The time has finally come: You’re ready to publish your ebook.
You’re sitting at your desk, patting yourself on the back for finally completing it.
But there’s one obstacle you must overcome before publishing it: picking a price.
Pricing digital products can feel like being stuck between a rock and a hard place, but there is a path towards pricing your ebook fairly -- and it only requires three simple steps.
When combined with three supplementary tactics to boost the value and price of your ebook further, you’ll soon be on your way to becoming a well-paid author.
But before reaping the fruits of your labor, you’ll first need to figure out what the standard prices are in your industry -- let’s dig into that now.
How to price your ebook in 3 steps
Step #1: Analyze competitors' prices
You should seldom attempt to price-match your competitors to the cent since that can lead to race-to-the-bottom pricing.
Researching their prices, on the other hand, can give you an idea of what you can reasonably charge for your ebook.
Compare prices from both independent and traditionally published authors to get a fair estimate of what ebooks in your field cost -- 15 to 20 titles should be a good sample size.
For example, from a quick browsing session, I saw that the top 16 hits for Amazon Kindle books about overcoming procrastination fall between $4 to $15.
Therefore, I would probably make the most sales if I priced my ebook about procrastination towards the lower end of that range since I’m an unknown author.
That being said, you may want to lean a little more towards independent authors than those from publishing houses.
So sampling more heavily from independently published authors may give you a more accurate representation of what customers are willing to pay.
If you plan on selling in a marketplace like Amazon, read reviews to see what readers thought about the book overall and if it was worth the price.
If your competition sells from their own website, see if they have reader reviews or claims like “XX downloads so far!” so you can gauge their ebooks’ success.
For example, if you were publishing a book about influencer marketing, you may come across influencer marketing expert Brittany Hennessy’s website, which states that her book has sold over 25,000 copies since the summer of 2018.
In your research, you may see that ebooks sell for pretty low prices compared to other digital products -- $10 to $20 is a common range, even for successful creators.
However, don’t let those prices deter you. With ebook publishing revenue expected to reach over $5.33 billion in 2022, there’s plenty of income to go around, especially for authors who know their audiences well.
That last part -- knowing your audience well -- is the linchpin to focus on. Once you’ve got your industry price ranges nailed down, you need to get granular and figure out what your audience is willing to ante in.
They’re not always the same price range.
Step #2: Research what your audience is willing to pay
Consumers have an internal reference price for most items.
An internal reference price is the price customers think an item should cost based on their past experiences or knowledge of a product.
For example, most consumers’ internal reference price for a cup of coffee probably ranges between $3 and $6. Charging something drastically lower or higher -- say, $0.25 or $12 -- would likely deter most customers from making a purchase.
Research has suggested that internal reference prices affect consumers’ willingness to pay for an item because it takes less cognitive load to rely on the internal price than to consider and calculate other factors.
How do you find out your customers’ internal reference prices for ebooks like yours?
To figure those out, you could send surveys to your email subscribers and social media followers, or interview them through video conferencing.
Like Herman Miller did with their email survey, you should offer some sort of incentive, like a discount code or participation in a giveaway, to encourage people to respond.
Don’t discount the benefit of going on forums to see what people say about popular ebooks’ prices, as well as the prices of highly recommended ebooks, either.
Lastly, don’t forget Amazon reviews as a research resource.
To conduct research on Amazon, simply click on the username of customers who’ve purchased an ebook, and then scroll through their review history to see what other books they’ve read and what reviews they left.
Researching around 10 to 15 reviewers’ testimonials should give you a clear enough idea of what price range you can reasonably price your ebook within.
As the final step, you need to fit that range into your pricing model.
Step #3: Determine your pricing model and storefront
There are multiple factors to base your ebook price on, but they basically come down to two models.
The first is the cost-based pricing model (also known as the “cost-plus” pricing model), which is based on the amount of time and materials needed to produce your product, plus your desired profit margin.
However, the cost-based pricing model isn’t a great fit for everyone. For one, it can cut into your profit margins when you offer sales or discounts.
Secondly, the costs to create an ebook vary heavily, so it’s tricky to pick a price that rewards you for your efforts but doesn’t give your customers sticker shock.
Author Joseph Hogue, for instance, estimated that it took 100 to 200 hours to write each of his 160-page ebooks, and that excluded time spent editing, formatting, and marketing those ebooks.
With that amount of effort, it can be hard to justify any ebook price less than three digits.
For those and many other reasons, entrepreneurs should consider the value-based pricing model, where companies determine a price based on the value customers believe an item has.
Basically, value-based pricing is about giving your customers more value so you can earn more “value” (i.e., money) in return.
If you’re among the 80% of companies who use the cost-based or competitor pricing models because of obstacles like weak market segmentation, there are ways you can use value-based pricing without complex calculations.
If you feel like there’s little setting your ebook apart from others, look for ways besides the content of your ebook to increase its value, such as adding a supplementary mini-course.
Whatever obstacle you perceive to be keeping you from charging the price your ebook deserves, there are always ways to enhance either its real or perceived value.
The last point to consider when pricing your product -- where you will sell it -- may seem minor, but can be the difference between a slim or thick profit margin.
For example, marketplaces like Amazon offer royalties -- or a fraction of an ebook’s sale price -- to authors, whereas platforms like Teachable take a commission from each sale a creator makes.
That means that if you sell an ebook for $10, you will only receive $7 after it’s sold on Amazon -- and that’s before you take out taxes and expenses, too.
Amazon isn’t the only platform guilty of variable royalty fees.
Kobo pays out royalties ranging between 20% to 70% based on how much an author charges for their ebook, meaning that anywhere from 30% to 80% of a sale can go to Kobo instead of you.
Additionally, if you decide to sell on a marketplace, you may want to be wary of the prices they recommend for your ebook.
Amazon recommended that Louis Gudema price his ebook at $5.99 since that’s what “similar” ebooks charged, even though Louis’ content-rich ebook likely had few serious competitors on the market.
Louis decided to price his ebook at $16.95, but his adventures with Amazon didn’t end there.
Louis found out that the lowest he could charge for the print version of his book was $45, of which he would see only $0.01 after Amazon took $27.45 for printing his ebook and other expenses were paid.
Yet another reason why authors may want to sell digital downloads from their website is that not all platforms will be around forever.
Microsoft, for instance, removed ebooks from the Microsoft Store and deleted customers’ libraries in 2019, leaving authors with one less platform to sell from.
For the sake of consistent customer experience and not having to worry about marketplaces’ ever-changing whims, consider selling digital downloads from your own website instead.
You can charge whatever price you wish since you don’t need to worry about a price correlating to a commission level, and can raise product prices whenever you feel it’s appropriate.
If you don’t want to commit to that kind of maintenance, though, there’s another option that offers the convenience of a platform without the profit sink of one: Podia.
You can sell an unlimited number of ebooks and other digital downloads from your website for no extra fees, and Podia doesn’t charge any commissions on sales, either.
In other words, you get to keep 100% of your sale, among many other benefits.