Tuesday, September 3, 2013

Before you can set a price on your book, you need to know several things.
1.            What did it cost you to produce and publish it?
2.            What are the distributors’ and/or retailers’ fees for each book sold?
3.            What is your “valued” competition charging for like titles?

Let’s think outside the box for a minute. You are grilling out steaks tonight. Are you buying your steak at the dollar store, or are you going to the grocery store or wholesale club to get them? Why? The steak at the dollar store is only \$1, and the grocery store, steak is probably a minimum of \$5 or \$6 for the lesser quality steaks. The same thing you are thinking about that dollar store steak, and yes, there is steak at a lot of dollar stores, is what people think about books sold at \$0.99.

Formula:  Word count ÷ 250 = eReader pages

Pages                    Price

001-100                \$2.99
101-200                \$3.99
201-300                \$4.99
301-400                \$5.99
401-500                \$6.99
501-600                \$7.99

Now let’s say after the retailer takes their cut, you may get approximately 50% of the purchase price from the retailer for each book sold. (Careful of the retailer/distributor fine print like Amazon taking a much larger percentage if your book sells for \$0.99 instead of \$2.99 or more.)

Formula: Cost ÷ Net from retailer = Base # of books
Formula: Base # of books + 10% returns = # books required to break even

Example: 60,000 word paranormal romance with total costs of \$700
To find purchase price: 60,000 ÷ 250 = 240 ebook pgs = \$4.99 retail price
Find net from retailer (assume 50%): \$4.99 * .5 = \$2.49
To find books to sell: \$700 ÷ \$2.49 = 281
Add in 10% average return rate: 281 + 10% = 310
It will take 310 books to break even on this title. Not too bad.

But, what if you sold the same book for \$0.99?
Find net from retailer (assume 30%): \$0.99 * .3 = \$0.29
To find books to sell: \$700 ÷ \$0.29 = 2414
Add in 10% average return rate: 2414 + 10% = 2656
It will take 2656 books to break even. This is going to take a very long time for most.

Why is breaking even important? Tax implications and ability to write full time