Category Archives: Publishing

Pricing Your Book Intelligently

If you read through the self-publishing message boards, price point is a popular topic. Outside of writing process, selecting the right price might be the most important decision an author faces. I see a lot of different theories about what should determine price. Most of what people say is wrong. You only need to think about one thing when selecting your price:

Pick the price that maximizes your profit.

That’s it. That’s all. Just pick the price that maximizes the size of your monthly check. Picking anything else is stupid.

This is a tall order. It’s not immediately clear which price will generate the most money for you. Amazon offers 35% royalties on books between $0.99 and $2.98. Anything between $2.99 and $9.99 nets 70% (minus a usually negligible data transfer fee). So a $0.99 book needs to sell between five and six as many books as a $2.99 book to keep pace. Whether the higher demand from the cheaper price justifies selling at $0.99 remains to be seen and probably varies from book to book and genre to genre. An author might have to experiment with different price points before settling on the right one for him.

An author must also weigh the value of sacrificing extra profit from a single book to generate additional profit for rest of the author’s library. For example, the author of a trilogy might want to sell the first book at $0.99 and the other two books at $2.99. The cheap introduction brings more readers into the series, which in turn will lead to additional sales of the more expensive selections. I run a similar strategy with my game theory textbook, selling the first chapter at $0.99 and a larger version at $2.99.

Some people’s pricing strategy baffles me, however. Some people refuse to price books at lower prices because they do not feel it adequately reflects the amount of work the author put into the book. Absolute nonsense! The time you spend writing a book is a completely sunk cost once you are done. Placing a book at $4.99 because you think that is the value of the book is beyond ridiculous. The market determines the appropriate price. If selling at $0.99 or $2.99 brings in more profit, your resistance to lowering your price only makes it more difficult for you to pay your rent. It also leads to fewer people buying into your brand and therefore fewer sales of your other books. These authors need to get over themselves.

Just pick the price that maximizes your profit. It’s that easy…at least in theory.

The Power of a 1-Star Review

I am a little worried.

My larger textbook—Game Theory 101: The Basics and Extensive Form—has been doing quite well. This month, it has averaged a little more than ten sales per day. I know that might not sound a lot, but it projects to more than 3500 sales over the course of a year, or $5600. That is a lot of money for a graduate student living off of a small stipend. It’s also a lot for an academic book, most of which will get about 200 sales over their lifetime.

However, my book received its first review yesterday. It was not so good:

I regret this purchase, even at only $2.99. This is way below “101” level. This is about a 6th grade level…[i]f you are considering this product, you are better off reading the Wikipedia articles on Game Theory – it will be free and much more productive.

Needless to say, he gave me 1 star. Now, whenever someone searches for game theory on Amazon, they will see my book is worth one measly star.

How does that impact a seller? Despite averaging more than ten copies per day this month, I have not sold a single one since that time. Yikes.

The part of the review that I put above—the book is very basic. (There is more to the review that I believe is incorrect, but I excluded it from above to keep this conversation focused.) But that’s the point. I want the book to be simple. Game theory should be simple. There should be no magic or hand waving. The number one complain I receive from students taking game theory is that they have no idea how to solve games despite attending every lecture, section, and office hour they could. That’s why I created my video series, which eventually evolved into the textbook.

But his suggestion to read Wikipedia instead is ridiculous. Go read the Wikipedia page on how to solve for mixed strategy Nash equilibrium. Then try to solve the game in this video. Best of luck to you.

My personal feelings aside, consider an objective metric of the quality of a book: the rate of return. Amazon gives you a seven day window to return a Kindle book that does not meet your expectations. My small textbook has a rating of 5 stars (from a single, trollish review). In the last two months, it has a return rate of 0.69%, meaning a little more than 1 in 150 of these books gets returned. (For perspective, I’ve heard anything less than 5% is good, so I’m well below that mark here.)

The bigger textbook? The one with a 1-star review? Zero returns in the last two months. None. Buyers, it appears, like the larger textbook better. Yet it appears from the reviews that the opposite is true.

Edit: Looking back, I noticed I only calculated this from US sales. There was a single return of the bigger textbook from Amazon UK. So the return rate wasn’t exactly zero for the world, but it was darn close.

I’m curious why Amazon does not show the return rate for each book. Writing a review is time consuming, so you might get one review for every couple thousand books you sell. Consequently, the reviews don’t really tell you what the average person thinks of the book. Returning a book, on the other hand, is not costly, since it puts money back in the customer’s pocket. It is a better metric of a book’s value to its customers.

Anyway, hopefully my sales will return. In the meantime, if you have read Game Theory 101: The Basics and Extensive Form, please write a review. =) Whether you think it is five stars or one, at least the review will better reflect what everyone thinks as a whole.

Interview on Mind Your Decisions

Presh Talwalkar recently interviewed me on Mind Your Decisions. You can go directly to it by clicking here. If you are curious about how I got into this field in the first place or my thoughts on the way game theory is taught, this interview is for you.