Thursday, July 5, 2012

The $0.99 Price Point

From John Locke using it, to Dean Wesley Smith calling it ill-advised, a lot gets discussed about self-publishers pricing their work at $0.99. I admit, I've even picked up a few $0.99 novels—when they're promos, or when I'm feeling grateful to a writer and want to say "Thank you," so I pick up something they have for sale.

(In other words, this post is geared for fellow writers who might be interested in selling their work, but for any readers trying to figure out where those $2.99 short stories are coming from, feel free to stick around.)

And let me say up front: I am neither for nor against $0.99 as a price point.

Each price point targets a different type of reader.

Each price point has its pros and cons.

And each price point has people who get indignant about naysayers.

I'm not one of the naysayers—but I'm also not a yaysayer. I'm a "consider your options and how they connect to your goals before you commit to a route" sayer.

For example, if you want oodles of readers and don't give a care about money, go serialize your book on Wattpad and make it available on different e-book vendors for free or $0.99. John Locke did famously well at that $0.99 price point, though I think his marketing background (and skill in marketing) helped him find attract a lot more readers than most would be able to, in his position. (Also, serializing on a blog can actually be a good marketing strategy, but I digress.)

Readers who impulse buy, picking things up for free or cheap tend to read fast, read a lot, and be willing to overlook some technicalities if the story's good. (Say what you like about poor Amanda Hocking's poor fortune with editors as she worked on My Blood Approves—she wrote a good story and got it to her intended readership. Kudos, Amanda.)

Well, that's one type of "impulse buy" reader. Some are "download everything free and cheap that looks even remotely interesting at a glance"—and because there isn't enough incentive for them to sample and make sure it matches their tastes, they trash it when they don't like it. W00t.

(Hey, I'm critical, but that just means I don't buy much of anything and I don't get past the first few pages of most of the freebies I download—unless, say, that title's immensely popular or I know the author. And when I'm reading a popular title that I dislike, I make myself look for what they're doing right—because they obviously are doing something right, else they wouldn't be popular.)

Then there are the budget shoppers—but I don't think those play as much in the $0.99 reading pool as many self-publishing authors seem to think.

See, I'm a budget shopper. (Did you know some herbs in your cabinet can be potent painkillers and antibiotics? I've saved so much money on doctor copays this past year, since I learned that! Each lung infection used to cost me at least $50, since it took 2+ rounds of antibiotics to get rid of them. Now, it's…maybe $1 in ingredients to cure each infection.) (Speaking of which, I'm drinking some of that tea now.)

But even as a budget shopper, I, uh, honestly can't think of any authors I got into because they were inexpensive or free, though I could name a few whose price points helped me collect more of their titles more quickly once I was interested. (Lindasy Buroker, looking at you. You're one of the few authors I collect so thoroughly, but it's not because of your prices.)

But even with Lindsay—whose steampunk other-world fantasy novel The Emperor's Edge is free, so if you don't have it yet, go!—I didn't start reading because it was free, or even because it was a genre I very much wanted to read. Most of the time, when I pick up a freebie (usually by searching for a genre and then sorting by price on my Nook), I'm waiting for a pot to boil or something. So I pick up a few freebies, glance at them, wince or enjoy them, then can't remember the author later.

But Lindsay Buroker, I "knew" because I'd met her online. I also had an inkling that she knew how to write, considering she'd spent years supporting herself online with blogs (something I know enough about to know it's not easy). So I picked up her freebie, intrigued and interested in possibly reading it…

And kept forgetting about it.

This forgetfulness has happened with several free or cheap books I picked up, from one of Kris Rusch's titles under the name Kristine Grayson to Soulless and some other books.

Eventually, I happen upon a reminder of "Oh, yeah! I wanted to read that!" and I go check it out. (And sometimes become a rabid fan… My friends know not to ask me what I've been reading lately unless they want to risk possibly entering a 20-minute discussion of what they like in books for me to try to find an angle that would intrigue them in a title of which I've recently become a fan. Though my careful consideration of what they like in books does mean that they take me seriously when I say "You will love this book!", because I don't say that unless I'm 100% certain they will.)

I admit, when I first started paying attention to e-books, I paid close attention to their prices, and though I still note them now, I've been burned enough times by cheap that I sample everything. (To be fair, I know of one released-by-a-publisher e-book that's horribly formatted, but that's due to the annotations in the book, which the publisher evidently wasn't sure how to handle for EPUB. I'm quite glad I only sampled that one and didn't drop $8 on it—though I also recently dropped $11 of birthday money on an e-novel I really wanted to read and knew I'd re-read. Neither one of those mentioned titles is available in mass market paperback, for the record.)

All that to jump into the first things to ask yourself when considering the $0.99 price point, either for a sale or for a long-term price:

  • What kind of reader am I hoping to attract?
  • Does that reader shop at the $0.99 price point?
  • Am I willing to risk attracting the super-critical type of reader who will blame me when they don't bother making sure my writing is to their taste?

But, see, there's these little things called "money" and "bills" and "value of your time" that also are considerations for anybody who would like to be able to support themselves with their job. (And why shouldn't authors earn a living wage for what they do—assuming they can write good stories that appeal to the tastes of a large enough number of people?)

This "money" issue is why some authors are now charging $2.99 for a short story: That's the minimum an author can charge and still earn the maximum royalty percentage on their work with some of the major e-book vendors. One of the major guys to talk about it, Dean Wesley Smith, insists that the $0.99 price, even for a short story, is "discount publishing" (not an insult; it's 1 of the 3 types of publishers). He therefore advises pricing short stories at $2.99.

Note #1: Yes, some of DWS's titles are still at $0.99, right now. That's changing. He only changed his mind fairly recently about that price point, and he's been busy with life rolls.

Note #2: Dean Wesley Smith "short story" threshold for charging $2.99 is 7k words; he bundles stories together to get at least that minimum. SFWA definition of "short story" ends at 7.5k words. I'm not sure at what which word count he starts calling them "novelettes", but it doesn't matter—point is, he's not recommending that I, for example, take "Driven by the Deadline" and bundle it with "Butterfly Boots" and sell the ensuing 3k words for $2.99. Though I understand that erotica writers do fine with that—I don't read or write the genre.

Here's the crux of the issue: When a reader buys a $0.99 title, the author only gets $0.35.

Ooo, that's a whole quarter and a dime! I could take that down the street and buy, um… Two Now and Laters from the dime store? (Mmm, cherry. Not that the cherry Now and Laters actually taste like cherry, mind you. More like sour + red dye. Yes, I just publicly admitted to liking the taste of red dye. I also like kangaroo.)

An author has to sell 6 copies at $0.99 to earn what they make with one $2.99 copy. (Unless your buyer of your $2.99 title is in a country where the maximum royalty percentage doesn't apply. Then you only have to sell 3 to equal one sale at the other price.)

Now, let's step back a bit visit what pro– and anti– $0.99 price pointers are thinking. There are two basic ideas at work here:

  1. What the author earns for the time worked (measured in word count as an indicator of time spent writing the work). Formula: (Cost_of_Title X Author_Royalty_Rate) / Title_Word_Count
  2. How much enjoyment the reader gets from the end product (measured in word count as a measure of time spent reading the work). Formula: Cost_of_Title / Title_Word_Count

See how those two basic focuses come up with such wildly divergent pricing schemes?

(Note: Some writers also believe that they have to price low to "compete" with others, but that… Just kick that idea from your head, okay? If it were a competition, "big publisher" debut authors wouldn't ever get popular, because their book prices are too high.)

Let's think about some other types of entertainment that can be found at the $0.99 price point:

  • A 1-day movie rental: 1–3 hours' entertainment within a 24–hour period
  • A song: 2–10 minutes' entertainment

What about ±$4.99?

  • A DVD movie: 1–3 hours' entertainment
  • A discount music CD: about an hour's entertainment

What about ≥$9.99?

  • A movie at the theater: 1–3 hours' entertainment (without reuse ability)
  • A music CD: about an hour's entertainment

And most people take at least 4 hours to read even a 60k-word novel once. A 7k-word story? For many readers, that's about half an hour, and I suspect that's some of what DWS considered when he chose that word count for his price $2.99 threshold.

Personally, I'm a very fast reader, so that affects how I think about pricing. Also, compared to some writers, I also write short stories, as in ≤3.5k words. (Possibly due to several challenges I did on one website where I had to write short stories in that word count range. Maybe I got used to it.)

Might I someday change my mind about having short stories available for $0.99? Probably, even if it's only due to inflation. Is $2.99 an "unfair" price for a 7k-word story that would provide most readers with 30 minutes' entertainment even before the re-read value?

I don't think it is. It might only be 10 minutes' entertainment for me (if that), but I do not think the price "unfair". (Remember the $10 CD that's only about an hour's entertainment? For some artists, a CD's more like 30–40 minutes.)

And depending on a person, a story can have just as much re-read value as a music album.

So it's best to bear all those factors in mind when deciding how you're going to price something, but there's another little detail involved in the pricing mindsets here:

Even that $0.35 per sale is a heck of a lot better than what some authors earn. As in over 3 times better. (Hint: Major romance publisher you've surely heard of? Yep.)

Even a NYT bestselling traditionally published author might gross about $0.35 per sale. Granted, that's on discounted e-books, but…the best-case scenario royalty that author evidently gets per sale? $1.

So your favorite author might only be getting a whole dollar from that $7.99 you dropped on their latest e-book. (Technically, they were probably already paid that dollar already in their advance, but that's another issue.)

(That also means that you could assume that some publishers place over twice the value on the e-book's vendor as they do the author who wrote the book's content, based on what they pay each party.)

But anyway

There's another important factor, here. For a moment, forget everything I said about how much is earned per sale, and let's consider Dean Wesley Smith's recent point that an author needs to consider how many sales it will take to repay the author their investment in a story—including time paid for hours invested.

So, let's roll with how little authors tend to value their per-hour time and assume they're paying themselves $10 per hour—which, after self-employment taxes in the US, is roughly equivalent to minimum wage.

Let's assume the following:

  • Hourly wage: $10 per hr/minimum wage
  • Cover = 2 hours
  • Writing = 1 hour per 1k words
  • Editing/Revising = 1 hour per 1k words
  • Proofreading = 1 hour per 3k words
  • Formatting = 1 hour

So, taking those numbers—which some of you writers will consider high, some of you low—let's have three stories:

  1. 6k-word short story: 2 hrs (cover) + 6 hrs (writing) + 6 hrs (editing) + 2 hr (proofreading) + 1 hr (formatting) = 17 hrs = $170
  2. 30k-word novelette: 2 hrs (cover) + 30 hrs (writing) + 30 hrs (editing) + 10 hr (proofreading) + 1 hr (formatting) = 73 hrs = $730
  3. 90k-word novel: 2 hrs (cover) + 90 hrs (writing) + 90 hrs (editing) + 30 hr (proofreading) + 1 hr (formatting) = 213 hrs = $2130

Now, in how many sales will the author make their money back on each one?

  1. Short story @ $0.99 = 490 sales
  2. Novelette @ $2.99 = 348 sales
  3. Novel @ $6.99 = 436 sales (@ $5.99 = 508 sales)

So the $0.99 short story will take a comparable number of sales to the novel, to earn back what's been invested in it. Granted, overall, short stories don't seem to sell as well as novels, so those equal numbers of sales might theoretically be harder to get with the short story as opposed to a novel.

But it's still something to think about.

What does it make you think, when you see a story available for $0.99? Does it make you more or less likely to buy it? Does the length of the story affect what you think about the price?


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