When selling your book online, it's important to know about different ebook pricing business models. The first part of this article covers what they are.
Ebook pricing models
This is the simplest ebook pricing model in the print book industry. Let's look at the difference between wholesale and agency models.
Wholesale model is the traditional model of book publishing. Bookshops used to buy their stock at a price set by the publisher, then sell them at a price they want. Today, publishers set a digital list price and the retailer sets the final price for ebooks.
Currently only Google Play uses the wholesale model for ebook pricing (of all major players). They offer a 52%* revenue share for publishers. They usually try to sell ebooks cheaper than any other channel. By contract, they have every right to do so: they usually discount books by 33%.
It's important to note that retailers or even countries may have price-matching regulations. This means that publishers cannot sell their books cheaper. Publishers distributing at Google Play often set a slightly higher price to avoid discounting. PublishDrive calculates digital list prices and ebook pricing for Google, so you don't have to worry about random price discounts.
*Note: Google Play now offers a 70% royalty rate for certain price ranges in specific areas. Learn more about publishing on Google Play in our article.
P.S. You can start the distribution process to Google Play within the PublishDrive dashboard. Sign up for your account today to see everything in action:
The most common ebook pricing model is the agency model. This method gives the publisher freedom to setthe price for end users. If there is a book promotion, then all of us share the costs and revenues.
Subscription based stores
Subscriptions can be a game-changer. Think about how Spotify has pioneered in the music industry, or how Netflix has changed the film and TV industry. Popular options include Kindle Unlimited, Bookmate, or Scribd. For a fee of around 10 USD, you can read as much as you want.
Stores with subscription based business models, such as Scribd, pay after how much readers have read, not after full purchases. The publisher is usually paid out if more than 10% of the book was read. Also, similar services calculate royalties and pages read differently.
Defining parts of the book and lending
Other subscription-based business models cut the text into multiple parts. It can also pay a certain percentage of the digital list price based on the length of usage. With this method, publishers earn as much as the ebooks were read.
Subscription and characters read
You might not be paid based on the digital list price, but based on the subscription fee. Stores like Bookmate and Perlego work this way, where there is flexibility, fair reporting, and revenue share to all stakeholders.
Libraries usually buy a book once, and anyone who is a member of the library can read that book. Let’s see some ways publishers can ensure to keep their profits high while not losing out on readers.
1 copy/1 user
Libraries may buy a book permanently, for a limited period (‘expiration date’) or for a certain number of checkouts. This flexibility of ebook pricing lets libraries choose the best way of buying your books. If you remember to keep your price higher when selling to a library, you won’t lose revenues.
Pay per use
Pay per use is the ultimate way of ebook pricing based on the reading experience. Pay per use models usually pay publishers a pre-set rate.
For example, 10% of the digital list price is for 21 days. If your book is priced at 10 USD, you get 10% of $10.00 = 1 USD for a 21-day loan. After the 21 day period, the title must be repurchased for another 21 days.
This allows librarians to meet strong demands for popular books without having to burden their budgets or turn patrons away.
This way of ebook pricing at libraries gives you a lot of flexibility. Publishers may offer ebooks at a discount with an annual subscription to the whole catalog. They may also publish your titles with scaled options of 10, 20, 30 for discounts.
Here publishers can be creative – publishers may scale it to the number of users. For example, setting a higher list price but allowing a maximum of 5 users to read the ebook.
Ebook pricing guide for an international market
If you want to sell your book online across the globe, there are a handful of things to take into account. There's the VAT on online services differing from country to country. Within the EU it applies based on the buyer’s country of residence.
The VAT can even change based on whether you have an ISBN or not. Fortunately, this is something PublishDrive manages for you. You just enter your list price, and we calculate your royalties based on your sales in each country. There are also different trends and ideas about how much an ebook should cost.
If you want to read more on pricing an ebook for an international audience, check out our free course on Reedsy.
Amazon KDP Select
As the strongest kid on the playground, Amazon Kindle Direct Publishing (KDP) is worth mentioning. We will explain how you can enroll your book in KDP Select.
When you enroll in KDP Select, you can choose 70% or 35% royalty rates based on specific requirements. To qualify for 70% you have to price your book between $2.99 and $9.99. That's at least 20% lower than the print version. Without VAT, it's less delivery costs (yes, you pay for delivering your ebook to customers at $.15 per megabyte).
You also have to agree on your book being available through Kindle Owners’ Lending Library. In this case, you get 70% royalties from books sold in specific countries and 35% of books sold anywhere else.
Amazon KDP Select gives you the opportunity to sell exclusively on Amazon for a 90-day period. You can earn royalties based on book downloads through the Kindle Unlimited program and offer your book free for five days. Free downloads (via Kindle countdown deals for example) also count into your rankings. It gives a friendly boost to the top of the category.
If you distribute your Kindle ebook to Amazon only, you may lose potential customers from other countries.
For an in-depth comparison of your book in KDP Select vs. distributing wide, read our article here.
Setting the price
You may still be wondering about how much to actually sell your book for and where that ebook pricing guide is. At this point we have to disappoint you: there is no “one size fits all” answer to this question. How much you charge for your book depends only on you. There are several factors which you should consider before you decide to sell it for $.99 or $10 (or $100).
How many writers in your genre are charging
Research by going to an online bookshop and checking out the genre of your book. People searching for your book are going to see similar titles. If your book is much more expensive, people are most likely to buy a cheaper one.
Your primary goal
Decide whether you want to generate more readers or more money. Setting a low price could help you draw in readers who are just browsing and came across your book. If you’re selling for $1.99, you can get many buyers by impulse shopping.
Bear in mind that low price is often associated with lower quality. Unless you are selling a short book (under 100 pages), going under $2.99 can be considered suspicious. One exception is erotica which can command a $2.99 price point even for short stories. One pricing strategy is selling a chapter of your book for $.99 and prompting your readers to subscribe to your newsletter.
Fiction and entertainment books on Amazon are usually sold between $2.99 and $9.99, with both well-known authors and newbies. However, educational, self-help books, and textbooks in hot topics can sell for much higher.
This is also the case for certain uncommon hobbies and interests. A good example is the International Encyclopedia of Social & Behavioral Sciences. It's priced at $11,776.66 on Amazon (you can get a hardcover for only $799.95.)
Your peace of mind
You can easily start with a lower price and change it once you built a readership. Indie publishing an ebook gives you the flexibility with your pricing you would never get with a publishing house.
PublishDrive chooses the best options for ebook pricing to help your books sell. We set ebook pricing techniques in the metadata for you. All you need to do is give an average list price for your book as if in an agency model.
See what more PublishDrive can do for you by signing up for a FREE account today. How does distributing your ebook to 400+ online stores sound? How about promotional tools or lower print costs?