How to determine your ebook’s price

Among the big decisions you’ll make when publishing your ebook (and your paperback, for that matter) is what price to charge. If priced too high, you’ll decrease your sales to zero. If priced too low, you’ll miss out on revenue.

Before examining what factors to consider in determining your ebook’s price, recognize that readers expect to pay less for an ebook than they do for a paperback. After all, the paperback requires trees, ink, printing presses, and labor to produce and send it; an ebook doesn’t (Well, the labor largely is limited to a few comupter and software techs.). Paperbacks that I charge $10 for go for $2 as an ebook. As of this writing, most ebook prices average 99 cents to $2.99.

Your ebook’s price also will in part be bounded by whichever print on demand company you go with. Most set a minimum price to cover their overhead and to make a tidy profit. For example, currently Kindle DP won’t let you sell a book below 99 cents unless you enroll it in special programs the company offers.

Once you know the minimum price you can charge, determine your costs by considering these factors:
• Competition’s prices – Identify the prices of a dozen books very similar to yours in topic and file size that are available for sale at Amazon.com. Making a chart listing the title/file size/price is useful. Now fit your book into that chart for file size and undercut the competition’s listed price. That is, if your book is 275 KB and the other books at or above that file length sell for $1.99, set the price at $1.89.
• Set your goals – Is your goal to establish yourself as an author or have you already done so? If the former, then keep your price low, even though that means your royalty payments will be less in the short run. That’s because low prices help generate sales that pushes your ebook higher into Amazon.com’s rankings, which in turn will generate more sales. If you’re already established, you can go for a higher price and hence higher percentage of royalties (At Kindle DP, ebooks set above $2.99 garner 70% royalties while those below that price earn 35% royalties.) knowing that a built-in audience is willing to pay for your books.
• Ensure a profit and respectability – Don’t reduce your price to the point where you earn mere pennies for your ebook. You must keep your book somewhat above the minimum price that your print on demand provider requires. Hence, if the minimum price of your book is 99 cents, don’t charge a dollar for it. You’d have to sell a hundred books to make a mere dollar. And those 100 sales will be tough as many readers will wonder if your book is of questionable quality as it is priced so low.