Why Your Low Priced eBook Pricing Strategy is Wrong

This post is not about the economics of ebook pricing. There are other articles out there that have treated this topic in depth (ex: this article by Joe Konrath.) Rather, it is a hypothesis about the psychological reaction from readers to your ebook’s low price.
 
John Locke and the 99 Cents eBook Revolution

A few years ago, John Locke became one of the first authors to break the $1 Million sales mark for ebooks. Thereafter, in reference to being compared to big name authors, he famously declared: “…I thought that if I can make a profit at 99 cents, I no longer have to prove I’m as good as them (i.e. the famous authors who price their books at $9), rather, they have to prove they are ten times better than me”.

Since then, a mini-generation of authors have been pricing their eBooks at 99 cents or slightly higher in the hopes of spurring ebook sales. A number of authors have succeeded with this low price strategy. And consumers are used to seeing low priced ebooks.
 
But Consumers are Beginning to Get Burned

Here’s how this is happening:

An author churns out a half-boiled, poorly edited book and then prices it at 99 cents or thereabouts.  Some poor, unsuspecting soul picks up the book and gets burned. The reader then makes the conclusion that  Low Price = Low Quality
 
The Jewelry Store Enigma

In his book – Influence – Robert Cialdini tells the story of a friend who runs a jewelry store. The friend needed to move a batch of turquoise jewelry that was simply not selling. So she gave instructions to the store assistant to set prices at 1/2 the current price. A few days later, when she returned back to the store, she learnt that all of the jewelry in that batch had been sold. She was even more stunned to learn that the sales woman had misread her instructions and priced the jewelry at twice the current price rather than half!

According to Robert, the reason why this happens is because consumers have a simple algorithm running in their heads. It goes like this:
 
High Price = High Quality

Sellers of luxury products such as shoes, bags and clothing have figured this out long ago. So have companies like Apple and Mercedes. And market research outfits like IDC and Gartner who price their research reports at hundreds if not thousands of dollars.

A few ebook authors have figured this out as well. For example, Sean D’Souza – a business writer prices his Brain Audit report at more than $100. Has he succeeded with this strategy? Absolutely! He has a devoted following of small business owners who buy his books, attend his workshops and subscribe to his forum.
 
Think Switzerland When You Build Your Product. 

Think of a Swiss watch. What do you see? I see something that is expensive and that I will treasure for the rest of my life … Something that I can pass on to my children.

Now think of a cheap throwaway watch from a low cost, mass manufacturing country. What thoughts does the product evoke? Do you think that the manufacturer may have cut some corners in the materials? Perhaps hired some low cost, nearly-slave labor? Would you be proud to own it? Or do you simply use it because it “serves the purpose”?

When you price your ebook too low, you will tend to cut corners – such as not investing in a good editor or going in for a cookie cutter book cover. The low price may even affect your plot lines and the content of your book. And if you receive a negative review on Amazon, you’re subconsciously thinking, “buddy, what more can you expect at 99 cents?!”

On the other hand, when you make a decision to price something substantially higher than comparable products in the market, you begin to think about value. You begin to ask yourself questions such as:

What can I provide to delight, surprise and pamper my reader?

What can I do to make my readers remember this book for life? 

How can I wow my readers?
 
And Finally. A Quote from John Ruskin

“There’s hardly anything in the world that some man cannot make a little worse and sell a little cheaper. And the people who consider price only are this man’s lawful prey.” – John Ruskin (1819-1900)
 

Here’s hoping that you price your ebook in a way that is fair to yourself and ultimately fair to your readers.

What do you think about pricing ebooks? Chime-in with comments below.
 
 
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(Twitter – @bookbuzzr ) Vikram is a graduate from Carnegie Mellon University. Prior to starting BookBuzzr, Vikram founded another software company that has been successfully serving clients from all over the world since 2001. 

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Vikram
Vikram Narayan is the founder of BookBuzzr Book Marketing Technologies. Vikram is a graduate of Carnegie Mellon University. Prior to starting BookBuzzr, Vikram founded another software company that has been successfully serving clients from all over the world since 2001. When he is not dreaming up ways to help authors accelerate their earnings and book sales, Vikram spends his time playing the guitar, practicing Aikido and spending time with his family.
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  1. Pingback: Why Your Low Priced eBook Pricing Strategy is Wrong | The Official BookBuzzr Blog | Pricing News | Scoop.it

  2. jamesccamp0@gmail.com'James Campbell

    I agree with you in principle, but I have one potential caveat to your theory: what if the majority of readers neither know or care that these books are bad quality?

    The biggest selling books nowadays are cookie-cutter romance books; they’re all basically the same, yet readers eat them up, and will continue to do so if the authors keep pricing them so cheap. Do these readers ever go looking for ‘higher quality’ books? I don’t know.

    But regardless, by pricing so low, they’ve dragged the whole market down with them. Even readers who demand quality aren’t going to go too much over $4.99 for an unknown indie writer.

    At least, that’s how I see it now. I really hope I’m wrong.

  3. VikramVikram Post author

    I agree with you James. But $4.99 is a decent price and not too low. The reader reaction of Low Price = Low Quality probably arises when authors price at 99 cents.

    There are a bunch of books out there that are priced at 99 cents and don’t sell anyway.

    Also, as you’ve rightly pointed out, when it comes to fiction (and romance in particular), readers seem to be willing to try stuff that may be sub-standard. They probably view it as lower risk game with just a little loss of time. I’ve seen a few Nora Roberts kindle book bundles priced at more than $40 for the Kindle editions. In these cases, I’ve also seen readers complaining about price.

    Non-fiction (business, health etc.) is a different game with higher priced books still succeeding.

  4. Pingback: Raise Your Prices and Increase Sales! • Ebook Download • PDF • Guide

  5. heyzeus023@gmail.com'Cody Alan Reel

    I charge my stories based on how good I think they are. I’m selling one short story for $4.99 because I think it is a very good story while my other short stories are either $0.99 or $1.99. I have a novelette at $2.99 and a novella at $9.99. So I agree with you, I don’t see how making your stories cheap are going to help your credibility. No one expects luxury from McDonald’s. And if I sell one story at $9.99, I make $6.98. If I were to sell it at $0.99, I’d make $0.35 and have to sell almost 20 copies just to make the same profit as one sale. My thinking is that if you can get someone to take a chance on your work, then hopefully word of mouth takes off and instead of 100 sales at $0.35, you get 100 sales at $6.98. But my sales aren’t doing that well but I attribute that to poor covers, which I can’t do much about at the moment and poor editing, also something I cannot fix at the moment. But I’ve only made about $27 since July but that was when my first story was uploaded. The other ones were uploaded sporadically in the months following that.

  6. vikram@freado.com'Vikram Narayan

    Cody,
    Reading a book – even a short one – takes time. If a reader spends 2 hours going through a mediocre book and if we value that readers time at $5 per hour, that is still $10! In that sense, there is no such thing as a free book. Readers instinctively get this and tend to make buy decisions not based on price but rather based on perceived quality of writing and fit with what they need at that moment. They figure out perceived quality based on title, description, front cover, back cover, total number of reviews, number of positive reviews, number of negative reviews and then make a final decision after making a qualitative analysis of the negative reviews (i.e. they ask themselves why a particular reviewer has reviewed the book poorly and if the reviewer is justified.)
    In most cases, authors should fine tune pricing after they’ve got at least 25 reviews in there.