Recently a question related to author’s pay came up on the Facebook Austen Authors page. Somebody asked how authors decide on a price for their books. It’s an excellent question, and I am copying my reply on that page below. Then I’d like to talk about how authors make money in general.
To price my books I look at what other JAFF writers are charging for their comparable works, to get a good sense of what the “going rate” is. I also look at what Amazon has to say about it. When an author first publishes on Amazon they receive a suggested price based on data collected by Amazon, which tries to maximize the sale price without losing too many potential customers. (They almost always suggest $2.99.) I put those two figures together and then make a gut call.
If an author decides to make their books available in Kindle Unlimited, so that a reader can download and read them without buying them, then the author also has to agree to sell that book exclusively through Amazon. No “going wide” through other sales channels like Barnes & Noble, Kobo, or Smashwords. In return the writer will receive a small payment for every page read through KU, so the writer has to decide if that additional payment will be worth the loss of the potential sales through non-Amazon channels. A crystal ball would be good here!
(Yes, Amazon knows how much you have read in a book that you borrowed. They know what page you left off on, remember? It’s all stored in the cloud.)
To make it more complicated, the KU payment amount changes every month, and you don’t know what it will be for this month until the middle of next month. Amazon starts with a big pie of money, somewhere in the vicinity of $18 million, which I guess they derive from KU subscriptions and maybe advertising. Then they decide how to allocate that big pie amongst all the pages that were read on KU the month prior. Typically this amount ends up around $.0045/page.
That leaves paperback sales. How does an author set the price of a paperback, and why is it so much more expensive than an ebook?
To begin with, a paperback is much more complicated to produce than an ebook. The pages have to be numbered, which is a tricky process, and the book cover has to have not just a front but also a back and a spine. The sales price also has to be at least high enough to pay for the actual printing of the physical book itself, which is not something an author worries about with an ebook. So the author has to set their sale price higher if they want to recover their investment.
To give you an idea what all this looks like in real life, take a look at Mr. Darcy’s Persistent Pursuit, my first book. I wrote it in about four months and posted it on fanfiction.net chapter by chapter, so everyone who read it there got to read it for free (a model I still follow). Figuring out how to publish it and then actually going through the publishing process took another couple of weeks, and I followed Amazon’s suggestion and priced the ebook version at $2.99. Two months later, following a steep learning curve, I managed to publish the paperback version.
Profit from ebook version: $2.02
Profit if someone reads the whole book on Kindle Unlimited: $1.71
Profit from paperback version: $1.58
Was the work worth it? Would I do it all again? Absolutely! My only regret is that I didn’t start doing this years ago!
I look forward to hearing any comments or questions you may have on this topic. In my next post I’ll talk about fanfiction sites–why authors use them and a survey of some of the better-known fanfic sites out there.