This is not a one-size-fits-all answer and responses spark controversy in many writing forums (fora) as themes of book valuation, author’s time/effort, and the future of e-publishing come into play. Without getting overly opinionated, let’s look at some options.
Of course, in e-publishing the author may set any ebook price she/he wants. There are a few main options depending on the length and quality of book itself, factored in with the goals of the writer. Let’s run through some e-publishing situations, which might help you decide a price-point for the sale of any ebook. Because Amazon Kindle is currently the king retailer of sales, they will be my example for figuring royalties. Other retailers will have similar numbers, like for Barnes & Noble Nook and Apple iBookstore. Also for Amazon UK or Germany note this;
Amazon.co.uk and amazon.de list prices that are set automatically based on your US Dollar list price are converted using the exchange rates in effect on the date that they were initially calculated. If the converted list price would be outside of the minimum or maximum list price (see below) we accept for the currency, your list price will be converted so that it is equal to the applicable minimum or maximum list price for that currency. List prices automatically set for your existing books are displayed in the above table.
The list price you provide is VAT-EXCLUSIVE. The VAT we will add for sales to customers in EU countries from amazon.co.uk and amazon.de will be 15%. VAT rates, where applicable, vary for other countries.
Option #1 – $2.99 to $9.99 range. This is where many Indie authors will price ebooks because this range offers the highest royalty payment at 70% of the sale going directly to the author. That’s a nice royalty! Any more or less of a price reduces the payment in half. (Yikes, what a difference.) My novels are priced at the lower end of this spectrum ($2.99) while my How-To books are priced closer to the middle ($4.99). Some Indie authors who are just starting out price ebooks at the higher end of this spectrum and typically have very slow sales. Is your ebook worth $9.99? Of course it is, but many readers are unwilling to pay that for an Indie author so it’s a risky price-point. That’s not my recommendation, but you can always try it and lower the price later.
Option #2 – 99 cents to $2.98. In my opinion, this price range should really just be for 99 cents since that’s the lowest Amazon will allow an Indie author to price an ebook and so many books are listed at 99 cents. This range offers royalty payments of 35%, so a 99 cent ebook makes 35 cents per sale while a $2.98 price gathers $1.04 (and charging one penny more at $2.99 makes double the royalty of $2.09). For obvious reasons, you won’t find ebooks at Amazon priced for $2.98. Typically, all ebooks in this range are for 99 cents. The philosophy is to make the sale attractive to bargain hunters as Kindle owners are notorious for loading up on cheap ebooks (even if they don’t read them– weird). You may ask, “Can an author really make money this way?” Absolutely YES, by selling volumes and volumes. John Locke is famously doing it and even has an ebook out explaining this price-point and its benefits. Amanda Hocking is fast becoming a millionaire on 99 cent ebooks (mixed in with her $2.99 prices). Even friends of mine like Joan Reeves are becoming major successes with 99 cent ebooks, selling tens of thousands each month. This option makes a lot of sense for authors with multiple books. Readers finish one and happily move onto the next. The idea is to produce new books routinely, even if they are short, to keep readers buying new books. It can also be a good way for an author to get a reader-base going even for just one book.
Option #3 – Free. Give it away for free because many readers LOVE freebies. This option makes sense if your soul purpose is to establish many readers quickly and get the ball rolling with sales and reviews. You may say, “Okay, but how since Amazon doesn’t allow Indie authors to publish free books?” It’s called price-matching from another retailer like Smashwords, where you can set the price at another venue to anything (including free). Once the ebook is available elsewhere for free, Amazon bots will eventually discover the cheaper price and set the Amazon price to match. Voila, your ebook is free on Amazon and suddenly being downloaded by thousands of Kindle readers. You make no money, but the rewards of gaining readers and other possibilities of networking may be worth that. Eventually you can make adjustments at Smashwords and then at Amazon to raise the price once a buzz has already been created. (Notice that it may take weeks or even months to get all of the prices properly changed at multiple ebook retailers and a fair amount of working with customer support.)
Option #4 – Sell it for $10 or more. This returns you to the 35% royalty range, so an ebook that is priced at $9.99 will earn $7 royalties, but a higher priced ebook would have to sell for $20 to make the same $7 royalty. This makes absolutely no sense to me, as Amazon should have an intermediary royalty, unless you plan to sell your ebook for much more than $20. Will it sell for more than $20? Possibly, but it’s highly doubtful as we have entered the age of inexpensive media in all forms.
Below is the list from Amazon explaining all the ebook pricing and specifications.
* Please note: 70 percent royalty option applies only to purchases of qualifying Digital Books by customers in the U.S., U.K., Canada, Germany, Austria, Switzerland, Luxembourg, and Liechtenstein.
That’s the skinny of how to price an ebook. My advice for price points are these 5 choices: Free or 99 cents or $2.99 or $4.99 or $9.99. You decide depending on your book and your goals.