Skewed Pricing Incentives

I have to say that one of the things that annoys me the most about Amazon is the way they skew prices because of their arbitrary payouts for different price points.

For those who don’t know: Any title priced under $2.99 or over $9.99, the author is paid 35%.  Between that range, the author is paid 70%.

It means that authors either end up setting prices higher than they’d like to (or lower if they want to price above $9.99) or they end up publishing material in a different manner than they would prefer to.

Let me give you a recent example that led to me unpublishing a handful of titles.

I have some short sweet romances I’ve written that are all about 5,000 words long.  Because there’s nothing sexy going on in them, I’ve been publishing them at 99 cents each.  They sell at that price point and no one complains about them being too short, so they’re a viable product.

(I HATE seeing people who haven’t tried publishing anything making arbitrary statements about what is too short and what isn’t when they have no clue what the market will or will not accept.  But I digress…)

I also bundle every five stories together and offer that at $2.99 because some people do want a longer read when they buy or download and I don’t mind offering the stories as a bundle at a lower price, because it’s easier to get someone to buy once than it is to get them to buy on five separate occasions.

My preference would be to offer both the single standalone stories and the collection to readers and let them choose which they prefer.  To some readers paying 99 cents is an auto-buy but paying $2.99 is enough to make them pause and six bites at the apple are better than one.

Unfortunately, because of the way Amazon has set up payouts, I realized this weekend that it doesn’t make sense to offer both.  It costs readers more money if they buy all five individually AND I earn less money from it.  (If they read through KU, it’s pretty much a wash.)

Let’s do the math:

5 titles at 99 cents is basically $5.  If I’m paid 35% of that amount, I earn $1.75.

1 collection at $2.99 paid at 70% is $2.09.

By offering all five in one collection at $2.99, I earn thirty cents more for the purchase of those five stories AND my readers pay $2 less.

It decreases visibility, unfortunately, because fewer titles out means fewer chances for someone to discover one of the stories and read the rest.  But, honestly, I don’t think I can justify offering anything at less than $2.99 at this point unless it’s part of a limited-time promotion.

It costs my readers and it costs me and the only one who makes more off of it is Amazon.

I wish we just had flat payouts across the board for all price points.  (And that the lowest price point was closer to 50 cents.)  But I can’t control Amazon.  All I can do is react to the choices they make.

This is also one more item to list in the “write novels not shorts” column.  (To me it’s not that shorts don’t have a viable market, I think they do, it’s that advertising and payouts are all built to encourage a focus on novels, which is really too bad.)  Fortunately for me I have a 100K novel to edit and it’s part of a trilogy, so time to dig in and work on that puppy.

About M. H. Lee

M.H. Lee is a speculative fiction writer currently residing in Colorado whose stories are sometimes dark, sometimes funny, sometimes darkly funny, but hopefully always thought-provoking and entertaining.
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2 Responses to Skewed Pricing Incentives

  1. Dave Higgins says:

    The balance between the options changes slightly if you factor in returns:

    A reader buys a short and likes it enough to buy a second; they don’t like the second one so return it and don’t buy any of the others. Total $0.34

    A reader buys a collection and likes the first story but not the second, so they return the collection before they run out of time and don’t buy any others. Total $0.00.

    How much difference that makes is hard to judge.

    • M. H. Lee says:

      Good point, although honestly my return percentages are low enough that I don’t see that as a real factor. I do have some returns, but they’re mostly the “read the entire series for free” types and then it doesn’t matter what format I choose, they’ll return them no matter what.

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