Picking a price for an e-book can be a real headache.
There are e-books out there that cost as little as 0.50$, and there are also e-books out there that cost as much as 6,232$.
How are you supposed to decide what you should charge for your ebook when the range of possible prices are so large? Let's look at what has worked for successful ebook writers and consider what is the best approach for your ebook.
Reality Check: All Prices are Relative
We often think that there is such thing as a “fair price” for everything. It's important to understand, though, that things don't have inherent value, they only have perceived value. Consequently, “fair price” is relative, and depends on a lot of factors.
It's important to understand, though, that things don't have inherent value, they only have perceived value.
For example, although it doesn't make any sense, people happily pay thousands of dollars for little glittery things called diamonds. Is there some divine law that says that these pieces of carbon are worth a lot of money? No, it's simply that those who sell diamonds and those who buy diamonds agree on the prices, and therefore they are what they are.
In the same way, when it comes to selling ebooks, you can charge as little or as much as you want. Who is to decide whether your ebook is worth 1$, 10$, or 100$? You.
Pricing Low Vs. Pricing High
There are two camps that promote two completely different ebook pricing strategies:
- “Price low!” - this camp says that it's best to price ebooks within 1$-10$ range, points to common Kindle Store prices, and thinks that charging more for an e-book is outrageous.
- “Price high!” - this camp says that it's best to charge as much as people are willing to pay (usually within the 27$-197$ range), ignores Kindle Store prices, and thinks charging only a couple of dollars for an ebook is ridiculous.
Here's the thing: both camps are right and both camps are wrong.
The truth is that there's no “one-size-fits-all” solution to e-book pricing. It all depends on a situation: in some cases, it's silly to price higher than 1$, meanwhile in others, it's silly to price lower than 100$. Moreover, you can make a decent amount of money with both pricing strategies, therefore it's not as black and white as some people like to think.
Well then, when should you price high and when should you price low? To get an answer to this question, let's take a look at two web designers who used very different pricing strategies:
Pricing Low: Sacha Greif, “Step by Step UI Design”
Sacha Greif wrote a short ebook about UI design that was meant for people who weren't professional web designers themselves, but had some interest in web design.
Sacha's goal was to get as many sales as possible in order to create a readership that he could then use to promote his future product. He decided to settle for 1$-10$ price range, since he knew that most people can afford to spend this amount of money on an impulse purchase. This price range proved to be very effective for expanding readerships, since many buyers mentioned that low price was the reason they bought the ebook without much hesitation.
Here are the prices that Sacha chose for his ebook:
- Normal edition: $5.99 early bird discount $2.99.
- Deluxe edition: $12.99 early bird discount $5.99.
Sacha managed to make 1,476 sales within the first 48 hours which resulted in $6,663 revenue.
When to use a similar pricing strategy?
- When the primary purpose of your e-book is entertainment, not education. Sure, Sacha's ebook was very informative, but the target audience were people who dabble with web design for fun. Keep in mind that people are not likely to pay a lot for e-books that they see as entertainment (that's why you don't see novels that cost 197$).
- When your primary goal is to maximize the reach, not the revenue. When something is priced in the “impulse buy” range, a lot more people will buy it, which will help you to expand your fan base much faster. However, keep in mind that although pricing low leads to more sales, you will probably make much less money than you would if you had priced high.
- When you are simply not comfortable charging more for your ebook. Many people feel that it's not fair to ask a lot of money for their e-books since they cost almost nothing to produce and distribute. This is a flawed perspective, but if charging less will make you feel better, go for it. You can always change your pricing later once you become more comfortable with the idea.
Pricing High: Nathan Barry, “App Design Handbook."
Nathan Barry wrote an e-book about app design that was targeted to professional designers.
Nathan used a very different pricing strategy. Here are the prices that he chose for his ebook:
- 39$ for “book + resources” package.
- 79$ for “book + resources + video” package.
- 169$ for the “complete” package.
Nathan made 322 sales within the first 48 hours which resulted $19,547 in revenue.
When to use a similar pricing strategy?
- When the primary purpose of your ebook is education, not entertainment. Sure, 169$ for an ebook might seem outrageous when you compare it to 0.99$ Kindle Store best-sellers, but if it helps you to acquire skills that will allow you to charge more as a designer, then it might be worth it, right? People are willing to spend a lot of money on e-books that help them to significantly improve their lives (e.g. make more money, get more dates, lose weight, etc.).
- When you only have a relatively small following to promote your ebook to. In general, if you have a small fan base, you have to maximize the revenue from each sale, since you won't be able to make a lot of sales. It makes sense to charge more even if that means that you will get fewer sales.
- When your primary goal is to maximize the revenue, not the reach. Pricing higher works well when your primary objective is to make as much money as possible. However, you will get less sales this way, therefore you will not expand your reach as fast as you would with lower prices.
It's easy to see that simplistic thinking “this is right, this is wrong” doesn't apply here. Yes, Sacha could have made more money, and Nathan could have made more sales, had they chose different prices. However, they both made decisions that worked for them and met their goals, and they both had great success.
What is Best Pricing Strategy for Your Particular Situation?
Don't listen to people who think that their strategy is the strategy that everyone should use – it's very likely that they have no idea what they are talking about.
Think about your particular situation:
- What is the primary purpose of your ebook, entertainment or education?
- What will the reader get from reading your ebook (e.g. will they have fun reading your detective short stories, will they learn how to make money online, will you explain to them how to finally get that six-pack, etc.)?
- What kind of money do people spend on products that provide similar value (e.g. on other detective short stories collections, guides on how to get ripped, etc.)?
- What is more important to you with this e-book: to make as much money as possible or to expand your reach as much as possible?
- Do you have a relatively small audience or a relatively large audience to promote your ebook to? Imagine that 5% of the people in your audience will buy your product. Will you be happy with the revenue?
- Are you comfortable with charging a certain amount of money for your ebook (few extra bucks are not worth it if you will feel bad about it)?
These are the things that you should consider when choosing a price for your ebook. However, if you feel that you are falling into the analysis-paralysis trap, simply pick a number, make it available for sale, and see what happens. You can then adjust the prices as you go.
Your turn: what do you guys think about low ebook prices and high e-book prices? Let me know in the comments!