Pricing Strategy - Kindle Dilemma

[Michael Kellam]

Hi Everyone!

We have a pricing dilemma that we're not sure how to address. We offer both print books and PDF e-books and for 5 or 6 years the print book version and e-book version of each of our books has been the same price (except that print books orders add shipping).

Some readers, but not many, have objected to the e-book version of a book being the same price as the print book.

So far, we are happy with our current pricing model and we don't believe that lowering the e-book regular price would increase sales.


Our dilemma is that we are working on releasing Kindle versions of the same e-books, but Amazon's royalty structure is such that it is more beneficial to us to offer the Kindle versions for less than our regular prices. (Amazon has a $9.99 limit for a 70% Royalty). Kindle sales would cost us significantly less in delivery and customer service costs so our net would be roughly the same.

We are concerned that it might slow sales if customers notice that the "regular" price at the Kindle store is significantly lower than the "regular" price for the PDF on our site. We are concerned that a lower "regular" price at Kindle might lower the perceived value of the books on our site.


We sell significantly more books/e-books when we offer big half price sales in our newsletter and on our site. If we lowered the "regular" prices of the e-books, we don't feel that we could offer half price sales anymore, but the urgency of a limited duration sale is what drives a lot of the sales. We think that if we reduce the price and don't offer sales our frugal living niche would put off buying indefinitely because there's no incentive to buy NOW.

Also, if we were to lower the price, there would be less incentive for affiliates to want to promote. (50% of a lower price is less commission.)


Do you have any experience with this or any thoughts about how to deal with this?

Thanks!

Michael

[ChristineCobb]

Why do you want a Kindle book? If it is because you want to tap into the marketing power of Amazon, then set the Kindle price similar to your other prices. Effectively you will be paying Amazon 65% commission instead of your other affiliates at 50%.

[Michael Kellam]

Hi Christine,

Thanks for the recommendation. That sounds like it might be a good way to go. Did it sound to you like our concerns about different prices were warranted? I'm not sure why we didn't think of it that way except that we thought the other scenario would be less costly for readers and still make the same money for us.

We're not actually completely sure what we expect Amazon to do for us. We did publish one of our giveaway e-books on Kindle for $.99 last week hoping it would help send traffic to the site, but we think we need to drive some traffic over that way so that Amazon will help market it.

We have had some readers ask for the Kindle versions of our main books in the past and another publisher we talked to told us that, based on her experience, she thought there would be a significant increase in sales because of Amazon's exposure. We're not sure what to expect but we have decided to try it with some of the e-books.

Thanks again for the recommendation.

Michael

[ChristineCobb]

I have experience with an author with 3 novels and we get as many Kindle sales now as physical book sales. Interestingly Nook sales are getting more numerous. I think if you have people asking for Kindle books, then you should seriously consider that. Yes, you still have to market it yourself. If you can run one of your sales initially and get some early sales and reviews on Amazon, then you are likely to do better in searches on Amazon for your keywords.

Amazon also gives you an author page where you can post info about yourself, an RSS feed, a video and other books.

[Michael Kellam]

Thank you, Christine! That is good news. It's good to know that it is likely that they will increase overall sales. I formatted the giveaway one first so that I could understand the procedure and so I could see if the links in the preview were DoFollow.

Regarding the marketing, we were planning to get a number of the e-books on there and then have a sale to push Kindle users there from our list in order to get some traffic on our Kindle books. Then we hope that the traffic increase will encourage Amazon to join in on the marketing. Does this sound like a reasonable plan?

Just yesterday I looked into what it would take to get it on Barnes and Noble for the Nook and a number of other outlets and I plan to pursue that, too once the Kindle stuff is in place.

Thanks again!

Michael

[David_Perdew]

If it is because you want to tap into the marketing power of Amazon, then set the Kindle price similar to your other prices. Effectively you will be paying Amazon 65% commission instead of your other affiliates at 50%.

Hey Michael - my personal opinion is that any new sales channel is good. Pricing doesn't have to be different. I buy Kindle books for the convenience and don't really compare the prices that much. But i may not be typical.

The difference in commission would also be of no concern to me as a seller since it's new income for you anyway...

[jenniferperdew]

Michael-

Another option ( and I am by no means a Kindle Expert) if you are unsure about the structure of the Amazon Pricing is to offer a .Mobi file download along with your pdf straight from your site. I've seen some other folks do that and essentially what happens is that the buyer can download it to their Kindle file locally on their computer and then upload onto their Kindle (via USB). Yes you lose the immediacy of it automatically downloading to the Kindle but it allows you to serve your market by offering the same information in alternate formats. Amazon has an FAQ about using the personal documents settings that you would want to familiarize yourself with so you can explain it to your customers.

You can also check out a product we use here at MyNAMS very frequently called Product Creator Pro ( http://nams.ws/pcp). As you build the report/book you are able to download the file as a pdf and mobi.

But with all of that said, I created all of the Kindle reports we did this past spring and uploaded to Amazon and although it took alot of time to get the formatting correct for the first report, it was super easy once I had the templates set up. So you could still use Product Creator Pro to create the formatting prior to uploading to Amazon (which I have not done yet) as it does alot of the formatting for you. And I think Ronnie from Product Creator Pro is going to do a webinar for us in the near future about using the program.

Hope that helps some

[Michael Kellam]

Thanks for replying!

i think we will keep the prices consistent with our other prices and go with the 35% like you are suggesting.

Jennifer - That is a good idea to offer the .mobi from our site, although one of the benefits I see to putting it on the Amazon store is a reduction in tech support time. We currently spend a lot of time helping people figure out how to download and use the files and I hoped that with the Kindle store people would be more familiar with the setup and, if not, that they could get the simple questions answered from Amazon and only contact us when they really need help.

We're also planning to pursue other outlets. I've been told that if we use a company like SmashWords, we can generate one .epub file that can apparently be used for Nook, iPhone, Android-- everyone but Amazon. I hoped this would reduce conversion work. Does anyone have any experience with them?

The Product Creator Pro does look like a good product for new books but the books I'm working with are existing books. Unfortunately, the source files are in Pagemaker, Word and Apple Pages so they require some reformatting for Kindle. The converters I've tried all end up having big problems with crazy formatting of graphics and page numbers.

Thanks a bunch for the great replies! I welcome anything else that comes to mind!

Michael

[drmani]

It's a tricky and complex question, because it has more to do with strategy than pure tactics.

If you'd like me to compile my thoughts into a lengthy post, I'll do it (but if you've already made
your decision, it may not be helpful!)

fwiw, I've sold 'Think, Write & Retire' on Kindle at $39.95 - and sales didn't shift much after testing
other price points of $19.95, $14.95 and $24.97.

(I'm now making some changes based on a different approach I'm taking with the entire product line,
so at the moment things are in flux.)

All success
Dr.Mani

[drmani]

I decided to go ahead and jot down my thoughts anyway, so here
goes (apologies for the length of this post!)

The question that lies at the core of your strategy is this:

Why are you selling on Kindle estore?

There are many possible reasons.

1. You want to make sales from Amazon's audience, without taking
the trouble of marketing your writing at all

2. You want to create an additional stream of buyers for work
you've published and sold using other channels

3. You want to attract a new audience to sell other stuff - with
the ebook being only the 'hook' or 'bait' to lure them in

4. Other

With #1, there's little if any conflict. You price to maximize
Amazon sales, and keep writing and publishing content.

With #3, there's little concern too, as the cost of acquiring a
new client is offset by your downstream profit.

The real dilemma is in #2, especially as pricing constraints on
Kindle create some worries about what to set as your ebook's
price point.

To add to this is the reality of sales of ebooks peaking at close
to the lower end ($0.99 to $2.99) and dropping steadily in volume
as you go higher, with a sharp fall beyond $9.99 for ebooks.

(Which, incidentally, is the likely reason why Amazon chose that
as the cut-off to pay 70% royalties - they WANT you to price very
aggressively to maximize sales, and their data tells them buyers
WANT sub-$10 pricing for ebooks).

Now, this pricing makes sense if you buy into Seth Godin's oft-
stated viewpoint that you're in the battle for readers' ATTENTION
- and the physical book should be little more than a souvenir,
the important thing being the spread of your IDEAS among the
right people.

With digital publishing, the incremental cost of publishing your
work gets as close to zero as possible, meaning you can distribute
widely at little (if any) added cost, giving you ENORMOUS pricing
flexibility - which makes a $0.99 price actually sensible!

Ok, so here's how I deal with this situation.

I first set a minimum allowable cost (profit) per sale that I will
not accept less than.

Then, I compute the royalty payout on Kindle estore at each price
point - and see which ones match my desired profit point.

If I want $7 per sale, then I could price at $9.99 for 70% royalty
OR at $20 for 35% royalty - and which of the 2 choices is better
is simpler to decide.

For more sales volume, it's $9.99. For premium positioning and to
attract only serious buyers, it may be $20.

That's not all.

At $0.99 to $2.99, you get a flurry of interest, even from casually
curious browsers - and not all of them are penny-pinchers. The nice
thing about Kindle is that it lets you present your value at a very
low price to first-time contacts - and then Wow them with the experience
and generate massive sales later on!

Where you may make 100 sales at $4.99 or $6.99, you'll make 1,000
(or more) at $0.99.

Net-net, you make the same front-end profit - with a wider reach of
your market.

Can you find more back-end sales from an audience of 1,000 - or 100?

Interesting question, huh?

Then, you throw KDP Select into the equation, and it gets even more
interesting - because now, you have the option to offer your ebook
FOR FREE for 5 days over the 3 month period (but it remains exclusive
to Amazon, and you can't sell on other channels!)

Is THAT worthwhile?

You need to decide.

With those ebooks of mine I've put on KDP Select, I've had 100 to 1,200
downloads in a 48 hour period during the free giveaway phase.

My only fiction novel has been downloaded over 1,000 times - but not
sold more than a handful, even at $0.99 (hey, probably it isn't good
enough, it was just a fun experiment for me - but there's a lesson in
ebook marketing there!)

Many writers have said they price ONE ebook in their portfolio low,
to attract fresh audiences, and give it away on KDP, and see a nice
boost in sales of the OTHER ebooks in their collection, all of which
are priced at their regular/ideal level.

Next...

Price mirrors sales velocity - and dynamic pricing can take advantage.

Say how?!

If you plot sales volume against price, you'll notice dips when the
price is higher, and peaks when you're at $0.99 or free. By using KDP
to gain momentum, and THEN tapping it by price adjustments, you can
get a slightly higher profit - for little extra effort.

Give away your ebook on KDP for 1 or 2 days. Sales velocity peaks.
As downloads increase, raise the price to $2.99 or $4.99 - and at least
some of the new browsers who see your ebook (because it makes the top
100 list, or most downloaded lists) will buy.

Gradually sales will taper off and your rank will drop - at which point
you reduce price to $0.99 to pick up some more sales. And the cycle
repeats.

Re: different prices for essentially the same ebook...

You can modify/edit the ebook to become a DIFFERENT product.

I stripped out some sections from my premium ebook, and priced
the edited version lower - throwing in the 'missing' chapters
as a bonus for registering as a buyer.

You could also sell the bonuses separately, making up the
price difference and not losing out on profit per sale.

That lets you justify your pricing to current buyers, who paid
full price, and leverage the marketing reach of Amazon. It
also keeps perceived value higher.


re: Selling on multiple channels like B&N Nook...

A simpler and more convenient way to sell across multiple ebook channels
is to use a service like Smashwords.com which will let you target a
range of different ebook services, from one place.

Extended distribution even gets you on the Apple store and more.

My affiliate link for Smashwords is:

http://www.smashwords.com/?ref=drmani

The direct link is:

http://www.Smashwords.com

ALL of these tactics, however, are governed by the strategy which is
based on the initial question...

WHY do you want to sell on Kindle?

With that clear, the tactical bits are (relatively) easier to figure out.

Hope this is of some help.

All success
Dr.Mani

[EllenBritt]

Great thread and thanks Dr. Mani for the summary of how you think about this...

I like to think of Amazon as a lead generator...people who are purchasing an ebook, even if it's only 99 cents are buyers, in that while they have not paid you directly, they have pulled out their wallets and purchased. If you offer them a compelling reason in the ebook to come over to your site and opt-in (perhaps for a valuable free report or audio/video) you are then essentially building a list of paid leads.

My friend and colleague Denise Wakeman and I have just released a report, the 2012 Digital Publishing Industry Report, based on a survey we did with over 1000 consultants, coaches, speakers, authors and other small biz owners...you can pick up a copy at the link below...no opt-in required...

http://thefutureofink.com/digital-pu...y-report-2012/

Ellen

[ConnieRagen Green]

I agree with Ellen on this. I have three paperbacks available on Amazon, as well as those three available through Kindle and another three titles only available on Kindle. The leads and new clients that find me there may not have ever found me if it had not been for this distribution channel.

Connie

[KellyMcCausey]

I stripped out some sections from my premium ebook, and priced
the edited version lower - throwing in the 'missing' chapters
as a bonus for registering as a buyer.

Oooh, nice! Thanks for that idea

[KevinRiley]

Here's some stats you should find interesting. Supports and illustrates what Dr Mani wrote.

http://4.bp.blogspot.com/-puQXndqSsL...priceunits.png

http://www.the-digital-reader.com/20...writers-career

[Michael Kellam]

Wow, you guys are great! This is all very helpful.

OK, this may reflect small thinking (Tell me if that is the case!) but I'm still unsure how this will impact our regular prices directly on our site. Dr Mani - Our purpose is to figure out how to maximize income from all streams and we're unsure how the Kindle store will fit into that.

I think our primary purpose is:
We want to create an additional stream of buyers for work we've published and sold using other channels.


We sell 15 or 16 e-books or e-book sets on our site from between $7.95 to $21.95 regular price. The niche is frugal living. Typically, we get some regular price sales but we get a lot more sales when we have a sale and mark down the e-books 50%.

We have one that is 90 pages and regularly $12.95 that is on sale for $6.48 right now and selling well. Our highest priced book ($21.95) is a cookbook that is 500 pages, which has sold very well for many years, although 2/3 of those sold were from "limited time" sales with prices reduced up to 50%.

If selling the books for a lower regular price on Kindle would mean ten times as many sales, it would definitely be worth it, although we are concerned that it might undermine our ability to sell the comparable print books for more on our own site. Of course if we consistently sell ten times as many at Amazon, we wouldn't be as concerned about possible reduction in sales on our site.


Regarding using lower priced items at Kindle as a way to get more people on the list/visiting the site, I think it's a great idea. Then, in addition to selling our own items, it would give a larger audience for us to promote other people's affiliate products to.

Since so many heavy hitters have posted here, I ask you all:

-Is it short sighted to hang so much on the price? Kevin's chart of pricing definitely seems to show the potential value of pricing at least some things very low.

-Would it be better to offer *some* low priced items on Kindle and keep our strong selling higher priced items at their current prices?

-Would it be better to sell all of our e-books for lower prices at the Kindle store? If we do try lower prices on Kindle, would it be better if the prices on our site were comparable to those on Kindle?

In the past, before we understood how to sell, we discovered that lowering prices for our site/list didn't mean more sales. In fact, when we raised the cookbook prices, we ended up selling more of them. It seemed that the increased price increased the perceived value. This is why we're obsessing about price. It's hard to "undo" a price reduction! ;-)


Tell me - Are we being short sighted? Are we stuck in a rut obsessing over something small while ignoring the bigger picture?

Thanks a bunch! You're all great!

Michael

[Michael Kellam]

I just reread your longer post, Dr Mani and I didn't think of modifying the e-book so the version that is lower priced is different than the full priced version... great ideas.

I do plan to set up Smashwords after Kindle and would be happy to use your affiliate link...

[anita_hampl]

Ways you could use Dr. Mani's suggestions, Michael, yet not tick off your existing customer/affiliate base:

Make short Kindle books featuring selections from "Dining on a Dime", offer them for 99 cents, using them practically as lead generators. Perhaps you could offer "Frugal Gift Baskets from Dining on a Dime" or "Best Brunch Ideas from . . . .", etc.

Have fun with it, write up some appealing introductions, being aware of how many pages Kindle allows for the "look inside" feature so you don't waste those pages. Be sure to provide links back to your website in the early part of the Kindle book, so even people who merely peek on the Amazon sales page might link back to your main website.

At the back of each book, show the Table of Contents for your entire book, with another link to your website.

Put out 5 or 6 Kindles like this, always referencing one to another. Eventually you could offer pricier (like $2.99 or $3.99) versions - maybe even cut your cookbook into 5 sections and offer volume 1 for $2.99, volume 2 for $2.99, etc.

Amazon loves it when one author has several offerings, they sometimes will send buyers emails, "Since you bought XYZ, you may be interested in ABC . . . "

And on your real website, or in emails, tell your loyal customers what you are doing, explain that it's helping build your reach so you can do research and provide even more value to your base. AND teach them how to register as Amazon Associates so they can promote your Kindle books . . . explain how the Amazon cookies work . . . remember, someone may go to Amazon to buy a 99 cent book and end up buying a camera or soccer balls or whatever . . .

In your emails, ask your regular fans to buy one of the Kindle books, and if they leave a review on Amazon, you will send them a premium or coupon as a thank you. OR ask them to "buy" one of your free days, as was mentioned above.

Kindle and its cousins Nook, etc. are here to stay. If you pull your regular base in to this new adventure with you, they won't feel cheated and may help you zoom to success in this new income stream.

Good luck!

Anita

p.s. Once you get rolling, find a good how-to-publish-on-Kindle program (I know a few NAMS people have written some) that you can promote as an affiliate on your website!

[drmani]

Michael

Jay Abraham drilled a mantra into my head long ago...

The only risk you ever have to take in business is an INEXPENSIVE TEST.

At the moment, Kindle is a closed box to you. It may be a treasure chest.
Or a Pandora's box! You won't know until you open it!

So, test it.

Maximizing income will come after sequential steps, some of which may cut
the income down for a while... unless you get lucky with the first test.

Take ONE ebook out of your portfolio, and drop it into the Kindle estore.
Track everything carefully. Use links within the book which may tell you
which type of offers or back-end sales it generates. Invite the buyers to
your list, or to follow you on social networks, or subscribe to your blog
for updates.

If price is a major issue, re-work the Kindle edition to be slightly
different - still valuable, but different enough to justify a lower price
(to your regular buyers).

Kindle estore lets you change price as often as you like, so take advantage
and test out different price points.

You can run special offer sales by planning when to lower prices, and then
notifying prospective buyers about it - and drive the same sales spike as
with your $6.48 specials... from Amazon browsers!

And after a while, when you have fair enough metrics to make an informed
decision, choose to either move the rest of your portfolio over to Kindle,
or pull the one you're testing, or leave that one alone on Amazon as a
lead generator for the rest of your material.

In any case, make sure that the first trial ebook you put on Kindle acts
as a brand builder and links to all the other things you have available
for your audience.

One thing that may not be clear thanks to all the hype is that, ultimately,
it's up to YOU to sell ebooks on Amazon. The brand and trust that Amazon
has built in the marketplace helps to CLOSE more sales - but if you rely
entirely on Amazon to do the heavy lifting, your sales won't be stellar.
But throw targeted traffic at your Kindle store, and chances are your
conversion rate will be higher than on your own site (though, test it!)

Hope this helps

All success
Dr.Mani

[drmani]

I like Anita's ideas - A LOT!

Make short Kindle books featuring selections

Great one. Just be sure the selection delivers value for the price
you charge. You want 'samplers' to be DELIGHTED with what they get,
and DESIRING even more - regardless of price!

Have fun with it, write up some appealing introductions, being aware of
how many pages Kindle allows for the "look inside" feature so you don't
waste those pages.

I've found that to be a problem with shorter ebooks.

The 'Look Inside' feature allows you to display the first 10% (in word count)
by which time you should grab prospects' interest enough to convert them
into buyers.

This means formatting the ebook to have ONLY title and author name in front,
with the administrivia pushed to the end - and the juiciest bits of the book
bumped up to the front.

Here's a 'trick'.

Mention the special bonus or gift that you're making available for your
readers in the next chapter - and position that text just before the
free sample ends!

Those who browse the 'Look Inside' feature may just be convinced enough
to get the rest of the book FOR THAT BONUS/GIFT

Be sure to provide links back to your website in the early part of the Kindle book, so even people who merely peek on the Amazon sales page might link back to your main website.

Excellent point. It works even better if you lead that link to an opt-
in form to your mailing list - and mention a valuable freebie in the
text leading to that link. You could build your list from just those
"taking a peek" :lol:

At the back of each book, show the Table of Contents for your entire book, with another link to your website.

I set up a separate website (or section) for this portfolio.

One that I'm helping with is here, you can take a look:

http://www.HowToSellEbooks.org/kindle/

Put out 5 or 6 Kindles like this, always referencing one to another. Eventually you could offer pricier (like $2.99 or $3.99) versions - maybe even cut your cookbook into 5 sections and offer volume 1 for $2.99, volume 2 for $2.99, etc.

Some 'swipe copy' (if you'd like to use it) from an ebook series I helped
put together recently:

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For more information visit our website at
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The landing page sells the collection of ebooks - at an attractive price!

AND teach them how to register as Amazon Associates so they can promote your Kindle books . . . explain how the Amazon cookies work . . . remember, someone may go to Amazon to buy a 99 cent book and end up buying a camera or soccer balls or whatever . . .

Wow!

Never thought of that - was focused only on 6% commissions on 99 cent ebooks!
But you're right, people who visit Amazon may end up buying other stuff, too.

Thanks, Anita. Will include this in my process, for sure!

In your emails, ask your regular fans to buy one of the Kindle books, and if they leave a review on Amazon, you will send them a premium or coupon as a thank you.

Not sure if incentivizing buyers to leave reviews fits in with Amazon's ToS, so
check before you do that.

Thanks for that EXCELLENT post, Anita. Deeply appreciated

All success
Dr.Mani

[CarolKalil-Hamilton]

Since I bought my first iPad all I do is buy books on Kindle. They are always much less than print copy. I also read all newspapers online. It is very difficult for me to now read a book...