Monday, June 27, 2016

Guest Post: Loss Leaders, or How I learned to Stop Being Poor and Love the $0.99 Book

Hi Folks,

Last Monday, I talked about why 99c should not be your go-to regular novel price. We got a lot of good feedback on this post! The best counter-point was from USA Today bestselling author Annie Bellet, who has graciously agreed to do today's guest post.

Annie Bellet is the USA Today bestselling author of The Twenty-Sided Sorceress, which Rachel loved and is free right now! So check it out.

Her other notable works include the Pyrrh Considerable Crimes Division and the Gryphonpike Chronicles series.

She holds a BA in English and a BA in Medieval Studies and thus can speak a smattering of useful languages such as Anglo-Saxon and Medieval Welsh. Which is pretty darned cool!

Her interests besides writing include rock climbing, reading, horse-back riding, video games, comic books, table-top RPGs and many other nerdy pursuits.  She lives in the Pacific Northwest with her husband and a very demanding Bengal cat.

This is a great guest post ya'll as the comments on my anti-99c post were mostly all about loss leading. So today is going to be very on point!

(Just a quick word. I realize in hindsight, that maybe I didn't setup my post properly. Long and short, I was talking about people who do things like price entire series at 99c, price book 3 at 99c, or otherwise use it as a long-term, regular price for too many of their works. It wasn't meant to say, "never use 99c".)

But while I could have been clearer, I'm very happy it lead to such a great conversation! So, are you ready to look at the loss leader strategy and how you can rock out with well-done 99c pricing? Here's Annie Bellet!

Guest Post: Loss Leaders, or How I learned to Stop Being Poor and Love the $0.99 Book

Pricing. It’s a scary part of self-publishing. What is a book worth? You’ve put dozens or even hundreds of hours into a work. You’ve (hopefully) paid for editing and wow-factor cover art and smooth formatting and your book looks like a million bucks to you. It’s weeks and months or years of blood and sweat and tears.

I’m going to tell you something scary but first a little caveat. This is all my belief and based on my own experiences and what I’ve observed after six years of self-publishing and putting up over forty titles. It is not the last word nor a 100% script that everyone can or should follow. Nothing works for everyone all the time. Nothing. Anyone who says “this is the only way” is either deluded or selling something. The following is just my experience and based on my own data and data I’ve gathered. Take it as such.

So what is a book worth?  Now the scary part. It’s worth exactly what someone will pay for it. If you have made a professional package (great cover, well edited, well formatted etc)… you’ve done your part to make the book great. Hopefully you also wrote a great book, because that’s the foundation of a strong career.

But readers don’t care. They care that the book is something they want to read. They care that it looks awesome (editing, formatting, cover) because that’s all a quality signal which instills confidence that hey, this might be a great book and not a waste of their time and money. But they don’t care and won’t know if you spent twenty years or twenty days writing this book or two thousand bucks on that cover or bought a cool looking premade for thirty dollars. 

A reader gets to your book page (a win right there), and the thought process goes something like “ooh, cool title and cover, ooh interesting blurb, ooh decent reviews, ooh this sample makes me want to read more” or some ordering of those steps (not every reader will take all those steps, I’ve bought books purely off “ooh cool title and cover” before, haha). Every single thing on your sales page is a potential tool, and a potential barrier. Selling a book to someone means making sure you are using your tools and not setting up barriers. Great cover, catchy book description, great hook/opening to your book, etc… are all tools to help a reader get what they want. But there is always one more barrier (and tool!), and that is… price.

Great cover, title, blurb folks. Also free right now! (Click for instant preview!)
Self-publishers often price out of emotion or ego, I think. I’ve been guilty of that in the past, too. You work your ass off on a book, you think “this is at least as good as big name novel from huge publishing house with years of heavy marketing  and a giant fan base that was published a decade before ebooks” and price the same as that because reasons. Or you think “I’m brand new and nobody knows who I am and nobody is going to buy this so I better not price much” which is equally an ego/emotion decision.

My advice? Stop doing that. Have a REASON beyond “I feel like it” for how you price your work. What are the majority of well-selling debut novels in your genre priced at in ebook? Is your book the first in a series or a standalone? What’s your plan for this book in three months? In six? In a year? How are you going to get people to the page? Will the price be an enticing aspect or a hindrance in a buyer’s decision-making process?  How does this book fit into your overall publishing plan?

So how to use $0.99 and make it work?

There are two ways that I see $0.99 working as a price for a novel.

The first is as a sale price. There are two ways to do this, also (pricing is complicated, I mentioned that, right?). One is obvious. You book some promotion sites and/or set up Facebook ads etc and drop the price to $0.99 for a few days or a week or whatever works with your plan. The key with all of this is to have a plan. Don’t price without one. Don’t do anything without a plan, really, because this is a business and if you are self-publishing with the intent to sell books and gain readers and make money (and you can’t really make money without readers, I promise), then you need a plan. Always. 

Another method for $0.99 as a temporary price is as the launch price for a new novel. Usually this is done for no more than two days, as a way of rewarding readers on your mailing list and as an initial boost for the algorithms and also-bought placement on Amazon etc. 

In both of the above cases, $0.99 isn’t a permanent price and the book will move to its full price (whatever that is, generally based on genre and what you’ve found worked best in the past to maximize readership and monies).

But what about a novel permanently at $0.99? How does that work and when/why should you use this method?

It works as the first book in a series.  Again, this isn’t the ONLY way to launch a series. Plenty of successful authors have done it this way and plenty have done it with higher priced books (or even with free titles, which would be a whole other post).

However… I personally (re)launched my career on the back of a $0.99 title and I’ve seen dozens of other authors do the same and grow themselves to six and even seven figure a year careers.

Putting out a novel at $0.99 is scary. Especially if you are in dire need of money, as I was when I did it. I had over $20,000 in medical debt and we were looking at not being able to pay even our rent within a few months of me launching a new series. It was my last shot at making writing for a living work after years of making every mistake in the book (one of them was pricing way too high because of ego and stupidity). Being in such a low place made me open to new ideas, and it saved my life and my career.

Here’s how a $0.99 book as first in series can work and the ideas behind it:

The way to think about revenue and readership with a series, I’ve found, is to think of the series as a whole instead of just book by book. You want to maximize the number of readers for book 1, because that is the gateway to the series (and the gateway to a decent income). 

So let’s look at how this works with hypothetical numbers. I’ve found for $0.99 vs $2.99, usually about twice as many copies sell at $0.99 as at the higher price. (Sometimes 3x-4x as many or more, but let’s use 2x as the baseline because I’ve seen it consistently enough to be comfortable doing so).  All numbers below are hypothetical and used to illustrate how $0.99 can make you more money and get you to a more stable career in the long run when used as a loss leader at the beginning of a series.

Awesome Series Book 1 debuts at $0.99 and sells 10,000 copies! You make $3500 on AS book 1.

Alternate Universe Series book 1 debuts at $2.99 and sells 5,000 copies! (Because remember, we’re guessing about half the sales at the higher price based on what I’ve seen in pricing). You make $10,000 on AU book 1.

Wait, you say… you’ve made over twice the money on AUB1 as ASB1. Why would you ever price at $0.99? 10k is way better than 3.5k, right?

Stay with me. It’s a series, remember?

AS book 2 debuts at 2.99 and 50% of the people who bought book 1 buy it. (I’ll talk about sell-through at the end and what you should aim for/expect). That’s 5,000 readers for ASB2 and you make $10,000 on that book (70% of $2.99 rounded down because delivery costs etc and also the math is easier this way). Running total for the series is $13,500.

AU book 2 debuts at 2.99 and 50% of the people who bought book 1 buy it. That’s 2,500 readers for AUB2 and you make $5,000 on that book. Running total for AU series is $15,000.

AU series is still ahead money-wise… but twice the number of people have read AS series. Hmm…

AS book 3 debuts at $3.99 (hey, it’s book 3, readers are hooked and you are writing kickass novels, what’s a buck between friends). 50% of your readers from book 2 buy book 3. That’s 2,500 sales at about $2.75 a sale (again rounding down a bit for the math) and you make $6,875 on ASB3. AS series total earned: $20,375.

AU book 3 debuts at $3.99 and 50% of readers from AUB2 keep going. That’s 1,250 people who buy book 3 at $2.75 a copy for $3,437 monies. AU series total earned: $18,437.

The Tale of Two Series
Wait! See? That $0.99 novel at the front of the series seemed like a poor choice when looked at alone against its $2.99 potential, no? And yet, here we are three books in and the numbers look much better, don’t they? The loss leader series has more readers and is making more money over all.

I often see $0.99 price point mocked as a desperate move or “short term” thinking. But as you can see from the numbers above, it’s actually a good long term thinking kind of strategy when utilized with a purpose and a plan. Always think about the long game, even as you aim to succeed in the near term (you have to do both, because if you never succeed in the NOW, later will keep turning into now and success will always be something over the horizon). 

The series loss leader method is the best way to use a permanent $0.99 price, in my opinion. The more readers you hook into your series, the healthier the sales for the series will be in the long term. More readers mean more sales and a more stable career.

Which brings me to my closing point. Sell-through. This is the number one reason why you should never skimp on ANY part of the business or craft. Without sell-through, you will have a terrible time making a long term career out of writing. If people buy book 1 and don’t buy book 2, that’s very bad for the health of your career. The guideline I use is I worry if sell-through on a $0.99 book isn’t above 50%. So if at least half the people who buy book 1 don’t buy book 2, something has gone wrong in the process. Common things that go wrong: Book 2 doesn’t resemble book 1 and is hard to find. Book 2 is priced too high ($0.99 to $5.99 is often too huge a jump, if you are doing something like this, try $2.99 or $3.99 and see if sell-through improves).  And the biggest likely problem? Book 1 just isn’t good enough. By “good enough” I mean fulfilling reader expectation and keeping them engaged. That’s your job as a writer. We write for readers when we engage in the business of publishing. If your craft isn’t up to snuff or you’ve mislabeled your genre or you’ve left out or broken foundational tropes for your genre… you will lose reader interest in your books even if your packaging is perfect and gets them to buy book one. If at least half of your readership isn’t interested enough to buy book two… usually that indicates a problem with the craft of book one.

And that’s why ALL of this comes back to quality. If your books aren’t delivering to reader expectation and engaging your target readership, no price is cheap enough. Sorry. I personally feel that sell-through is the biggest indication of the health of a career. Even if you are writing standalone novels, it’s still important that enough people who read one of your books go on to read more of your books. The people who buy a whole series or your whole catalog of X genre are your bread and butter. Those readers are your foundation and without them, your career will be constantly sinking and in danger of going under, no matter what price you choose or how much you write or how pretty your cover art is.

So to sum up:

$0.99 works well as a sale price or a short term price for launches.

$0.99 works great as a first book in series price for maximizing the number of readers and long-term income.

No price plan will ever work without the foundation of quality. Quality covers, quality editing, quality formatting, quality book description… and more importantly than all of those: a quality book that delivers on its promise and keeps readers engaged.

Thanks Annie!

I hope ya'll enjoyed the guest post today and learned a few new tricks, I know I did. A big thanks to Annie Bellet for this one. If you enjoyed the blog, please follow Annie on Twitter/Facebook/Tumblr.

If you haven't checked it out yet, please take a look at The Twenty-Sided Sorceress. Rachel loved it and it's free right now so no excuses.

As usual, please leave your comments below. If you enjoyed the blog, please follow Rachel on Twitter/Facebook/Tumblr/Google+ to never miss a post. Thank you as always for reading, and I hope you're getting lots of writing done this summer!


Tom Sweeney said...

I appreciate the work the guest poster did, and I love to see data that helps me make decisions, but there was no data in this article. I still have no idea if $.99 pricing for the first book works because actual numbers weren't used.

Just think about this for a minute. If you make up sales numbers that support what you believe, then the numbers--surprise--will show that your belief was correct. How does that prove anything. Had someone else made up numbers, he or she could 'prove' that any pricing scheme would work.

As an engineer, I am leery about results based on assumptions and opinions rather than data. I'm not saying that $.99 pricing for the first book in a series isn't beneficial, only that you cannot make up data and then say, "Look! See? Here's proof."

Personally, in the absence of data, I don't believe the scenario presented would happen because of several logic faults in the assumptions. The biggest logic flaw I see is that 50% of the people who buy Book One will buy Book Two without regard to the price differential of the two Book Ones.

Note how critical this assumption is to the final result. Much more likely is that the number of Book Two buyers who bought Book One at $.99 would be at least a little less. Maybe not, but this is the point of making assumptions. Let's assume that the number of Book Two buyers of $.99 first books is a mere 5% less, that only 45% of $.99 Book One buyers go on to buy Book Two, and let's assume that the number of Book Two buyers of $2.99 first books is a mere 5% more, that 55% of Book One buyers go on to buy Book Two.

"Big deal, so what?" you say? Well, that totally changes the results and now you have 'proof' that pricing a first book at $.99 will net you LESS money. Do the math.

Or as long as we are making assumptions, let's assume that Books One and Two are priced at $4.99. Now you will make less than half as much for Books One and Two by pricing the first book at $.99.

That's the problem with results based on assumptions. You can prove anything you want, just make the correct associative assumptions.

Annie B said...

Tom Sweeny- I based those percentages on my own experience and data I've collected from others, so they are loosely based on reality. Many writers I know, including myself, see about 2 times to 4 times the sales at .99 as at 2.99. Which I explained before I talked about the numbers. That's why I chose half the sales at 2.99 as at .99 for the example.

I used the 50% sell-through as my base line example because in my opinion, if your sell-through isn't at least 50%, something has gone wrong, which I also explained right there in the article.

If you want to see what my real numbers look like with my pricing experience, I posted about my own income here:
Which is to say, every example I give above, comes out of direct experience and direct data, even though it is being generalized so as to be used as an example. (My real life sell-through from a .99 first to a 2.99 second was over 70%, but I chose to use 50% in the example because that's where I would draw the line as a writer in if I need to fix something).

Baronger said...

Of course my excitement over a free book are dashed. I already brought it and it's currently I my too read pile. I love my kindle, and how I can now drag my read pile around.

Thanks for addressing mine, and others queries on loss leading.

This brings up another relevant point. If your writing in novella/novelette length you are not putting as much effort into each sale unit. Taking the 20 sided Sorceress as an example, it is broken up into novella segments. Thus reversing the long trend of lantern and longer books. I think we have reached the 70's in terms of word count for speculative fiction.

I agree a modern door stopper would be ridiculous if priced low. But if we go back to the Victorian, serial model it works. Take of two cities and Great Expectations for example are sold as a single book now, but were originally published in small segments. With today's fast paced life it might also be a better model too.

In hand with this it also allows side novels, where other aspects of the world/character/setting are explored. The best example I've seen is the side novels/short stories of the powder Mage series.

With this in mind would you recommend either building breaking points into the story, so they can be broken up into smaller units? What word count would you consider the sweet spot for length? Would you recommend writing the entire book first then breaking it up, or publishing as soon as written?

My own thought is writing them in 5 book segments, then selling them individually at a .99 price point but then also offering a discount option of buying the five combined with perhaps some extra material for 3.99. Plus you get to put some of the "darlings", side branches of plot, and the interesting character you had to cut or trim back in.

Annie B said...

Baronger- I wrote 20sided specifically that way, not as broken up segments. I never intended the books to be longer than 40k-50k words (the first two are 33k or so, all the others are 40-50k). The first four stand more or less alone though they go in sequence/chronological order. Books 5 and 6 don't because the main over-arching story comes in and becomes the main storyline. It's more like a season of a TV show than a broken into parts novel, if that explains it better?

Personally, I love writing short novels. I feel very comfortable at 40k-50k words and can fit a lot of story and character into that length partially because I come from a short story writing background. However, going forward, I'll be moving later books in the series into the 70-80k length and any other series I write will likely move into that length also (except the 5th Gryphonpike Chronicles novella, which will be about 30k). Longer works have more flexibility in how you can promote them and readers seem to prefer them. I think my books have done well *in spite of* their length, not because of it.

Lindsay Buroker said...

I'll often launch a Book 1 in a new series at 99 cents, in part because it may sell more copies and gain more visibility at Amazon, but also because I *know* I'll get a Bookbub ad on that book 6 months or a year down the road and drop it to 99 cents again. I want my regular readers to get the deal price instead of being bitter that they paid $5 only to see the book at 99 cents a few months later (I know *I've* been bitter when trad publishers have done this... and it's more of a difference for them: 9.99 to 1.99).

If I launch a Book 1 at 99 cents and it sticks in the top 250 of the entire Amazon store, I'll let it ride too. You're selling so many books and getting so many readers into a series then that if you have more books coming along soon, it can make sense. KU adds some interesting elements right now too. Like I've had my first SF book at 99 cents since it launched a month ago, and it's sold just shy of 10,000 copies at 99 cents, so not major income, but then it's had close to 2 million page reads in KU, which means it's making a lot more from borrows. And there are more full-priced books already out, so I want as many people trying the series as possible (Annie's 50% sell-through rate is pretty solid for me right now). I'll eventually raise the price (so I can discount it and get ads later), but there's nothing wrong with letting something ride if it's performing well!

Note: I say if 99 cents isn't getting you a ton of sales (or at least onto the first page in your category), then it's probably not worth it. I'd be iffy, too, if it was a stand-alone book with no series to follow. In KU, you can still do well with the borrows, but it's questionable whether you'll end up making more than you would at a 70% royalty point.

Thanks for posting, y'all! You're coming back on our podcast soon, right? :)

Pamela Kelley said...

Have you experimented with free on Book one instead of .99? I wonder if that could potentially earn out even better due to volume?

Annie B said...

Pamela- yep. I have a couple free first in series that do well (one of them was .99 for the first 9 months, then after I got a Bookbub on it as a freebie it did so well I left it free). It all depends on what you are going for. Sell-through from free book to paid second book is much lower in my experience (20-30% instead of 70%+ for me) but the volume is so much higher that it makes up for it.

Bob Simpson said...

This was a brilliant article. Thank you. I have a buddy who writes and I couldn't get anything substantial from him about prices or nets from a book priced at 99 cents.

Being a budding editor, I recommend that you edit this article to include written out numbers like book one and book two in your examples, especially if you are using price numbers in the same sentence or paragraph. "book 1" reads better if it is "Book One."