Thursday, 1 August 2013

99c Experiment

We dropped the price of Dead on Demand to 99c for two reasons:

1. To try and reach more readers. 99c is impulse purchase territory, and it's a bargain for a full length novel.

2. To get a definitive look at the stats for other authors considering the same move

We were originally at $4.99 selling 1/day. That made $3.47 per copy. Net $104.10 per month.

We reduced our price to $0.99c and sold 151 copies in the month of July. That's 5/day. Those 151 copies generated a revenue of $52.85.

The net result? We sold 5x more, but made half what we did before. If we take into account the $45 worth of advertising spent during the same timeframe (on Kindle Books and Tips, and WLC/AMC adverts - see earlier blog posts) we made a whopping $7.85. About £5.

We expected this - 99c worked once upon a time because no-one else was doing it. Hocking and Locke did very well out of the strategy. It may work better if you've got several titles in a series of course (and that would have to be a whole other experiment). We suspect this would still be less efficient than perma free.

To work out if it'd work for you, look at your history conversion rate i.e. out of 100 readers who buy book 1, how many book 2, 3,4 etc. Then take into account the extra sales you expect from 99c and see if it adds up.

For us, we saw 5x more sales at 99c.

A one book author (i.e. us) doesn't see any financial benefit at 99c. If we wanted 'more downloads' free would have done it - to the tune of 11,000 a day last time we offered it up for nothing. If we wanted more money, $4.99 was making twice as much as 99c.  Therefore 99c is bad for us. We're going back up to $2.99 for the rest of the summer, and will report back again on how that compares.

For a two book author, you've got to look at the differential in secondary sales. If you lose $50 on book one, do you gain $50 or more on the rest? If so, it might be worth it.

E.g. Author A was at $2.99 for each book a three book triology. She sold 150 copies of book one, with a 50% sell through to books two and three. That gives 150 + 75 + 37.5 sales on average per month, or 262.5 sales per month generating $525.

If author A cut to 99c, and saw a 5x uptick in sales (and kept the same conversion) as we did then she'd make

(750 * $0.35) + (375 *$2) + (187.5*$2)
= $1387.50

If you can keep the conversion the same, 99c works... but I think most would see a drop off in conversion from book 1 to 2 unless there was a really powerful hook at the end of book 1: 99c buyers often only buy 99c.

Similarly, let's look at free. Free, according to the smashwords data sells perhaps 12x as much.

Same author A tries this:

12*150 of Book 1 = 1800 at $0.
900 x book 2 at $2 = $1800
450 x book 3 at $2 = $900
Total = $2700.

So while 99c may work for Author A, perma free would work even better. It all comes down to your specific ratios and how 99c / free affects conversion. Anyone out there got some solid numbers to share on how their conversion %s were affected going to 99c/ free?

2 comments:

  1. Interesting post, & noticed many authors are now making their first in series perma-free, so your theory is likely to be sound. Hopefully, offering the first title free indicates confidence that the reader will engage with the author. My problem (among many) is that my series, although featuring the same central characters, are different genres. Nonetheless, I do intend to make the first in series perma free in the near future. Especially after reading one reader's statement that she "steered clear of 99c novels," simply because she reasoned if the author didn't value their work, why should she?

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    1. The lack of value, percieved or intrinsic, is a real issue. Do you want to be supermarket own brand, or Heinz? With big publishing still cranking out eBooks at £6+, there's real space for price competition... but there's a danger that readers will get used to paying 99c and see any more as a money grab. I'm quite happy with £2-4 as a price for an eBook - it's about the same as a big coffee. A coffee takes 20 seconds to make, and lasts minutes. A book can take years and will last hours. Compared to a movie, or a DVD, eBooks are very cheap. It's worth keeping in mind that the readers investment is time AND money. If they spend 99c but waste 10 hours on a book with a rubbish ending, they'll still hate it as much as if they paid more. If they did pay more, they're less likely to complain - a reader shelling out $4.99 is much more likely to check out the sample and see if it is for them before hitting buy. There's also the psychology of "It's my fault I got tricked into buying a crap book." Low prices = perception of low value, and that feeds into reviews, and viral ratios. You don't rave about the hamburger, you rave about the michellin starred meal. Be the something special - and get paid a fair rate doing it. 99c, categorically, does not pay the bills for 99.999% of those who use it as a price.

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