eBook Pricing and eBook Sales––PROFIT MAXIMIZATION is the Goal

30 Sep

The Angel & the Brown-eyed Boy

The Angel & the Brown-eyed Boy, Book 1 of Tales from Earth's End, KINDLE will be FREE OCTOBER 12th & 13th! Get the winner of 4 national awards for NOTHING!

The other day, I read  author Samantha Fury’s blog discussion of the result of changing her books’ prices from $.99 to $2.99. A reader/author commented that he felt that $2.99 was a fair price of his work and to give it away or sell it for $.99 demeaned his work. (For his exact words, check Samantha’s post.) I tuned in to a similar discussion on the  World Literary Cafe: “Your worth and the worth of your writing is reflected in the price of your books. If you don’t value your writing, why should anyone else?”

As a former economic analyst with couple of degrees in the subject and a long professional career as an economist, I need to point out that  profit maximization is the relevant variable. When the author is maximizing his or her profit, the book’s price is pretty much irrelevant. I’m going to present a few basic concepts of economics and illustrate them with experiences of self-published authors.

Anyone discussing eBook pricing should read Cheryl Kaye Tardif’s book, How I Made $42K in One Month Selling my eBooks.  Whoever makes over  in $42K profit in a month trumps the other on-line pundits. Despite the raging discussion about book pricing, this person is worth listening to. She’s walked the walk, not just talked the talk.

In her book, Cheryl reports that she made $30K the month after her $42K score and averages about $20K/mo. As a result of her success, she has signed a Waa-hoo of a contract with one of the major publishers. She achieved those results using Amazon’s KDP program and lays out what she did in the eBook above. By skillful manipulation of economic variables and marketing techniques, Cheryl is reaping the economic reward of her work.

Cheryl says she used the Amazon KDP program, doing a giveaway for one book of her books at a time, focusing on the first book of a series.  She kept her other prices up. But she changes her modus operandi, rather than staying fixed on one strategy. I just checked her author page. Her books are priced between $4.99 and $0.00 at this moment. (From what I’m seeing today, Cheryl has changed her method and has several of her books priced at zero. I’d be interested in finding out how it works for her.) Note that she doesn’t leave her books priced at any fixed level based on some notion of her personal worth or their intrinsic value. She changes prices to take advantage of market conditions. Cheryl is a tireless marketer.

Here’s a story: Cheryl and I were communicating about her policies a while back. I was running a KDP free program myself, while I was on vacation in New Mexico. I was participating in a Tweet Team run by World Literary Cafe. (The WLC is a resource for writers which is DEFINITELY worth joining.) I was tweeting away fulfilling my fellow team obligations, when I saw that Cheryl was posting tweets for her tweet teams while on HER vacation. That’s tireless.

I tried to emulate Cheryl’s results with a couple of sets of KDP days in August. The link takes you to my write up of the results of my first set of KDP days, including screen shots of my book ranked #1 in Sci Fi Adventure (Free) right up next to George RR Martin. The main between us difference is: he got paid. My book stayed #1 for a whole day. The article is very funny, by the way.

I repeated the KDP promotion a couple weeks later with another book, which hit #3 in the same category.

LADY GRACE, Book 2 of Tales from Earth's End, will be FREE OCTOBER 12th & 13th! Get the second of the series, a national award winner, for NOTHING! Get 2 books of the series free!

After the books reverted to not being free, result was an increase in sales in ALL of my books, some by ten times. I would have NEVER seen that increase if I hadn’t done the giveaway. Before that, my books were buried in the lower reaches of Amazon’s rating dungeons, growing mushrooms. Their brief rise to the light let thousands of potential buyers know they existed.

Do I mind giving my work away? Not all all.


I’d rather get new readers than have my work sit in Amazon’s computers hoping that someone will see its value.

THIS IS IMPORTANT, SO LISTEN UP: DO NOT confuse your value as a writer and human being with the price of your books. PERSONAL WORTH, THE VALUE OF YOUR WRITING, AND ITS PRICE ARE DIFFERENT VARIABLES.

If you need credentials to back up that statement, I also have an MA in Marriage, Family, and Child Counseling and a lifelong spiritual practice. I’ve walked the walk.


BACK TO SELLING BOOKS: The KDP glow didn’t last, so I’m planning on repeating it a couple of times in the next 2 months. Is it work to give your book away? Oh, yeah, horrible work. Here’s my article about what I did to prepare.

Doing the prep work  was fairly awful, but I got that great screen shot out of it and way more downloads than I expected.

MORE ON PRICING: I used to sell my books at .99. I know they’re intrinsically worth way more, but they SOLD at .99. Also, depending on the relationship of the supply and demand curves for your work, you may make way more selling for less. (We’ll talk more about those slippery curves below.)

Here’s another story: I have a friend who was (she died) a major, major seller on Kindle. (She also ended up signing with one of the big 6 publishers.) She had one of her new books marked at $2.99 and it wasn’t selling.

She fretted about knocking it down to .99. She’d have to sell six times as many books to make the same profit. She finally dropped the price, and sold 16 TIMES the number of books, making way more than she had been, even at the much lower margin Amazon gives .99 books. Amazing what hitting the right price point will do.

WHAT MY FRIEND’S EXPERIENCE ILLUSTRATES IS BASIC PRICE THEORY. Price theory is one of the first courses greeting budding economists.

One of the essential tenants of price theory is: Buyers will buy  more units of whatever you’re selling at a lower price than a higher one. Through statistical sampling, it’s possible for economists to draw a graph of how many widgets people will buy at different prices, up and down the range. It’s called the demand curve. The higher the price, the fewer units will sell. 

The other side of the pricing equation is the supply curve. Basic tenant of supply: The higher the price for anything, the more units suppliers will want to produce. The  graph representing the supply side of  goes  up as quantity increases. Lots of things are imbedded in the supply curve: the cost of producing widgets or books or anything else.

Supply and Demand for Pizza

Supply and Demand for Pizza

The graph above shows how the two curves function, using the market for pizza as an example. There the supply and demand curves are just as I described. Demand slants down, indicating people will buy more pizza if it costs less. The supply curve goes up, showing that pizza makers will make more pizza if they’re paid more.

The wonder of price theory is that the supply and demand curves intersect. The happy upward-pointing supply curve crosses the downward-pointing demand curve somewhere. This means that at that price and level of production, supply equals demand and the market is cleared. All the pizzas produced find homes and everyone’s happy.

This theory does not work so precisely when we’re discussing electronic books that have no cost after they’re rendered into pixels or POD books that are spit out to meet demand. (Those are extremely efficient means of production, by the way. No tons of books sitting around waiting to be pulped.)

But the general theme of lower price, more sales holds, due to the demand function. The economic issue for the writer becomes covering those initial costs and earning something on top of them for his/her time.

THE ANGEL IS UP THERE WITH GEORGE R.R. MARTIN! Would this have happened if I hadn't "given it away?" In my dreams.

MORE ABOUT PRICING BOOKS: Don’t follow the expert’s advice, necessarily––another story: A while back, I had my books priced at .99, based on the fact that they sold at that price.

One of the industry experts told me, “The .99 cent books  are the junk books. You need to get out of that pile. Your books are better than that.” That’s true, my books aren’t  junk and I deserve to make way more than I do.

Given that advice, I raised all my books to $2.99 and above, except for one kids’ book. Result? My sales plummeted. Fell through the floor. They’ve begun selling again, and I’m making a little more than I did previously, but the sales aren’t vigorous and I’m not getting rich.

Now I look at pricing in terms of profit maximization, not “how much my books are worth” or “how much I’m worth.” Our books are worth a lot and so are we. We deserve to make a great deal on them.

But that isn’t how worth is measured by economists. To an economist, things are worth what they sell for. Do you want to know what your house is  worth? Sell it. What it sells for is its value. (Of course, you don’t have it any more.) Most people just hate this, but it’s the only objective measurement of monetary value. Everything else is talk.

WHAT’S THE WORTH OF A BOOK THAT DOESN’T SELL? NOTHING.  A book you don’t sell brings you ZERO profit. So does one you give away.

The difference is, if you give a book away, you have a new reader.

I like what Cheryl Kaye Tardif’ says and how she uses KDP. So, I’m off to get them free days rollin’ again.



Sandy Nathan, Award-winning Author

Sandy Nathan’s writing has won twenty-two national awards. She’s won in categories from memoir, to visionary fiction, to children’s nonfiction. And more.

Sandy’s  books are: (Click link to the left for more information on each book. All links below go to Kindle sale pages.)
Sam & Emily: A Love Story from the Underground (paperback & Kindle available)
Lady Grace: A Thrilling Adventure Wrapped in the Embrace of Epic Love (paperback & Kindle available)
The Angel & the Brown-eyed Boy
Numenon: A Tale of Mysticism & Money

Tecolote: The Little Horse That Could

Stepping Off the Edge: Learning & Living Spiritual Practice

3 Responses to “eBook Pricing and eBook Sales––PROFIT MAXIMIZATION is the Goal”

  1. Kate McGuinness September 30, 2012 at 2:17 pm #

    Thanks for sharing an economist’s viewpoint.

    • Angel April 26, 2013 at 7:47 am #

      This is what we need – an insight to make everonye think

  2. admin October 2, 2012 at 7:14 pm #

    You’re welcome, Kate! I love it! All the world should study economics! Thanks for stopping by.