Setting an eBook Price & Understanding eBook Royalties

There are several schools of thought on the topic of setting an eBook price.  Some argue that because the distribution and production costs are so much lower, newer authors should price their books as low as possible to encourage potential readers to “take a chance” on a new author.

There are also those who argue that an eBook’s price should reflect the complexity and length of the work.

Whatever side you take, understand that consumers expect eBook prices to be lower than the printed version of the same book. The thought behind this is that the eBook should be cheaper to produce because there are no paper, printing, warehousing and shipping costs.  Right or wrong, that is the mindset of today’s consumer. 

The general rule of thumb is that you should set the retail price of your eBook at no more than $9.99.  This is because Amazon.com uses that retail price as a cut-off for paying out a bigger percentage of the sale price.  For eBooks priced between $2.99 tor $9.99,  Amazon pays a royalty of 70% of the retail price and BN.com pays 65%.  For eBooks priced outside of the $2.99 to $9.99 range, both retailers only pay 35% of the retail price.  In order to receive these favorable royalty rates, the ebook list price has to be at least 20% below the lowest price for the print version of the book.

Apple pays 70% of the sale price regardless of where the price is set.  For most other retailers, the royalties are about 50%.  

Use the chart below as a quick guide to eBook royalties:

All of these retailers require that you set the retail price the same with them as you do with any other place you sell the eBook online.  This means that you can’t set your retail price at $14.99 for the iBookstore, but something less for Amazon.

As with setting a retail price for a printed book, authors should conduct some research and see what other eBooks in the same genre are selling for online. This will help ensure that you have enough knowledge to competitively price your eBook.