While we can’t see many reasons why you would want to sell your book at a price higher than $9.99 due to the royalty issue (see our blog How does Amazon drive the price of ebooks?), there is a school of thought that believes it’s a good idea to sell your book at $0.99, despite the fact that Amazon significantly reduces the margin it offers from 70% to 35% for books which retail at a price point between $0.99 and $2.99. Why? Because a lower price, in theory encourages more sales, more sales lead to a higher sales ranking on Amazon, and with higher exposure and visibility your book begins to appear on other book pages under the ‘customers who bought this item also bought…’ If it works, this strategy may also build you a tribe of followers who will be eager to read your next masterpiece.
In theory it sounds great. In reality, there are plenty of disadvantages including no guarantee that a low price will lead to increased sales, the fact that you will need to sell at least six times the number of books to obtain the same income and that a low priced book might also have a low perceived value.
If we put the question of royalties aside for the moment, the price you choose really depends on three things; what type of book you have, the perceived value it has to the reader and whether you wish to increase income or exposure. Selling a book for $0.99 might work if you are writing a short book about vampires and teen romance but will probably be less effective if you are writing a history of the world as readers may question why it’s so cheap. The key is to find a price that maximises both profits and number of books sold. The ‘crux’ as we call it.