Set Your Kindle Book Price to Optimize Revenue
Author – Che
Category – Author Spotlight
When people ask me what price they should set their Kindle Book to, they’re often surprised by my answer.
“$2.99,” I tell them without reservation.
How can I be so quick in providing a one-size-fits-all response? The answer becomes apparent once you do a little math.
First, we need to go over some background information. Specifically, we need to review Amazon’s royalty structure, which I think you’ll find is quite generous. Amazon is willing to pay you 70% of your Kindle book’s selling price if three simple criteria are met.
- You price your book between $2.99 and $9.99.
- You sell your book for no less through a competitor.
On top of that, Amazon won’t let you set your book’s price less than $0.99 (the exceptions are Kindle Select program free promotions and countdown deals).
Armed with this information, we can now do a little math. Watch what happens to your revenue in the following price comparison chart as your Kindle book price rises.
Price > Royalty > Revenue
$0.99 > 35% > $0.35
$1.99 > 35% > $0.70
$2.98 > 35% > $1.04
$2.99 > 70% > $2.09
$3.99 > 70% > $2.79
Notice that pricing a book at $0.99 (below $2.99) generates a 35% royalty revenue of only $0.35 per sale. The $1.99 price point doesn’t fare much better since you receive only $0.35 for each $1.00 increase in book price. This is true right up through $2.98. Then, when you add that extra penny by setting your book price to $2.99 you receive a 200% increase in your royalty rate doubling your revenue from $1.04 to $2.09.
Increases of this magnitude are represented in charts as a nearly vertical line.
What’s that vertical line pointing to? You got it, that’s the sweet spot I was writing about earlier, and it occurs at exactly the $2.99 price point.
“Wait for a second,” you say. “I noticed that those revenue numbers keep increasing at a rate of 70 cents for every dollar increase in the book price. Why don’t I set my book price to $3.99 or even $9.99?”
The answer is again obvious: competition. As a newly published author, you’ll be competing with thousands of published authors for readership. Your ace in the hole for winning that competition is the quality of your product. But nobody is going to know how good your book is unless they buy it.
Price is your first impediment to getting your book into the hands of your readers. Honestly, you may even have to reduce your cost to the dreaded $0.99 level to compete, depending upon your genre.
What’s so wrong with the $0.99 price point? You receive 1/6 of the revenue you would receive by setting your book price three times higher to $2.99. You have to sell a lot of books at $0.99 to make any money.
So, if you write short, then bundle your work. If you write long, break it into a series. To optimize your Amazon Kindle revenue, write to the $2.99 price point.