Monthly Archives: May 2011

Your Book Costs How *#&! Much? Part 1

As a professional economist, I thought I knew something about pricing. The higher the price, the less people buy, right? After all, don’t demand curves slope downward?

Well, yes, they do, but putting theory into practice is more difficult than I expected, particularly in retail sales world.

I was schooled in this lesson the hard way when I published my first novel, The Pirate of Panther Bay. We made the mistake of trying to compete with the major traditional publishers. Most paperback teen novels were selling for $8 to $10. So, we priced The Pirate of Panther Bay at $8. Big mistake.

What we failed to realize was that our book didn’t compete in the same market as the big traditional publishers. Our readers were different, their willingness to pay was higher, and our costs were much higher. Traditional publishers have access to national markets with a very broad readership base and well established distribution system. Their authors increasingly have their own established marketing platforms. They are selling to the broadest market possible because their distribution networks can support that level of sales effort. Their books are routinely reviewed at key places such as Booklist, Library Journal, Kirkus Reviews, major newspapers, and picked up by major bricks and mortar book stores and chains. The big publishers are capable of selling hundreds of thousands of copies of (the right) books through these networks, allowing them to price them very low. Indeed, they depend on the “mass” in “mass market.” That requires exceptionally large volumes at very low prices in very large, broad-based markets.

Because we were a small press (and a start-up to boot), we weren’t competing in that space. For us, 10,000 copies sold would be grand slam home run, not 500,000. We were building our network and starting with virtually no distribution or marketing platform. Not surprisingly, the “small book” market functions very differently than the “big book” market, and our failure to understand the difference significantly undercut the financial viability of our debut book project (The Pirate of Panther Bay).

Our pricing strategy is a case in point. First, since we didn’t have a broad distribution system in place, we were really focused on selling to a niche market. Our initial customer base wasn’t going to be thousands of general readers. It was more likely to be hundreds and, if we were lucky, thousands, mainly in the area of teen fiction with a strong interest in action stories with pirate themes. We simply weren’t realistic about what we could achieve as a small, start-up press with no existing distribution network, and our pricing failed to reflect that.

Pricing a book for smaller, niche markets requires a more sophisticated approach. Most sales come directly from the authors’ marketing efforts, usually by personally selling copies through book fairs, speaking events, special corporate or nonprofit sales, or through their own internet-based marketing efforts. (This is typically true for most authors publishing through conventional presses, too, but they don’t tell you that.) A small market author’s ability to discount the retail price is critical to selling our book in these niche markets while remaining competitive with on-line retailers and even bricks & mortar book stores.

So, starting with a price of $20 allows the author (me) to discount their book to bulk purchasers or special events customers without eating away at critically important revenues. By discounting from a higher retail price, we have the option of giving niche customers the same financial benefits wholesalers get but outside the conventional book distribution system while protecting our margins (revenues earned per book sold). To achieve that, we need to start from a realistic retail price that recognizes the narrower, niche base of our market. While we dreamed of selling The Pirate of Panther Bay to large general readership, realistically we needed to establish our sales base in a narrower, niche market that could be directly influenced by our personal marketing efforts.

This is the first of three posts on book pricing.

Next up
: Why we can price niche books higher and get away with it while making our readers happy.

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Thoughts About Dialogue

I recently had the pleasure of seeing the movie Atlas Shrugged: Part 1, an independent film that is trying to bring to the live action screen Ayn Rand’s iconic novel of the same name. I thought the movie was very good although I thought the screenplay could have used a little tweaking to bring a bit more life into the scenes. This triggered some thinking about dialogue and some of the lessons I learned by reading books on writing screenplays. Among the more useful ones for me was the classic guide to screenwriting Story: Substance, Structure, Style and the Principles of Screenwriting by New York University film professor Robert McKee. (I think this book is so good every fiction writer should have it on their bookshelves or in their ereader.)

The scene in Atlas Shrugged (the movie) that got me thinking about dialogue was where a union boss was confronting the heroine, Dagny Taggart, about whether his workers will be “allowed” to work a new rail line–the John Galt Line–built with experimental steel. I don’t have the screenplay in front of me, but the selected scene can be viewed here. The problem with the scene is that it starts off with the climax: The union boss walks in and tells Dagney Taggart that his workers would not be allowed to work the John Galt Line. Dagny’s reaction is so obvious it robs the entire scene of drama.

Story, as McKee compellingly notes, are built on conflict and build to a climactic point. Scenes, whether in a book or movie, have a similar structure. They are a story within a story, that if scripted well build toward a climax that propels the larger story in the book or movie.

In the scene from Atlas Shrugged, the scene would have been more dramatic and effective if the dialogue had built conflict and tension in the scene toward a climax at the end of the scene. I think something like the following would have worked better:

UNION BOSS: Ms. Taggart, our workers have met and we’ve decided the John Galt Line is too untested to be safe.

DAGNY: I understand your concerns, but do you know that Rearden Steel is the strongest metal on the market? It’s safer than any of the conventional rails we use on our other lines.

UB: That’s not what we’ve heard from the State Science Institute.

DAGNY: The State Science Institute is a political organization. Their members are competitors to Reardon Steel and won’t benefit from competition. Besides, they haven’t tested the steel.

UB (annoyed): All the same, my members don’t feel it’s safe and they aren’t comfortable working on the line.

DAGNY: Let me talk to them. I’m sure I can show them the value of the steel and the importance of the John Galt Line to our business success.

UB (more annoyed): No, Ms. Taggart, let me be very clear: Our Union will not permit our workers to work this line on that steel.

DAGNY (angry): Don’t tell me how to run my business and who I hire to work for me. Are you really telling me you are not going to let your workers earn an honest wage, a higher wage on this line? That you are going to keep them from working for me even if they want to?

UB: Umm, no, Ms. Taggart, I don’t think that’s what I…

DAGNY: Well, what did you mean? I’m staking the reputation of my business on this line. I need the best workers I can get and I’ll pay them well.

UB: Well, we’re just concerned that….

DAGNY: I underdstand your concerns. All I’m asking you to do is let them have the choice. I’ve never forced anyone to work for me, and I won’t do that now. Can you just let them have the choice?

UB. Yes

Structured in this way, the scene builds to a climax where the Union Boss relents to Dagny’s quite reasonable request that the workers be allowed the freedom to choose if they will work for her despite the perceived danger. While the choice element is central to the dialogue in the original scene, the power of the scene is diluted by the Union Boss confronting Dagny with a very powerful statement at the begining. The scene in the movie, in essence, has two climactic points, one in the beginning and one (more intellectual) at the end, creating an uneven pace.

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Five Hard Lessons From A Free E-Book Experiment

Back in 2006, when my first novel, The Pirate of Panther Bay, was released (kindle edition available here), we were considering a range of marketing strategies in an effort to create synergies that could drive books sales. One of the ideas we adopted was providing a free e-book version through our dedicated web site, (You can read it here.)

We figured this would be a good marketing tool for selling the hard copy because quite simply (and simplistically) we thought readers would still want the feel of a solid, traditional book. And they would pay for it. We also thought offering an author-signed copy through the web site would be enough of an inducement to trigger a hard-copy sale. So, in theory, if we give customers a taste of a good product, they will want something with more substance.

I’m happy to report the free e-book has been a success. Nearly 120,000 people have viewed the ebook version of The Pirate of Panther Bay. And, we’re pretty sure people like what they read, because the ebook remains the strongest driver of traffic to our web site. The key was to get the book listed at web sites that specialized in providing access to free ebooks. So, is the top referring site to The third highest volume referring site (behind google) is

But, here’s the downside: We haven’t seen any impact on the hard copy sales of the book. Sales from the web site are practically non-existent (a topic I will discuss in a later blog post) and virtually all of our sales are through Ebooks, it appears, attract a different type of reader than hard-copy consumers. Hard-copy book sales might also have fundamentally different distribution systems and network effects than free ebooks although we are still trying to understand that effect more fully. Alternatively, and perhaps worse financially, readers who get access to their books on-line may well see digital versions and hard copy versions as complete substitutes. In this case, we have completely gutted the market and revenues for The Pirate of Panther Bay.

Of course, as an author, I love the fact my first novel is being read by tens of thousands of people. Unfortunately, as a business strategy, the free ebook was at best a diversion and at worst an unmitigated financial disaster.

In sum, here are the five hard lessons we learned:

  1. Free ebooks can help broaden the impact of your website by identifying new customers and driving traffic to your web site.
  2. For authors with a small readership base, niche authors, or authors with solo book projects, free ebooks will likely cannibalize hard-copy book distribution.
  3. Free ebooks don’t necessarily translate into hard-copy sales, especially if you’re asking visitors to pay for a product that is similar to or the same as the one you’re giving them for free. (Okay, you can say a collective “duh, no kidding.”) Reality confirms common sense.
  4. For authors with celebrity status, a large existing readership base, or a broad marketing platform, ebooks might make financial sense because they might create synergies with other products. You can sell personalized or signed copies, for example, or the hard copy still might have some consumer allure. Similarly, if you derive most of your income from speeches, workshops, or consulting activities, the free ebook can be an excellent way to market yourself and your product
  5. Free ebooks make sense only within a broader marketing strategy, such as building your brand as an author or using it as a “loss leader” to develop a readership for subsequent books (or editions if you write nonfiction).

Fortunately, I didn’t conceive of The Pirate of Panther Bay as a solo project. It’s part of a series. With any luck, and with the financial success of A Warrior’s Soul (out this July), I should be able to put Tortuga Bay, the second book in the Panther Bay series, in bookstores sometime in the summer of 2012. All those ebook readers of The Pirate of Panther Bay should be a ready made market for Tortuga Bay.

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