Pricing and Value

As an indie-author, I’m always trying to decide what to charge for my books in different situations. All businesspeople do this. What is the value of the product or service as perceived by the buyer? If we charge too much, not as many people will buy our product or service. If we charge too little, we won’t make as much as we could. It’s also possible that in the buyer’s mind low price equates to low quality. It’s always a balancing act.

I think oftentimes we underprice our goods and services. When we do, we might also be undervaluing our goods and services in the customers’ minds.

I’ll use my books as an example. My paperbacks retail for $14.99. I get about 70% royalty from Amazon, which is about $10.50 when people buy my books directly from Amazon. In the past when I’ve sold my books at book shows, I’ve usually charged $10.00 per book to encourage people to buy. Since I need to pay Amazon about $4.00 per book (including shipping), I would make about $6.00 per book. (Actually, this is inaccurate as it does not include the cost of copyediting, proofing, interior design, cover design, and everything else that goes into publishing a book, never mind the value of my time spent writing. However, it works for this example.)

Last month I did a book show with many other authors in Barnes and Noble in Madison. It is common for bookstores to keep 40% of the book sales to cover their costs of having a bookstore. I wasn’t surprised that B&N wanted 40% of what we sold during the show. I decided that with that in mind, I was going to charge the full retail price of $14.99, which would give about $9.00 per book, minus what I paid Amazon for the books, which would leave me making about $5.00 per book. (Which would be better than $2.00 if I discounted the price like I usually do.)

I sold just as many books at $14.99 as I usually do for $10.00. The higher price did not seem to be an issue. Interesting.

At the Lakefly Writers’ Conference this month, I decide to charge $14.99. Again, it did not seem to affect the number of books I sold. Price didn’t seem to be an issue for those that were interested in my books.

I also tried something else that worked well. I offered all three of my books for $35.00. That increased books sales more than discounting individual books ever had.

If you are in a situation where you think you might be undervaluing your goods and services, evaluate this closer. Charging more might be good.

Business or Hobby?

Business or Hobby? (Video)

“Businesses are in business to make money.  If it does not make money, it is not a business.  It is a hobby.”

This was the most valuable piece of information I learned when I went to the University of Louisville for an MBA.  (If I could remember the professor’s name, I would give him the credit.  Unfortunately, I do not even remember the name of the class.)  This forced me to take a very critical look at my business at the time.  I have used it to assess my business many times since.

If you are self-employed, do you treat your business as a business?  Or do you treat it as a hobby?  Do you invest as much time into your business as you would if you were punching a time clock?  Or do you fit in time where you can between personal pursuits?

I know people who run their businesses as a business.  They put in the time and effort needed to achieve the success they want.  I know others who consistently let everything else come first.  It can be easy to do, especially if you work from home.  There are many potential distractions.

This may be hard to believe, but the ones who are most successful are those who treat it as a business!  They work extremely long, hard hours.  If you want a business, that is the price to pay.

If what you really want is a hobby, that is fine as long as you have another way to support yourself.  But at least be honest with yourself.  A simple question to ask yourself is whether or not you would pay someone else to do what you do throughout the day.

Do you have a business or a hobby?  Which do you want?  Do you need to make changes?