The Hard Facts About eBook Pricing

RedPalm_FT_fAs the head of the publishing venture Apocalypse Weird, and the founder of the author support service ThirdScribe, I pay A LOT of attention to the production cost and sales pricing of books.

And when I say “a lot” I don’t mean as a passing fancy. I mean as daily spreadsheet tracking, bottom line trimming, “holy crap how are we going to make this work” kind of attention. I would hazard to say that at this point there are very few people on the planet more familiar with the costs of book production than me.

Since February, Apocalypse Weird has published 10 books, with two more due out this month. We’ve also been running an Indiegogo campaign to build the bank for production costs (yes, feel free to go and contribute to that right now, I can wait!). Apocalypse Weird books retail in digital for $3.49. One of the new AW authors, Jon Frater, recently wrote how a friend of his would never pay more than 99 cents for a digital book, saying there was simply “no reason” to pay more.

Hey, I get that. I do. I mean, it’s just a digital copy of a book, right? It’s not like it’s paper or anything. And, there’s the cost of the tablet/e-reader, too.

99 cents… Man, that’s just a lot to spend!

How about, just for fun, we have a frank chat about the cost of books? Ready? Let’s go!

Getting Your Money’s Worth

Before I delve into the costs behind producing that 99 cent book, let’s compare a few forms of digital entertainment:
Ebook ($0.99+) Generally about 50,000 words or more. Approximate entertainment time: 3 hours. Number of partial or re-reads: infinite.

Song ($1.29) Approximate entertainment time: 4 minutes. Number of partial or re-listens: infinite

Digital Comic book ($2.99+) Approximate entertainment time: 5 minutes. Number of partial or re-reads: infinite

Movie in theater ($9 matinee) Approximate entertainment time: 2 hours. Number of partial or re-watches: zero.
Looks to me like a digital book stacks up pretty well when you compare entertainment value with other digital media, even at a much higher price. Once could even argue that pricing it the same as a movie would still be pretty fair. Most don’t, except for the big publishers, but when you break it down to an apples and apples comparison, you can see that ebooks provide a pretty good bang for your entertainment buck.

Looking for some good books? Try these!
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Back To The Costs of Book Production

So, what does it cost, exactly, to produce a quality book?

Writing the Manuscript

First, let’s start with the writing of the manuscript. Some authors can just grind them out, some take a year (or years). That’s pretty hard to bring to a normal, so let’s just base that cost on some reported numbers and call it $10k.

Self published and most small press published authors don’t get an advance, but it still takes time and, as they say, time is money. After all, I’ll posit that many authors could be making a lot more money by working extra hours in a part time job than they would selling books. For most writers, it takes a while until their writing career can sustain them — if it ever does. And, while it may be a labor of passion, that isn’t what pays the mortgage.

Writing is a choice to use time to create something — but, that choice means you’re not doing something else, something business people call an “opportunity cost”, and that is what a publisher’s advance is supposed to be about — paying the author to write the book. And, on average, that’s $10k (but, often quite less).


Once you have that glorious manuscript finished, you need to send it to an editor.

There are a lot of people out there who think they can “self-edit” and I would say they are deluding themselves. Good books require good editing. Period. And, good editing costs.

How much does an edit cost? Industry average for a line edit is 2-3 cents/word, or 30-40/hour. Breaking that down to a 50,000 word novel, you’re looking at between $1,000 – $1,500. Now, that’s hard cash. There is no “I’ll pay you out of my earnings” when it comes to editors. They know the chances of your book becoming a best seller with a movie deal — it’s a cash service. You may be able to get a better deal with some editors, or, if you use Author Solutions or any of it’s branches, you’ll probably get a lot worse.

As an average, $1200 or so is a pretty fair guide for a novel.

Cover Art

Now, what about that cover art? I’ve seen the costs for covers range from $65 to $1500. Amazon pays it’s cover artists $1500 a cover. Jason Gurley, when he was doing covers, charged independent authors $750 a cover. You can get some decent bargains for the $400 range. I’ll go with $400 just for this article — but, generally, better artists are looking closer to $750.

Do you need better cover art? Yes. Yes, you do.

There are over 3 million ebooks on Amazon — a cover is not only essential to standing out from the crowd, it is the first hurdle to cross when convincing a potential buyer that your book is a quality read that’s worth their time and money.

Cover art is the first hurdle to cross when convincing a new reader that your book is a quality read



Now, with your complete, edited manuscript and quality cover art, you’re primed to get that thing ready to publish — which means formatting it into three versions: mobi, epub, and pdf. Mobi is for Kindle, ePub is for everyone else, and pdf is for print. If you have the time and the skill, you can do all of this yourself using tools like Sigil, Calibre, Scrivener, or others. But, you’re probably better off paying someone to do it, which will range between $60 and $200, depending on the formats you want and the time you want it in. Why? Again, because quality counts and time really does cost.

Formatting is one of those things that is generally worth paying for when you get to novel length. For our purposes, I’m calling it at $100.


Your ebook is complete and uploaded — Happy Day! Time to market it!

What, you think books market themselves? That cream rises to the top? Well, if you think that, you’re an idiot. Promotion costs. Period.

Now, there are a ton of ways to throw away money with advertising, but there are a few smart ways well. The smartest is to invest long term with an author newsletter. But, even with that, you’re going to want to make a push or two with a sale or paid ad. The most effective book advertising right now is BookBub.

In our genre (sci-fi), a BookBub promotion (if you can get one) is $400+ for a book you intend to sell (it’s $200 if giving it away for free). Advertising, especially for books, works best when combined with a sale, i.e. you reduce price to 99 cents. That doens’t mean you get 99 cents. No such luck. It means your take home per sale goes down from 70% of cover price ($2.09 for a $2.99 ebook) to 35% of cover price (or 35 cents/copy during a 99 cent sale).

To make your ad money back — not to mention making a profit! — you need to sell a ton of books. Most books don’t sell enough to make their money back, but they do a decent job of expanding the audience. The goal is to use the promo/sale combo to move more copies and entice readers to buy some other full price books in your list.

Cost for advertising: $400.

There are also tons of other costs involved — website, taxes, newsletter service, graphics, flyers, banners, convention tickets, etc, etc, etc. But, I’m actually going to leave them off the table for now. For this article, it’s just basic, bootstrap costs.

Tallying these up…

Editing: $1,200
Cover Art: $400
Formatting: $100
Promotion: $400
Grand total: $2,100 ($12,100 if you count the author’s time).

That is a real, no bullshit, actual, honest to God cost of what it takes to produce a quality book in the digital age.

With these costs in mind, we can now have a real discussion on the pricing of books. Moving on…

The Hard Numbers of Book Pricing

Once you’ve made your book and uploaded it to all of the many platforms you can find, it’s time to make your money back. The first (and biggest) question is how to price it?

A big part of ebook pricing boils down to Amazon.

Kindle books priced under $2.99 and above $9.99 only get 35% of the cover price, Amazon keeps the rest. Other book stores — nook, Kobo, iBooks, etc — followed their lead. If you price between $2.99 and $9.99 you get 70% of the cover price. That’s right — double.

Undoubtedly, you’ve heard of John Locke and how he sold a million copies by pricing his books at 99 cents a piece, right? He wrote a book about it. Yeah, that was pretty awesome. Guess what? His books are now ALL priced at $2.99.

Why? Because 70% of 2.99 is a heck of a lot better than 35% of 99 cents.

With that in mind, you know you’re looking at $2.99 or above, because after shelling out $2,100 you want to earn some money back. But, how much above?

The Big 5 publishers fought really hard with Amazon to be able to price ebooks however they want. In addition to that, they get better terms than most people do. You’ll see a majority of their books (especially new ones) at $9.99 or above — the latest Alex Cross novel by Patterson is priced at $15.99 for the Kindle version.

Hugh Howey and the Data Guy over at Author Earnings have calculated that the best price range for books is $4.99 or less. That price range provides a good return for the author and is not overly expensive for the reader. Basically, it rounds out to 99 cents/hour of entertainment, and, when you get right down to it, that’s a pretty good rule of thumb for pricing.

Based on the cost per hour of entertainment, you should be pricing short stories at 99 cents and full novels between $2.99-$4.99.

Apocalypse Weird books are $3.49, which gives us a gross from Amazon at $2.44 a copy. Remember that number.

Speaking of Apocalypse Weird books… Check these out!
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The Hidden Costs of Sales

To earn back your actual production expenditures, at a $3.49 cover price you have to sell a minimum of 860 copies. At a 99 cent cover price, you have to sell 6,000 copies.

6,000 copies is a LOT of copies. That’s 16 copies a day, every day, for a year. Just to cover your costs. There are a lot of authors — both self and traditionally published — that would kill to sell 16 copies a day.

However, to make 860 copies, you only need to sell a little over 2 books a day.

Which do you think is the better business decision?

The smart authors and publishers pay close attention to the same numbers I do. The same numbers John Locke and Hugh Howey do. 99 cents may move some copies, but it doesn’t generate revenue. And, with an industry average of less than 2% click rate on ads, paid promotions won’t be used as much, either. Why? Because everyone is doing it — which means no one is paying attention to it anymore.

Books at $2.99, $3.99, $4.99 — these are great prices for a book. Never in the history of books have readers been able to get better quality for such a low price. Never.

But, everyone is on the hunt for something cheaper… Here’s how you can get it.

I’d advise you to start signing up for author and publisher newsletters

How Readers Can Get Cheap Books

If you are a bargain hunter looking for cheap, quality books, I’d advise you to start signing up for author and publisher newsletters because that’s there those deals will be coming from.

Over the last year, authors and publishers have all learned a pretty powerful lesson: paying to take a loss sucks.

I’m happy to give loyal customers a price break. Heck, I’m happy to give books away for free as long as those receiving it promise to leave a review. But, it’s really hard to reduce price AND pay to promote that reduced price. Simple economics begin to prevail.

At $400+ a pop, an author has to sell 1,143 copies just to break even on a BookBub promotion of a discounted book, widely accepted as the most successful book advertising service right now. Given that BookBub has a average sales rate of 1,640 books for their promotions (in Science fiction, my genre), that’s a tall order. Even if you make the average (average, not the median, mind you), you’re only going to clear $173. Not a whole lot — and more risk is involved there than you think. It is not a guarantee.

I’ve found that successful authors and publishers resist the race to the bottom of the pricing barrel, and instead cost their books at a sustainable price. Every so often there’s a price drop and something goes on sale, just to keep things warm — a week at 99 cents here, a Kindle Daily deal there. But paid ads? Ehh… sparingly. Very sparingly.

If I decide on a 99 cent sale and announce it only to my email subscribers, I may sell less copies than if I run a paid ad campaign. But, I also don’t have to eat 1,143 copies to pay for that campaign. So, I focus on building that email list. It’s the only sustainable business model.

Again, if you’re a bargain shopper looking for cheap books, I suggest you either support a crowdfunding campaign or sign up for a newsletter. Luckily, the Apocalypse Weird has both… 😉

Apocalypse Weird books are currently 30% off if you get them through the Indiegogo campaign. And, we’ll be announcing future 99 cent sales via our newsletter.

Here’s how you get there:

Support Our Indiegogo
Join The Newsletter


About Rob McClellan

Rob is the founder of ThirdScribe, a unique author services platform and social network. As a naval officer and diver, he spent a majority of his career doing a lot more than you would think with a lot less than you can imagine — a skill that has proven extremely valuable in the start-up world. You can follow him on Facebook, Twitter or Google+.

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