Writing an ebook is hard. Pricing it should not be harder. Ebook pricing, however, can often feel like a maze without exits. It is easy to get lost or confused. With the following ebook pricing guide we would like to help beginners and seasoned publishers to find their way out.
If you are interested in different ebook pricing business models, keep reading. The first part of this article is for you.
If you are a self-publisher, however, and “nominal revenue share” is all Greek to you, just click on the links to skip the first part, and jump to learn about international markets, Amazon KDP and tips and tricks for setting the price of your book.
(Article was updated on 17/01/2018.)
Ebook pricing models
This is the simplest ebook pricing model ever coming from the print book industry. However, we have to differentiate between wholesale and agency model.
Wholesale model is the traditional model of book publishing. Originally bookshops had to buy their stock at a price set by the publisher, and then they sold the books at a price they wished to sell them. In wholesale model today, publishers set a digital list price, but the retailer sets the final price for ebooks.
Currently only Google Play uses wholesale model for ebook pricing (of all major players). They offer a 52% revenue share for publishers, and are usually trying to sell ebooks cheaper than any other channel. By contract, they have every right to do so: they usually discount books by 33%.
This behaviour, however, causes unexpected complications, as other retailers or even countries may have a price matching regulation meaning that publishers cannot sell their books cheaper. Publishers distributing at Google Play often set a slightly higher price to avoid discounting. PublishDrive already recalculates digital list prices and ebook pricing for Google.
The most common ebook pricing model is agency model. This method gives the publisher freedom: publishers set the price for end users. If there is a promotion, then all of us (publishers and distributors) share the costs and revenues.
Subscription based stores
Subscription can be a game changer if we think about Spotify in the music or Netflix in the movie industry. We are still waiting for the Netflix of books. An average reader usually reads less books per year then watches movies or listens to songs; the options have to reflect to this. As a customer, you have to be a heavy reader to choose the subscription-based business model. Popular options include Kindle Unlimited, Bookmate, or Scribd: for a fee of around 10 USD, you can read as much as you want. (Well, or a few books.)
This is where the beauty comes in when you are a publisher. 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. While all similar services calculate royalties and pages read differently, publishers can have a steady earning if many people regularly read their books or parts of their books.
Defining parts of the book and lending
Other subscription-based business models cut the text into multiple parts and pay certain percentage of the digital list price based on the length of usage. This way publishers earn as much as the ebooks were read, not more, not less.
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. This model gives flexibility, fair reporting, and revenue share to all stakeholders. And, of course, happy readers.
Seasoned readers know where to look for their digital favourites: in the libraries. 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 let 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. You can also choose a partner who does it for you automatically.
Pay per use
Pay per use is the ultimate way of ebook pricing based on the reading experience. As mentioned previously, in the section on subscription based ebook pricing models, pay per use models usually pay publishers a pre-set rate. For example, 10% of digital list price 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 option allows librarians to meet a short-term demand for a popular title without having to overburden their budgets or turn patron away if their ‘permanent collection copies’ are already borrowed.
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 or publishers their your titles with a scaled option of 10, 20, 30 for scaled 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 across the globe, there are a handful of things to take into account. VAT on online services differs from country to country – and within the EU, it applies based on the buyer’s country of residence. The VAT can even change based on the fact whether you have an ISBN or not! Fortunately, this is something we manage 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 everywhere about how much an ebook should cost, but this should be the topic of a separate post.
If you want to read more on pricing an ebook for an international audience, please check our course on Reedsy: it is free, popular and funny.
Amazon KDP Select
As the strongest kid on the playground, Amazon KDP (Kindle Direct Publishing) worth mentioning. We will explain to you how it works and whether it worth it.
Amazon KDP offers an either 70% or 35% royalty to the author based on specific requirements. To qualify for 70% (without VAT, less delivery costs: yes, you pay for delivering your ebook to customers $.15 per megabytes!), you have to price your book between $2.99 and $9.99, and at least 20% lower than the print version. 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-days period. During this time you earn royalties after the Kindle Unlimited downloads ($2 per book) and you can select five days on which your book is available for free. You are right to wonder why ‘free’ is such a magic word: because your free downloads also count into your rankings, which can give you a real boost and pop you to the top of the category.
But exclusivity has its price: while your book is only available through Amazon, you might lose your potential customers from other countries where Amazon doesn’t have the biggest share of the market.
Setting the price
So far we covered the models used for direct purchases, subscription and library use and Amazon KDP. It is all beautiful and interesting, you might say, but I still don’t know how much I should sell my book for: where is the ebook pricing guide you have promised? At this point we have to disappoint you: there is no “one size fits all” answer for this question. How much you charge for your book depends only on you – and on several factors which you should consider before you decide to sell it for $.99 or $10 (or $100).
How much writers in your genre are charging
You need to do your research: go to an online bookshop and check out the genre in which your book is going to appear. People searching for your book are going to see similar titles – if your book is much more expensive, odds are that people are going to buy a cheaper one.
Your primary goal
You have to decide whether you want to go for more readers or more money. Yes, you want both, but nothing comes easy at first. 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 – but 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. A very often used strategy is to sell a gist or chapter of your book for $.99, and prompt your readers to subscribe to your newsletter if they liked it.
Fiction and entertainment books on Amazon are usually sold between $2.99 and $9.99, well-known authors on the higher, and newbies on the lower end of the range. However, educational, self-help books, textbooks in hot topics can sell for much higher. This is also the case for certain uncommon hobbies and interests – as an extreme example, the International Encyclopedia of Social & Behavioral Sciences is priced $11776.66 on Amazon. (But don’t worry, you can get a hardcover for only $799.95!)
Your peace of mind
Writing your book wasn’t a piece of cake, and your worries still cannot end: “Will people read it? What if no one buys it? But if I sell it for too cheap, I won’t earn any money!” Thankfully, you are an independent author, in complete control over your sales. You can easily start with a lower price and change it once you built a readership who are likely to come back and buy your second book as well – or recommend you to their friends. 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 and make sure you will earn money in either way. We set ebook pricing techniques in the metadata, so you just have to give the average list price for your book as you were in an agency model and we will do the magic for you.
You may benefit from all ebook pricing models by reaching out new readers and by increasing your sales. However, it is the best if you can find a partner who can manage all different pricing models for you, so you will not get lost. PublishDrive takes care of all pricing models, so you can focus on what you are the best at: creating beautiful content.