at $2.99 and $3.99 support the idea it is the price point that is controlling. If it was an Amazon imprint effect, I’d expect the $4.99 units to spike above the $2.99 and $3.99.

      But that does bring up an interesting idea. What would a stacked histogram look like where the stack was divided into each of the Big5 plus the Amazon imprints. Why don’t I do it myself? Same reason I haven’t moved the lawn yet.

      Reply
  2. William D. Richards Avatar
    William D. Richards

    Looks like I nailed it, once again: $4.99

    I came to my price point in two ways: first by taking the stand that there is no way an ebook should cost as much as its print version because of the lack of production costs, and second, I reasoned out what I was willing to pay for a paperback when I was a kid and making a guesstimate of what inflation would make that cost today.

    In the first step, I decided that the ebook should be about 70% the cost of the cheapest print version. I checked paperbacks I still have that I bought back in the 70’s and 80’s and then went looking for the same titles on the shelves today. The very same titles were selling for $7.99. Seventy percent of $7.99 is $5.59. Because all the retailers insist on having a “.99” price point, I decided to round down to $4.99 as just a dollar more struck me as too expensive. Merely a gut reaction.

    From the other direction, I considered what I could pay when I was a kid, and noted that my book purchases fell off strongly as paperback prices pushed past $2.99. When I bought the most books, it was when they were roughly around $2 in price. Allowing for inflation, those books would cost $5.76 today. So, again, rounding down, I hit $4.99.

    For a 300–400 page (100K+ words) novel, I figured that was a fair price, so that became the price point for my books.

    I also reason that at $4.99, if I could sell 10,000 books for the year, I would have made a livable wage. After the average 30% share of the proceeds to the retailers and then 40% in taxes (federal & state), that left me with income in the mid-20K range, which is just enough to put food on the table and keep a roof over my head.

    Reply
  3. Marie Avatar
    Marie

    Wow, and I was just asking on kboards about how $4.99 was doing these days. Glad I stumbled across this! :) It’s good to see that this price point is doing well. Looking at those graphs, I’m thinking that 5 bucks is the limit on what readers are willing to pay for an ebook, which I think is fair.

    Reply
    1. Merrill Heath Avatar
      Merrill Heath

      Marie, if you look at the Kindle Top 100 you’ll see that about 1/3 are priced above $4.99. So readers are willing to pay more than $5 for an ebook. But those are mostly established authors. There are also just as many that are priced at the lower end of the scale. $4.99 seems to be a good middle-of-the-road price.

      Reply
  4. M Frank Avatar
    M Frank

    Do we know if these $9.99 eBooks are single novels or compilations? Isn’t $4.99 a bit low for 100K words? Or has the market stabilized to accept a certain word count for their $5?

    I ask out of a desire for information, not to troll. :)

    Reply
    1. Dazrin Avatar
      Dazrin

      As a reader, I don’t base my purchase decisions on word counts. I understand that is an easy metric for authors to use to gauge how long a book is, but when it is published that is a completely transparent item for me (and very hard to find, only smashwords posts word counts that I know of). I will (sometimes) base a decision on page counts, but only up to a point. For example, I am unlikely to buy a 50 page novella for more than $1, but I am generally willing to pay about the same for a 300 page novel or a 600 page novel. Significantly longer works might encourage me to spend more, but a favorite author will influence that choice much more than page/word count.

      For your 100k word example, that translates to about 300-350 pages* and doesn’t seem too long for a $4.99 price point to me. Hugh’s Wool/Shift/Sand omnibuses run ~115k-160k words and are priced at $5.99, so close to that. I wonder if he will revise his pricing based on the AE report? :)

      *I have tracked pages and words, where available, for all books I have read since 2011 and while it varies, that is where the average is for the 288 books I have finished in that time.

      Reply
      1. M Frank Avatar
        M Frank

        Thanks for supplying the reader standpoints. Enlightening.

        I suppose it’s better to sell 100 @ $4.99 than 30 @ $7.99 for me as well as the reader, even if you go 150K words.

        And the reader (the customer) IS the bottom line.

        Reply
        1. DaveMich Avatar
          DaveMich

          I would point out as a reader that it IS possible to have “too many” words. Just like an 80 or 90 minute movie is a sweet spot for length (as opposed to, say, a 3.5 hour movie,) 600 or 700 pages is kind of pushing it. A book is not just a whole bunch of words, it’s a story, and as an organic whole there is point where you can just wear out your welcome.

          Reply
          1. Dazrin Avatar
            Dazrin

            I agree although there are some genres that get a bit more leeway for me. I accept that fantasy (or space opera or political thrillers like Clancy, etc.) books will be longer than other books on average. That isn’t saying I prefer that, it just seems to be the way they are and therefore a longer book in one of those genres doesn’t intimidate me like it would in something else.

          2. M Frank Avatar
            M Frank

            One of my story arcs could easily go 180K-200K words which would be about 700-800 printed pages.

            I agree, not many would care for a single Bible-sized edition. This is why LoTR wasn’t originally published as a single volume as the writer intended. Can you image how heavy that would be in hardcover?

  5. Anna Zaires Avatar
    Anna Zaires

    Have you seen the new service KDP offers, where they tell you the highest revenue price point for “books similar to yours”? They show the elasticity of demand (i.e. if you raise it by $1, you lose x% of sales, but your revenue goes up by x%). According to that, most of my titles should be priced at $6.99 to get the highest revenue per book – a price that seems too high to me. Intuitively, $4.99 makes more sense to me, and anecdotal responses from my readers corroborate that as the highest price they’d be willing to pay for most books.

    Reply
  6. Tammy Salyer Avatar
    Tammy Salyer

    Data makes me happy. How do these price points measure across genre? For instance, is $9.99 the sweet spot for romance, but $5.99 works best for sci-fi? Also, is the data based on indie books, trad books, or all books? Just curious.

    Reply
  7. Mike Piper Avatar
    Mike Piper

    I’m curious about Tammy’s question as well.

    I’m a non-fiction self-publisher, and I’ve been using $4.99 for my Kindle editions for a few years. Just this last time though when I updated a book for 2014 (maybe 2-3 weeks ago), KDP actually told me that according to their data, $9.99 typically brings in more royalties for books of a similar nature.

    I thought it was very interesting having KDP explicitly recommend a price — even a higher price than I’m currently using.

    Reply
    1. J.M. Ney-Grimm Avatar
      J.M. Ney-Grimm

      Non-fiction is generally priced higher than fiction.

      Reply
    2. johnmonk Avatar
      johnmonk

      I wouldn’t trust a non-fiction book that was cheap, that stigma still exists, that a good non-fiction book is a deal at ten bucks. I guess it has to do with the factthat we all know college text books cost a fortune.

      Reply
  8. Terrence OBrien Avatar
    Terrence OBrien

    That first graph is a classic demand curve. Just like widgets.

    Reply
    1. Matt Avatar
      Matt

      OMG books are not widgets they are special snowflakes! Why are you trying to destroy literature?!

      Reply
  9. The Rising Price of Ebooks | Chris Weston

    […] great article from Authorsearning.com (I’ll be linking to Hugh Howey’s blog excerpt for the specifics) about the rise in acceptable ebook price points. I have to say, this is explosive news all […]

    Reply
  10. Alex J. Cavanaugh Avatar
    Alex J. Cavanaugh

    Good to know since my publisher starts every book out at $4.99. I know the $9.99 make more from me as I won’t spend over ten bucks on an eBook, no matter how much I like the author.

    Reply
  11. Lisa Grace Avatar
    Lisa Grace

    With Amazon’s new beta pricing tool, they did suggest I price one of my books at $4.99. So I have. Right now, one of my 99 cent titles sells the most.

    Reply
  12. Data-Driven Pricing | Return to Writing

    […] Hugh Howey posted findings by Data Guy that bear out a $4.99 price point as being effectively the best at moving books and earning […]

    Reply
  13. Chad Avatar
    Chad

    I’m a reader. The customer to you authors. I am finding plenty of new authors to read who price their work’s at $.99-$3.99. So much so that I will not buy an Ebook for $9.99 or higher unless it is the rare sequel to a long running series that I am following. There are big name authors whom I have followed for years and whose works I have paid $20-$30 for in hardback that I now refuse to read because of price. This is the new reality.

    The carrot though… I buy tons of books at $.99-$1.99on the slightest chance that I might like them just because the cost is low enough to gamble. If I do not like it I do not feel cheated in the least. But… when I do find the diamond in the rough I will buy more of that authors works and at a higher price.

    Reply
  14. johnmonk Avatar
    johnmonk

    Google has teamed up with Barnes & Noble to provide same-day delivery of books, toys, and magazines in three markets, offering up fresh competition against Amazon, a chief rival of both companies.
    Oh oh, with Google’s power, has Amazon anything to fear? Will Google move into ebooks next? I don’t fear the big five, I don’t fear anyone but Google…..

    Reply
    1. Nirmala (free spiritual ebooks) Avatar
      Nirmala (free spiritual ebooks)

      It seems that your fear might be a little late and also misguided as Google has been selling ebooks for several years now, and if they ever get behind their ebook effort (so far it has been half-hearted), it might be great to have more competition for Amazon.

      Reply
  15. Laura Resnick Avatar
    Laura Resnick

    Thanks for posting this.

    Reply
  16. john Hunt Avatar
    john Hunt

    Does not the market you are targeting have any bearing on the price?
    For example, one of my books targets doctors.
    I fear that groupthink has infected us.
    perhaps if you are targeting all the amazon universe, setting your price at the optimum for the average would make sense. But if you are targeting poor or wealthy subgroups, or providing a product that will increase the buyer’s net worth, or some other angle, optimum pricing will differ. Ahh the free market. What a wonderful thing it is.
    Only in the truly free, non-regulated, non-cronied market does everyone who is seeking wealth struggle everyday to provide for the needs of others, as well as they possibly can.

    Reply
  17. John Avatar
    John

    Not everyone can charge that high a price point. When you’re an indie author and your fanbase begins and ends with people sharing your last name, or went to school with you, it’s probably not a good idea to charge $4.99 for your debut novel, even if it does have more than 200 pages and gosh darn it, Dean Wesley Smith’s price chart says you should be charging $4.99!

    I know a sci-fi author charging $2.99 for his 20-page short stories. He has, I think, 7 or 8 of these books out. Every single one is ranked somewhere in the millions. I think he sells 1 copy a month if he’s lucky. I told him that Hugh friggin Howey charges only .99 cents for his 20-page short stories. But this guy won’t listen to me. He refuses to “devalue” his work.

    Some authors are too enamored with their ego to see the light.

    Reply
  18. Decisions, decisions . . . | madgeniusclub

    […] There’s also the factor of lost sales due to larger numbers of loans. To a certain extent one can compensate for that by increasing prices, but as indies we can’t afford to price ourselves out of the market. I’m currently using a mixed price structure of $2.99 for earlier novels and $3.99 for later ones. I may have to go to a $3.99-$4.99 mix, knowing I’m going to sell less books anyway, but hoping that an additional 70c revenue per sale will at least partly offset such losses. (Serendipitously, Hugh Howey has just confirmed that the $4.99 price point is very viable at present.) […]

    Reply
  19. Matt Avatar
    Matt

    Another reader here….one who has close to 100 books on my WTR list and who reads about 60-70 books per year.

    The three factors which impact my purchasing decisions are as follows:

    1) Availability at my local library
    2) Rating
    3) Price

    My first option for any book is to check it out from my library. However, many of the books I read are by less well know authors, and are therefore not available though my library system (King County, WA).

    Second consideration is rating….generally books rated below 4.0 on Amazon don’t make my list unless they sound really interesting.

    Third consideration is price….for the first book in a series, or a book by an author I have never read before, my limit is $3.99. For authors I have already read and like, I’ll pay up to $1 over the cost of buying a used paperback on Amazon. I will NEVER pay more than $10 for an e-book.

    Reply
  20. Marc Goldfinger Avatar
    Marc Goldfinger

    Hugh, I am totally enjoying your books. I do hard copy; don’t read e-books, probably because I like the feel of luxurious paper in my hands. Like you were enjoying holding the comic books of Wool. I’ve read the Wool Trilogy, almost finished Sand, and have signed & numbered copies of them all. I just ordered Half-way Home and I’m looking forward to it.
    I write for a small newspaper out here in Cambridge Ma, called Spare Change News; our website is http://www.sparechangenews.net and I have an article in almost every paper. Some are commentary, others are fiction.
    Jumping ahead, I’m looking forward to the movie. That’s all for now. Peace.

    Reply
  21. (And secondly…) Concerning eBooks and Hachette | Tori Brooks

    […] point appears to be $4.99. Of course the prices vary, from $0.99 to $13.99 for a single book. (There’s a reason for $4.99) The eBook that’s $13.99 is HarperCollins, not Hachette, by the […]

    Reply
  22. Monday Must-Reads [08.11.14]

    […] Data Guy on Price Points | Hugh Howey […]

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  23. Scott William Carter » When Giving Away Free Books Is the Smartest Thing a Writer Can Do

    […] to be just on the low side compared to traditionally published books in my genre.  There is also a fair amount of research that indicates, at least for now, that this is the price range that yields the most income.)  The […]

    Reply
  24. Why I'm a Little Afraid of Free – Keith Soares

    […] Hugh Howey (and friends) have collected and sorted a lot of data on pricing and determined that $4.99 is the optimal ebook price for downloads and royalties. I have exactly one book at that price, so I guess I need to reassess my […]

    Reply

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