Introduction
Since the introduction of ebooks in 2008, ebook sales have enjoyed steady gains that have reached an astonishing 4,660% upsurge, according to BookStats. The digital format has given authors a new venue to distribute and earn from their work. Self-publishing has provided authors with a lower barrier to entry, thanks to its freedom from the limiting financial costs of paper and printing. The ebook format is also especially compatible with social marketing, i.e., marketing using social networks such as Facebook, Twitter, and Linkedin, so ebooks can now be advertised to the market even without the massive fund backing of a big publishing company.eBook Explosion, a service offering of Social Commerce Inc., has been marketing ebooks using social media since 2007, which also happens to be the launch year of the Kindle eReader. This report is compiled using data from sales of 2,265 titles marketed using more than 25 social media assets, such as Facebook pages, LinkedIn e-groups, and Twitter accounts.
The Price Factor
One key factor we were able to identify while analyzing our data was the effect of the ebook price on both sales and pricing. Sales is measured in terms of two sets of conversions, i.e., how many people who saw the post about a book clicked on it (impression-to-click coversion), and how many people who clicked to get to the product page at the ebook seller’s site (such as Amazon) actually bought the book (click-to-purchase conversion).Obviously, ebook pricing is not the only factor for coversion. The number of people who show interest in a book versus those who buy it will also be affected by other factors such as how compelling the book description is, what rating and reviews the book has received, and whether or not the targeted reader is interested in the book’s topic.
Figure 1 shows the scatter diagram of the click-to-purchase conversion at various price points for a statistically significant representative subset of the ebooks selected from the 2,265 titles sold using our social media channels over past 18 months:
Figure 1
And here is Figure 2, which shows average conversion for the $0.99, $1.00–$2.98, $2.99–$5.98, $5.99–$12.99, and $12.99–up price ranges:
Figure 2
As Figure 2 shows, the average conversion rate went down from 13.2% at the $0.99 price point, to about 1% at the $12.99 price point. In other words, the lower the ebook’s selling price, the more likely it becomes for just-lookers to turn into actual buyers.
The Cost of Selling
But Figure 2 only tells half the story. Aside from the ebook’s price, we also need to consider the amount of funding involved in reaching out to the customers.Usually, the cost of an impression – whether you run a paid campaign or post a link on a Facebook page, a LinkedIn eGroup, or a Twitter account – is fixed.
The question is, does the volume really make up for the margin? Or is there a sweet spot between the $0.99 price point (which is the lowest price point allowed on most ebook platforms) and the around-$15 price point, which is common in the print world?
At this point, you need to examine your marketing objective: Are you looking to spread the word about your book, which is reflected in sales volume? Or are you simply looking at net earnings?
Also, what’s the effective cost you’re paying per impression? If you’re lucky enough to have millions of followers on your free social media accounts, the cost of impression will be low. However, if you’re using paid marketing for services like eBook Explosion, or to buy ads directly from Facebook, Twitter, LinkedIn or Twitter, you should consider the blended cost per impression or per click.
Figure 3 attempts to take into account the cost of impression or click. Basically, we took the sales data for 2,265 different ebook titles over the past 18 months, and then we used the blended cost that we paid (on behalf of our customers) across Facebook, Twitter, LinkedIn, and blogs.
To make our comparisons “apple to apple,” so to speak, we also took into account the following factors:
- the previously mentioned data that people are more likely to click at a post advertising a book with a low price such as $0.99 rather than one with a high price or no price stated, and
- the effect of book price on royalties earned, considering that ebook platforms such as Kindle give only 35% royalties for ebooks that are priced below $2.99 or above $9.99, compared to the 70% royalties given for ebooks in the $2.99–$9.99 price range.
Figure 3
Conclusion
Our analysis shows that the ideal price range to optimize ebook profitability is the $2.99 to $5.98 range, which gives an average return on investment at 58%. The inflection point is at $2.99 because although sales volumes below that price are higher, these volumes do not make up for the reduced reduced royalty rates. On the other hand, the higher prices above the $5.99 price point do not make up for the sharp decline in sales volume.The price of a digital product greatly influences the whole purchasing process since it affects the ebook buyer’s most important step: the final decision. If you are an author and you plan to publish your ebook, make sure you weigh in this information and strategically price your work, because doing so can spell the difference between being an ebook bestseller and being just another commodity in a great big marketplace.
About Us
eBook Explosion, a division of Social Commerce, is a premium provider of social media marketing services to authors, publicists, and independent publishers.More than ten thousand e-books authored by our clients have been downloaded by readers in
- the United States,
- the United Kingdom,
- Australia,
- New Zealand,
- Germany,
- France,
- Italy,
- Spain,
- India, and
- 45 other countries!
Click here to take that important first step in making your book known to the world!
+1 650 587-5883
SOCIAL COMMERCE, INC.40087 Mission Blvd., Suite 294
Fremont, CA 94537, USA
