So this post has only a bit to do with self-publishing novels, and more to do with pricing as an entrepreneur — or, I suppose, that has plenty to do with self-publishing novels, but since I’m running several small businesses now, I have a broader perspective on pricing.
The reason I’m writing this post is because of my other businesses, and the advice I’ve heard and my own gut feeling about how to price what I do.
Several business owners and consultants have advised that people will value something based on how you price it. If it’s more expensive, people assume it’s a worthwhile thing and will pony up the cash happily.
I just can’t buy into this. I’ve heard it before, and it just sits wrong in my gut with everything I know about selling stuff, buying stuff, and how people operate.
At first, I just chalked it up to my own financial situation (not awesome) and that I was displacing my feelings, and that I should take the advice of those older and wiser than me. But then I started running across some research that confirmed my initial hesitation. Allow me to present:
Thing 1 that makes me think that lower prices will attract more business: NPR did a report a number of years ago about the organic and natural industries — and how sales are pretty crap in those areas of retail. I worked in the organic and natural industry for a while, and I can attest to this. It’s a growing corner of the market, don’t get me wrong, but it’s not growing as fast as its conventional counterparts. NPR looked into it and found that while people want and like to see natural and organic products on their stores, what they actually put in their cart and buy is the product that is cheaper. I witnessed this in my own job as a supplement buyer. If I put 3 bottles of calcium on the shelf, 1 natural, 1 organic, and 1 conventional calcium, people coming to the local food co-op would buy the conventional calcium overwhelmingly more often. It was the cheaper of the 3. This was across the board for all the supplements. No one cared about quality or food-based or organic or third party testing, they wanted a bottle of calcium that cost the least. Period.
Thing 2 that makes me think lower prices will attract more business: An excellent article on David Gaughran’s blog spelled it out for me perfectly, what I had been feeling versus what I had been told: “price” and “value” are not the same thing. Price is how much something costs, value is what it’s worth to the person considering purchasing it. If the person considering the purchase values the product more than it costs, they will buy it. If the cost is more than the person values it, they won’t purchase. Pure and simple. There’s a certain amount you can manipulate that and make the object seem more valuable to the person considering it, but for the most part, they’ve already made up their mind about how much they value it, and if the price is above that, sale lost. This plays out in my life. I’m pretty broke, so I value food and bills above a lot of other stuff. I would love to get a Tarot reading on a regular basis, but most of the readers I would like to see cost about $50 or more. That’s a lot of groceries to sacrifice to be told about a future I’ll get to see if I just wait. I don’t value the reading that much. So I pass.
Thing 3 that makes me think lower prices will attract more business: Funnels and freebies at Amazon. In order to price a self-published book for free, you have to enroll that book in KDP Select, a program that requires the book be exclusive to Amazon. That’s the trade. Amazon wants no one else to have your book, and you get to set the price to free for so many days. Why is that awesome? Well, when you do set the book to free, if you do some advertising, a ton of people will pick that book up, read it, and if they like it, go on to buy all of the books by that author. This is a well-documented phenomenon. Most readers discover their favorite author through the library, or a friend who lends them the first book or gifts it to them, or on a discount rack. Neil Gaiman set “American Gods” for free download on his website and discovered that his sales boosted when he did it. For someone who’s never tried your product before, getting a cheap or free taste is the way to lure them back. A lot of businesses offer “free” stuff that turns about to be worthless and annoying, and when I’ve run across that tactic, I get angry and I don’t go back to that business. Many people I’ve spoken to say the same. If you offer a deal or a freebie, it should be the same quality product you would sell. Why do you think grocery stores hand out samples? Removing any barrier to trying something is the best way to encourage people to try it. This is sometimes referred to as a “funnel.”
My own experience with this is panning out. I haven’t yet managed to do very well with my books, but I’m doing okay for a noob. But today I read Tarot cards at a psychic fair, and I offered 2 options: a short reading for $10, or a longer one for $30. All of the people who came through were new to me. Many of them chose the $10 reading, but a few were so pleased that they sent friends and family in to me throughout the day. The $10 reading was a quickie for me, but I still read each card to its fullest, made sure the clients didn’t have questions by the end, and I didn’t do any stupid “oh, if you want to know the rest you’ll have to pay me the other $20 to find out!” The short reading took less time, so I wound up charging $1 a minute for my time for either reading, which I think is quite fair. I was very pleased with my turnout for the day and will do this again with no qualms whatsoever. Everyone who came to see me took my business card and promised to tell their friends. (And I saw some of those friends later!)
So, price high because people will value it, or price moderately because people will actually be willing to pay for it? I’ve heard the advice, and I think I’ll stick with my gut.
