Pricing E-Books- The Way I Approach Setting A Price

I spent some time on reformatting some of my new fiction books for distribution on Kindle Direct Publishing and Payhip this weeks. I needed to set prices for the. Me being me, there has to be some logical reason behind the price that I finally use. Here is what I came up with

Some of the current trends in e-book pricing bother me. Whenever I am asked to pay a price for an e-book that I is more or equal than the price of that book in a traditional print format, I get annoyed. I believe that one of the functions of technology is to reduce the cost of things for all of us. When I don’t see this happening, I treat it as ‘unfair’ pricing on the part of the publisher of the e-book.

At the same time, as a writer, I know the energy and the effort which goes into writing a book. I have had a number published by traditional publishers and have had to be satisfied with royalty on sales profits of less than 15% most of the time.

When I look at what it costs to produce a traditions book, I thin the costss breaks down like this.

The old world: Print based publishing

1. Author’s time and creativity – about 25% to 50% of the cost of producing the book.
2. Traditional printing, distribution and selling costs of print based books  – about 50 to 70% of producing the book.
3. Cost of marketing the book – first to book retailers, and then the public: about 10 to 25% of producing the book.

I know the numbers don’t add up smoothly to 100%. But I think, depending on the book, costs were in this range.

For this, authors got less than 15% got less than 15% of the cover price at best as royalties.

The new world: Internet based publishing 

1. Author’s time and creativity – about 50% to 70% of the cost of creating original copy of the book.
2. Cost of formatting distributing e-copies of the book  – it depends of the book, but for novels it is less than 5% of producing the book. For more complicated book layouts, it can a number of days to properly format the book.
3. Cost of marketing the book – mostly to the he public: about 30% to 50% of producing the book, but NOW the author is expected to do all of this = more time spent by the author on the book.

The practical consequence for me: how I price my e-books. 

Here is how I set the price for my e-books.

• First, I think about the old world. What would I sell this book for if it was a traditional print book. Lets use 50 dollars as an example.
• What do I think is fair reduction to this price, given that Internet has reduced the cost of printing and distributing the books so much. I tend to think that the e-book should be about 1/6 of the price that would have been reasonable in the print days – or about 8.50 for a 50 dollar print book in our example..
• What do I add because I now need to because I have do my own formatting and marketing. I use about 20% of the new price that I cam up with in the previous step. In the example. that means I add about 1.50 to 8.50. So my new price is $10, or $9.99, based on the psychology of the way that people tend to see prices.

That is the thinking that I use to price my my e-books. Hope that makes sense to you.