I must tell the truth and admit I stressed out a little over the pricing of “Rising”. I finally decided to go with $2.99, but not before reading dozens of opinions and formulating my own decision on the matter, based on what I felt were my only other options.
$2.99 versus 99 cents or $3.99.
Pricing is far from a science. As far as I know there is no “data.” It is, much like writing, an art. It may not even matter, for a well-written book and the right amount of luck and viral marketing may make any reasonable price irrelevant.
Enter my own logic on the matter. When I chose my price, I wanted something in the middle. Something that would be valuable to me and to still reach readers.
On one side is “value.” On the other is “market penetration.”
It's difficult to have both. It's a balancing act between how much an author makes from sales (the value of the book), and the ability to sell to as many readers as possible. If the book is too expensive, each sale will get a nice fat royalty, but fewer readers will purchase it. If the book is cheap enough, more readers will read, but the author will make less money.
Selling 1,000 copies at $2.99, an author would make $2,100 after royalties (an estimate)
1,000 @ 3.99 = $2,800.
1,000 @ 99 cents = $350.
Enter reality. If an author sold 1,000 copies at $2.99, she would likely sell many more at 99 cents and far fewer at $3.99. Reality would look something like this:
1,000 @ $2.99 = $2,100.
500 @ $3.99 = $1,400.
4,000 @ 99 cents = $1,400
You can adjust the sales however you want, but to match $2.99, 99 cents would have to sell 6,000 copies, and $3.99 would have to sell 750 copies.
Many people take value to mean only what we can get from one book. In this case it would make more sense to sell one copy for $100,000, but that is not reality. Value is really what an author can get for all of his sales, not just from one, for books are not singularities. A book is a copy of its original. I am not selling my rights to “Rising”, just a copy. Because of this, we must take into consideration what the reader is getting as well. It's not much. Just the opportunity to read a story.
If the price is too high, value becomes a mirage. An author may make $70,000 on an ebook priced at $100,000, but who will buy it? He'd have made more money by selling many copies at 99 cents, and more readers would have enjoyed his product.
Yet the problem with 99 cent books is that to make more money overall, the author must sell in bulk. Not 1,000 copies. Not 10,000 copies, but tens of thousands of copies. This is the purpose of 99 cent ebooks, to discount to sell more—much more. If I thought I could reach 50,000 readers in the next year, I would price my book accordingly.
There is no guarantee that people will buy my book just because it's 99 cents. 99 cents may be a great price for a week or two, or the price of the first novel in a series after the other books have been published, but it's not valuable for one book. My blog and social networks may be a better marketing tool, and may sell more copies of “Rising” than a 99 cent price point would.
$3.99 is a bit of the opposite. Personally, I would hesitate to buy an ebook at $3.99. I would have to know the author well and trust him/her, have read some really amazing reviews on it, need it for some reason (nonfiction), or want to read it because everyone else is (if they're making a movie about it).
Yet I have the same concern for $3.99 as I had for 99 cents, though for a different reason. It's no longer a matter of reaching many people, but getting a few people to pay more. I like my chances getting many people to buy something for next to nothing better than getting them to purchase the same thing for more.
And in the end it seems like a ripoff for the reader to have to pay more. I don't want to charge more for my stories. It's one of the reasons I want to be an independent author. I need something in the middle, something that is both fair to me and to readers.
$2.99 is a win/win. It's the lowest I can go and still collect the 70% royalty from Amazon, and it's low enough that readers won't find it expensive. I'll still have a difficult time selling it, but not because of the price—simply because it's difficult for fledgling authors to get a toehold in the market.
$2.99 is the porridge not too hot and not too cold. It's high enough to give me value, and low enough to still be valuable to readers.