None of this bodes well for the publishing industry. Why? Well, 99 cents and $2.99 works for self-published authors, but it’s probably not going to cut it for traditional publishers or the authors who sign on with them.
As Carnoy reports, just last year, the magic price point for a lot of indie authors was $2.99. Because if you price your e-book at $2.99 or higher, you get a higher percentage royalty from Amazon when using its Kindle Direct system, or from Barnes & Noble when using its PubIt publishing platform.
But if you drop below $2.99, you end up with a much lower royalty, but it’s still better than what you get on an e-book from a traditional publisher (25 percent of the net sale, which comes out to around 17.5 percent of the price of the book). Given that, you’d think that most people would choose to go for the higher royalty, which most did. We’ve also seen a dramatic increase of self-published authors bypassing traditional publishers altogether and controlling their own destiny, partly because publishers can’t and won’t sell e-books at that level because there’s no profit in it to do so.
Some authors started saying, “Screw it, I’m not selling that much at $2.99, I’ll just go to 99 cents and see what happens.” And bam, some of these books took off. And some really took off.
So like selling most anything, setting the right price for your e-book is key, and it takes constant adjusting and some trial and error in order to get it right.