Our E-book Pricing Experiments
by Robert Rosenwald
Poisoned Pen Press, which now has about 700 titles in print, started publishing e-books in 2008 and began to focus seriously on them in the middle of 2010 when Amazon.com changed its basic royalty structure from 35 percent to 70 percent.
At the end of last year, we created a series of experiments with pricing. As I write in mid-March 2012, we are figuring out what we, and perhaps other publishers, might learn from them.
From the beginning, I felt that e-books were going to be the new mass-market format and that they should be priced accordingly. So we had always priced our e-books at $6.99, retail. Of course, some prices are discounted by Amazon and some earn only a 35 percent royalty, so we don’t always receive the $4.89 results from a 70 percent discount of $6.99.
Throughout 2010, we focused on converting all the titles in which we owned digital rights and on improving the quality of the e-books we had previously done so that readers would have a uniform experience. By the end of that year, we had 159 e-books published on Amazon.com and this record of monthly growth in e-book sales:
Throughout 2011 we put up more books and watched sales increase to a little over 2,800 units (and $11,600) in September, and then decline to 2,200 units in October and 2,000 units in November. By the end of last year, we had just under 300 titles available on all the major e-reader platforms. And then in December the experiments began.
Trying Two New Prices
On December 10, 2011, I selected 10 series, repriced one book in each (usually the first) to $0.99, and repriced the other books in each series to $4.99. And we waited and watched.
The first active mention of this special offer appeared on December 28 in The Poisoned Pen’s e-newsletter, which goes to 8,600 subscribers. My wife and partner, Barbara Peters, mentioned it again in her e-news of January 4, 2012, and then Poisoned Pen Press promoted it in an email we sent to roughly 3,500 subscribers to our e-newsletter on January 10. Nearly 10 percent of those who got our email and 3 percent of those who got Barbara’s clicked through to the page promoting our $0.99 special.
Starting on January 9, we ran two weeks of radio advertisements on Sirius/XM radio, directing listeners to addresses such as Mystery11.com and Mystery22.com. The ads played on a number of stations—appearing on MSNBC, CNN, CNN Headline News, Martha Stewart Living, Oprah, and more—and they occupied more than 800 minutes of air time over the two weeks.
We had only around 400 Web hits that were directly attributable to the advertising, so my guess is that the expenditure was not worthwhile.
On January 25, after the ads stopped running, I selected 13 other series and again priced one book in each at $0.99 and the others at $4.99, leaving the prices on the books in the first 10 series at those amounts.
Finally, on March 1 I took all the books with reduced prices, changed those prices back to the original $6.99, selected 11 other series, and repriced just one book in each of them to $0.99, leaving the others at $6.99.
Watching the Figures Change
So what were the 2011 and 2012 e-book sales?
The data are especially interesting on a more granular level.
Here’s a look at sales data for all our e-books compared to sales data for the e-books in the first promotion, which began during the week of December 10. (Remember that the prices of all the $0.99 and $4.99 Promo 1 e-books were moved back to $6.99 in the first week of March. Thus the data in the columns labeled “$0.99 Books” and “$4.99 Books” refers to sales of the books that were priced that way as part of the first promotion, and not to the price of those books in every week listed.)
The graph below shows the relationship of earnings from Promo 1 books to earnings from other e-books.
We compiled the same data for the Promo 2 books from 1/25/2012 until the beginning of March.
We looked at graphs of e-book sales from January through November 2011, and from January 2011 through March 2012.
Although I am not ready to draw conclusions about what all this means, our experiments with pricing seem to show that:
- Offering a $0.99 special had dramatic impact on the sales of all our e-books.
- Consumers seem to perceive little difference between the value of a book priced at $4.99 and one priced at $6.99.
- There is reason to believe that the increases in sales generated by the $0.99 promotions will continue after prices return to their previous levels, although at this writing we have only three weeks of relevant data.
Only time will tell whether the 99-cent strategy will work over the long term. But if I am right that e-books are the new mass market format, then people with e-readers are and will be purchasing in much the same way that people have traditionally bought mass-market books. When they walk into a bookstore that has the kind of books they like, they buy everything they can afford while it is in front of them, because they may not remember later and because this is what’s available now. Clearly, e-books are here to stay and will be a significant part of any publisher’s business. Less clearly but quite possibly, short-term changes in price can play a significant role in maximizing sales.
Robert Rosenwald is president of Poisoned Pen Press, which was spawned in 1997 from The Poisoned Pen bookstore founded and run by his wife, Barbara Peters, and has become the country’s premier independent publisher of mystery fiction. To learn more: poisonedpenpress.com.