How Should You Price Your Book?
If you want bookstores to carry your book, then you will need to include a price on the back of your book next to the ISBN. The price will also be embedded in a barcode for easy scanning. If you only want to sell your book online, then you don’t need to worry about this and can leave the price off. This can be helpful if you’re unsure of the correct price point and want some flexibility to figure it out as you go along. However, even if you do have a price on your book, you can choose to sell it for less than the list price on Amazon.
I agonized over how to price my book for a long time. In the end, I made a guess based on some basic math and my gut instinct, and landed on a price that has worked really well. However, there were some important things I didn’t take into consideration and in that respect, I got rather lucky. Listed below are some of the key factors you should take in to account when developing a pricing strategy for your book.
What are similar books selling for?
Head on over to Amazon and search for books in similar categories to your book. What’s the general price range of those books? In my case, books I hoped to compete with ranged from $6 to $10. They were all established books with very large print runs by established publishing companies. One of my biggest competitors is a hardcover Dr. Seuss book that sells for $9.99. This is when I started to feel really stressed about how to price my book. I could not possibly make money if I priced my illustrated children’s book to be competitive with those books. Although I knew my primary sales channel would be Amazon, I still did research in bookstores to see what children’s books in general were selling for. The price point for contemporary children’s books in stores was generally between $12.95 and $18.95, although these were often for hard covers.
What are people willing to pay for your book?
This is a tough question as it’s impossible to truly know the answer until you try to sell your book. I believed, but had no way of knowing, that because there weren’t very many books in my category, that I could set a higher price point and people would still buy the book. I also guessed that since people were accustomed to buying more expensive children’s books in stores, that a higher price point might be acceptable.
What will Amazon actually sell your book for?
When you enter into a contract with Amazon, they retain the right to discount your book at times. This is really great for book owners because their discount does not affect your royalty! I priced my book at $14.95 and hoped that Amazon would discount the price on a fairly regular basis, and that is exactly what happened. My book does sell consistently at $14.95, but sales are much brisker when Amazon discounts the price to around $11.50 as shown below.
What do you need to sell your book for in order to make money?
First, you need to know what type of royalty you will get from your primary sales channel. With Amazon Advantage, I earn a 45% royalty on every book sold, which comes out to $6.73 a book. But how much profit do I actually make? You will need to factor in the cost-per-book as well as shipping and advertising costs.
If you use a print-on-demand service, your price-per-book will always be the same as they print them one at a time. If you print your book the traditional way, you can reduce the per-unit cost by printing a larger quantity of books. I was originally going to print 500 books at a cost of $4/book, but then I quickly realized it would be impossible to make money. I took a big leap of faith and printed 3,000 books, which reduced my cost to $1.52/book.
If you are using a print-on-demand solution such as Create Space or Ingram Spark, you won’t need to factor in shipping costs, which is a big advantage. However, your royalty won’t be as big. If I had used Create Space, I would have received $5.32/book instead of $6.73/book. Your shipping costs are going to depend a lot on how many books Amazon orders at a time. If Amazon only ordered one copy of The Smallest Horse, it would cost $2.66 to ship the book, which is hardly worth it. However, the fewest books they’ve ever ordered was seven, and that came out to $.59 per book to ship. My average shipping cost to Amazon is about $.25 per book, which is just fine. Consider that you will have to spend some money on shipping and packaging materials. Related: See my post on how to estimated shipping costs.
Do not leave this out of your calculations! Amazon offers some terrific advertising opportunities that are key to getting your book noticed and improving rankings. Without some initial advertising, your incredibly awesome book could be so far down in rankings that nobody ever sees it. In the beginning, I spent $.54 in advertising for every book sold. Now that my book shows up organically for relevant searches, I don’t need to pay for advertising anymore.
How Does It All Add Up?
After selling my first 1,000 books on Amazon, here's a look at how all of my costs have averaged out:
List Price: $14.95
$6.73 Royalty from Amazon
-$1.54 Printing Cost
-$0.25 Shipping Cost
-$0.54 Advertising Cost
Since I don't pay for advertising anymore, my current profit is almost $5 a book. I sure hope this helps! <strong><a href="mailto:firstname.lastname@example.org">Please drop me a note with any questions.</a></strong>