Dan Poynter and I presented our Ebook Revolution presentation this weekend at the San Francisco Writers Conference.Attendees were given a crash course in how to produce, publish, price, distribute and promote their books as ebooks.
The Powerpoint is embedded below. (Click here to download a separate audio recording of the presentation - will open a new browser window, then click on the "Download File" link)
As promised, I presented *preliminary* data based on a quick study we did at Smashwords to determine if certain ebook price points yield authors and publishers more revenue. For example, we all know if something is cheap, we tend to consume more of it. If the price goes up, we consume less.
So how does this rule apply to ebooks, and at what price can ebook authors and publishers expect to yield the highest total revenue, defined by price multiplied by units sold?
We examined 13,500 recent sales at Smashwords. We aggregated the sales data into 50 cent price ranges from $.99 and up, and then divided by the number of titles represented by those sales. This gave us the average sales per title per price point. The vertical axis is deliberately left unlabeled because I'm more interested in the visual representation of how titles in different price ranges perform in relation to one another. Scale, however, is apparent in the horizontal lines. The third line is triple the first line, and the second is double the first.
I expected to find a single price as the magic sweet spot, but instead, our data suggests there may in fact be a few sweet spots. $5.00 and $9.00, for example, look like promising price points that deserve further study.The highest yielding books, on average, are those with higher prices. Before you all run off and raise your prices over $20.00, I'd caution this data is subject to error and misinterpretation.
The data doesn't take into consideration genre, the length of a title, the quality of a title, the age of the title, or the success or failure of the authors' marketing. Although we looked at a large sample, most of these sales were under $10.00 because most Smashwords books are priced under $10.00. Although the data is normalized to account for this, results for titles priced over $11.00 are less statistically relevant because they reflect fewer titles.
On the surface, it wouldn't be such a huge surprise that authors and publishers can make more money at $20.00 than $2.00. In order for the $2.00 book to beat the $20.00 book, the $2.00 author would have to sell ten copies for every $20.00 copy sold. The supply curve isn't so elastic that readers will read an unlimited amount of content at lower prices. A reader's time is limited, and the reader values their time, so it would make sense the reader is willing to invest good money if they know it's for a quality read. The possible lesson here, and it's a bright note for authors with the ability to develop high quality content, is that readers will pay for your content if it's worth paying for.
I think the data raises more questions than it answers, so I plan to dig deeper. In the months ahead, we'll look at larger samples and better-tuned sample sets. I'll share the more enlightening results with you here.
The conference was excellent, by the way. If you're a writer and you want to improve your craft and knowledge of the business, I'd definitely recommend the conference in 2011. Agents Michael and Elizabeth Pomada, the conference organizers, did an excellent job of pulling together a writing conference that was both entertaining and educational. Thanks also to the dozens of conference volunteers who helped make every session run like clockwork.
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