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)
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?