Setting prices for Kindle editions

Q: Hi Steve,
Do you have any thoughts about pricing?
My inclination would be to charge a low price, hoping to attract more people--I'd rather make $5 from five people reading it, than one.

A: I've been doing a bit of experimenting with price. As I work on 2 books about the Kindle, I am excerpting individual chapters as "articles" and posting them in a price range between $1.99 and $3.99. I've also posted my old bookselling book and it has had sales both at $7.95 and at lower prices.

There are several things to keep in mind:
* When their dead-tree editions are only available in hardcover, the vast majority of books are going to be priced at $9.99. You don't have to go much lower than that to make your price seem a bargain.
* That being said, I notice that the Pullman trilogy is selling pretty well at $3.19 per Kindle book -- this compares with $13.50 (or $4.50 each) for a boxed set in the mass market paperback edition. This would tell me that a good price for otherwise paperback fiction is $2.99 to $5.99.
* There is a weird spectrum of consumer behavior that one deals with here. Pricing too low may cause some customers to question worth of a book.
* Once somebody has a Kindle, its says 2 things about them. One, they love to read. Two, they have some disposable income if they have already forked over $399! These people probably won't decide not to buy your book because it is priced at $9.99 instead of $4.99.
* Amazon sales rankings will determine a lot about how visible a book is in the Kindle store and on Amazon in general. The sales rankings are based on "# units sold" rather than "dollars sold," so this argues for getting as many sales as possible early on to help your titles climb that ladder and increase invisibility, which in turn leads to more sales.
* Because the universe of Kindles is likely to grow arithmetically over the next few years, it is valuable to be "in on the ground floor." It is probably realistic to extrapolate that if you can sell 5 copies of something this month, you would be likely to sell 50 12 months from now and 100 24 months from now -- all other things being equal, as if they ever were.

I guess where I come down, given all of this, is that it usually makes sense to price book length fiction around $3.99 to $4.99 if it is otherwise available in paperback, and $7.99 to $9.99 if it is only yet in hardcover.

Hope this helps.