Kindle Store Top 100 Pricing Analysis

I’ve seen a few recent claims about the average price of the books in the Top 100. Most of them have struck me as strange. We know that prices in the Kindle Store Top 100 are falling relentlessly. Yet claims are made constantly that the average price is in the $8 to $9 range.

Well, let’s do some pricing analysis using two methods, using only the Kindle Store, and figure out what the truth is.

  1. First, let’s do average pricing assuming every book in the Top 100 sells the same amount. This gives us one estimate.
  2. Second, let’s do average pricing assuming book sales are approximately – 10,000 a day for #1 to #10, 2,000 a day for #11 to #20, 1,000 a day for #21 to #50, and 500 a day for #51 to #100. This gives us a second estimate.

From these two estimates, we can get a good idea of what the actual average price of books in the Top 100 is.

Kindle Store Top 100 Pricing

Here’s what we have in the Kindle Store Top 100

  1. Kindle Store Sales Ranks of Top 100 Books at $1 – #7, #9, #20, #22, #24, #26, #27, #28, #30, #33, #38, #44, #47, #48, #55, #72, #86, #90, #96, #97, #98.
  2. Kindle Store Sales Ranks of Top 100 Books at $2 – #1, #32, #53, #56, #89, #91.
  3. Kindle Store Sales Ranks of Top 100 Books at $3 – #4, #15, #23, #34, #46, #60, #75, #77, #80, #85, #95.
  4. Kindle Store Sales Ranks of Top 100 Books at $4 – #3, #11, #13, #16, #18, #25, #37, #49, #54, #57, #58, #63, #67, #68, #76, #84.
  5. Kindle Store Sales Ranks of Top 100 Books at $5 – #17, #41, #83, #99.
  6. Kindle Store Sales Ranks of Top 100 Books at $6 – #50, #51, #61, #64, #65, #88.
  7. Kindle Store Sales Ranks of Top 100 Books at $7 – #35, #73, #87, #93.
  8. Kindle Store Sales Ranks of Top 100 Books at $8 – #12, #45, #92, #100..
  9. Kindle Store Sales Ranks of Top 100 Books at $9 – #9, #70.
  10. Kindle Store Sales Ranks of Top 100 Books at $10 – #5, #19, #29, #31, #62, #69, #71, #74, #79.
  11. Kindle Store Sales Ranks of Top 100 Books at $11 – #42.
  12. Kindle Store Sales Ranks of Top 100 Books at $12 – #21, #36, #39, #40.
  13. Kindle Store Sales Ranks of Top 100 Books at $13 – #2, #6, #8, #14, #43, #52, #59, #66, #78, #82 (assumed price), #94.
  14. Kindle Store Sales Ranks of Top 100 Books at $14 – None.
  15. Kindle Store Sales Ranks of Top 100 Books at $15 – #81.

This is a very interesting list. Interesting to see $1, $4, and $3 being so popular. $13 is just as popular as $3 and $10 is also very popular.

Quick Review of the Frequency of Every Price Point in the Top 100

  1. 21 books at $1. That’s massive and is bound to drop the average price. If 20% of your Top 100 are at $1, that says something. It’s also apparent that readers are voting with their still-heavy wallets when it comes to book pricing – $1 works.
  2. 16 books at $4 ($3.99 to be precise). Not sure why $3.99 beats out $1.99, $2.99, and $4.99. Perhaps that whole psychological thing of readers seeing $3.99 as $3. Why then does $2.99 not work better?
  3. 11 books at $3. $3 is the price at which Amazon starts giving Authors 70% revenue share. That, combined with readers preferring prices below $5, is perhaps why $3 and $4 do so well.
  4. 11 books at $13. The joint third-most-popular price point. It seems Publishers are making $13 work for new books. It’s interesting to see 4 books at $13 in the Top 15 and then nothing until #43. Perhaps $13 works for new books but then reduces longevity in the Top 50.
  5. 9 books at $10. This was the price point we were promised in 2007 and 2008 – $9.99. Interesting to see it become the 5th most popular price point.

The rest of the figures are there for you to see. This list obviously changes frequently. However, this is a reasonable list. I don’t see prices going up higher anytime soon.

Average Pricing and Pricing Analysis assuming Similar Sales at all Top 100 Sales Ranks

Yes, we know this is wrong. However, this gives us a good bound.

If we just weigh each sales rank equally, and given the relatively balanced distribution this isn’t a terribly bad idea, we get $571 as the amount required to buy all 100 books. That gives an average price of $5.71.

That should be a wake-up call to Publishers who complained that $9.99 was unsustainable. They started the Agency Model and tried to torture users with $13.99 and $15.99 prices. Now, instead of a nice and healthy $9.99 per ebook, they are faced with the average Top 100 price being just $5.71.

That’s incredible. $5.71. However, this is a very rough method. So let’s try something a bit more accurate.

Average Pricing and Pricing Analysis assuming Sales Figures drop sharply

10,000 a day for #1 to #10, 2,000 a day for #11 to #20, 1,000 a day for #21 to #50, and 500 a day for #51 to #100

We can simplify this as – 20 a day for #1 to #10, 4 a day for #11 to #20, 2 a day for #21 to #50, and 1 a day for #51 to #100. This simplification won’t affect the average price (just imagine we divided each figure by 500).

  1. Average Price of the Top 10 – $6.89. Multiplied by 20 – $137.8.
  2. Average Price of #11 to #20 – $5.63. Multiplied by 4 – $22.51.
  3. Average Price of #21 to #50 – $5.06. Multiplied by 2*3 (because there are 30 books) – $30.364.
  4. Average Price of #51 to #100 – $5.844. Multiplied by 1*5 (because there are 50 books) – $29.22.
  5. Grand Total: $219.894.
  6. Average = Grand Total/35 = $6.283.
  7. An average of $6.283 per book. Very interesting to see the Top 10 being much higher than the other sales ranks. Perhaps due to the presence of three $13.99 books, one $10 book, and one $9 book.

$6.283 is surprisingly close to our previous estimate of $5.71. $6.283 is probably more accurate since it factors in the fact that the Top 10 and Top 20 sell a lot more than the rest of the Top 100.

Conclusion: The Average Sales Price of the Top 100 Kindle Books is perhaps around $6.283

Based on the above estimates and lists, we arrive at a few data points and guesstimates –

  1. Average Sales Price of a Top 100 Kindle Book: $6.283.
  2. Most Popular Price Points: $1, $4, $3 and $13 (joint), $10.
  3. Most Popular Price Bands: $1, $3 to $4, $10 to $13.
  4. Average Sales Price of a Top 10 Kindle Book: $6.89.
  5. Average Sales Price of a Book in the bottom half of the Top 100: $5.844.
  6. There are only 17 books priced above $9.99 in the Top 100. Contrary to the perception that $13.99 is winning out due to impatient Kindle owners, we are seeing prices above $10 mostly fail. The exception is $13 and that might be linked to the newest releases all being $13.
  7. There are an absolutely massive 58 books below $5. This suggests prices below $5 are going to be the norm for the Top 100 in the near future.
  8. There are 21 books at $1 and 16 books at $4 suggesting that $1 and $4 (or perhaps $3) might be long-term stable price points.

That figure of $6.283 is absolutely fascinating. The assumption all along has been that we would settle at price points such as $9, $10, $13, and $7. That would result in an average sales price of $10 to $11. In actuality, the advent of indie authors has forced prices down massively. There are very popular price bands of $1 and $3 to $4. These bring down prices to $6.283 on average.

$6.283 is very interesting. Even more interesting is the rise of $1 and the $3 to $4 band, and the possibility that average prices drop below $5 and perhaps stabilize in the $3 to $4 band.

Kindle and eReader related analysis and news

There’s a lot going on – a welcome change from the last 2 months of nothingness.

The Kindle and the Nook have seen some interesting recent developments, as has the iPad. Let’s take a look.

Kindle 3 will be sold in AT&T stores starting March 6th

TeleRead has the scoop on Kindle arriving at AT&T stores. Chris Meadows points out that the Kindle will be the only product there that won’t come with a soul-mortgaging contract.

There are lots of interesting aspects to this –

  1. What is AT&T getting? Data Charges, perhaps a selling fee of 10%, one extra product to offer. It’s a win-win deal for both parties.
  2. AT&T has over 2,000 stores. That’s a massive increase in retail footprint for the Kindle.
  3. It’s the first dedicated eReader offered in AT&T stores.

Definitely a big win for Amazon. Perhaps much more so than for AT&T.

The $200 Nook Color sale

Yesterday, or perhaps the day before, there was a $200 sale for the Nook Color. Missed it completely. It’s really interesting – At $249 the Nook Color is a steal. At $200 it’s daylight robbery.

Update: Nook Color Sale is on until 8 am PST on March 3rd, 2011. Use coupon: CBARNESDD at checkout. It seems to have sold 6,542 Nook Colors so far.

Makes you wonder what’s going on at B&N – $40 million to promote the Nook, the end of the Nook black and white (though Nook WiFi still continues), this $200 sale on Nook Color.

B&N is either being super aggressive because Nook Color is turning out to be a real winner, or because its survival depends on eReaders and eBooks now – Perhaps both.

Business Insider talks about 26-year-old indie author ‘making millions’

Living up to its reputation of stellar journalism Business Insider talks about Amanda Hocking’s success in the Kindle Store and throws in as much hyperbole as it can.

However, there is a lot of truth underlying the claims that she is making millions.

  1. Guardian wrote that Amanda Hocking sold over 450,000 titles last month.
  2. Her Switched trilogy got optioned for film by the co-writer of District 9. This was in mid February.
  3. BI mentions that she is selling over 100,000 copies a month. This is probably since November 2010.
  4. While she gets 35% for books priced at $1, she does get 70% for books she prices at $2.99. In either case, multiplying it by a few hundred thousand is pretty good.
  5. She’s building up her brand. In the coming decimation of the books industry it’s going to be very valuable – perhaps more so than 35% of $450,000.

You know what’s infinitely amusing about all of this – Publishers don’t see any of the money. Nothing from the book sales. Nothing if the book gets made into a movie.

By virtue of being the store that’s making some indie authors very successful the Kindle Store is becoming the default option in authors’ minds.

There are two qualifiers to keep in mind – Only a few indie authors are going to see this kind of success, and there are only a certain number of spots in the Top 100. With Amanda Hocking and John Locke taking up 5 spots each, and with all the Published authors, and all the other indie authors, it’s not going to be easy to replicate what Hocking and Locke are doing. Very possible, but very difficult, and now might be the only window of opportunity. By 2012 it might go from the realm of the difficult to the realm of miracles.

Random House switches to Agency Model

It probably has a lot to do with Random House wanting to be in Apple’s ecosystem. Here’s what Random House had to say about selling its soul to the Devil

“We are making this change both as an investment in the successful digital transition of our existing partners and in order to give us the opportunity to forge new retail relationships.”

It is rather fitting that we cover this news right after the news that Amanda Hocking sold 450,000 copies of her books in February and got her series optioned for film by a legitimate Hollywood writer (even if District 9 was the most pointless SciFi movie of all time).

iPad 2 arrives tomorrow

March 2nd is rumored to be the announcement date of the iPad 2. Not much to say as there will be 5,000 sites talking about how important it is to the future of the human race that everyone buy an iPad 2.

March is turning out to be much more exciting than January and February. It just might save us from death by boredom.

Is there a way to make a living on $1 books?

The Kindle has seen a deluge of $1 books from indie authors. Now, we have Amazon and publishers getting into the game too – Alone by Lisa Gardner is at $1, Old Town is at $1, Stalina is at $1, The Summer Son is at $1, The Hangman’s Daughter was at $1 before it went up to $3.99.

Here’s a question –

If $1 is what lots of authors are using to get into the Top 100, how long before everyone has one or more books at $1?

It’s not a hypothetical question. Consider this list –

  1. Hangman’s Daughter is at $3.99 but it used $1 preorders to get into the charts. 
  2. Switched is hovering between #2 and #4, and is at $1. 
  3. Alone by Lisa Gardner is at $1, and it’s at #6.
  4. Saving Rachel by John Locke is at $1, and it’s at #13. 
  5. Deed to Death by D. B. Henson is at $1, and it’s been in the Top 100 for 224 days. It’s currently at #25.
  6. Amanda Hocking has another $1 book in the Top 50 – My Blood Approves is at #27.
  7. Where There’s a Will by Katriena Knights is at $1, and at #30.
  8. Another John Locke book, Lethal People, is at $1, and at #37.
  9. Her Last Letter by Nancy C. Johnson is $1 and at #39. It’s been in the Top 100 for 71 days.
  10. Not What She Seems by Victorine E. Lieske is at $1, and at #44.
  11. Impetuous by Lori Foster was $1 for a long time. It’s managed to stay in the Top 100 for 50 days. Now it’s at $3.38 and down to #50.

Apart from Lisa Gardner and perhaps Lori Foster, none of these authors would have been very likely to make it to the Top 50 without the $1 price. They are taking up spots that $10 and $12.99 books would have taken. Add on the books priced between $1 and $5, of which there are 9 in the Top 50, and we’re seeing a huge shift.

Is it going to become vital to price books at $1 and $5 to be in the Top 100?

Yes. Without a doubt.

We already have 24 out of the Top 50 at $5 or below, 10 of which are priced at $1. Remove the newspapers and magazines and we get two interesting figures –

  1. Nearly 25% of books in the Top 50 are at $1.
  2. Nearly 50% of books in the Top 50 are at $5 or less.

A year ago there used to a handful of books below $5 in the Top 50 – between 5 and 10, sometimes less. It’s hard to get an exact read because it was a combined list with free books and paid books However, if you had weeded out the free books, you would have found hardly any books below $5 in the Top 100. $9.99 ruled. Publishers blew up $9.99, and now they get the infinite joy of watching $1 and $5 books rip them to shreds.

For better or worse, we are seeing a situation where authors have to figure out how to survive on books priced at $5 and below. For indie authors it’s even tougher – they have to figure out how to survive on books priced at $1 and $3.

Can authors survive on $5 books?

Let’s do a simple guesstimate –

  1. Let’s assume a $5 book that makes it into the Top 50 spends an average of 25 days there. 
  2. Let’s assume that the #1 book in the Kindle Store sells 10,000 to 20,000 copies a day, and that the 50th books sells 250 to 500 copies a day. 
  3. Let’s assume that across its 25 day stay in the Top 50 the $5 book sells an average of 700 copies a day.
  4. 70% of $5 = $3.50 per copy. 700 copies per day for 25 days = 17,500 copies. That’s $61,250.
  5. So the $5 book is making $61,250 which is split between Publisher, Author, Agent, etc. Let’s say the author gets 40% which equates to $24,500. 

$24,500 from a $5 book that’s a hit isn’t bad. It’s a start.

Let’s assume that ebooks grow from the current 10% to 70%. Competition increases, and other factors kick in, so let’s assume the effective increase in the market is not 7 times but 4 times. That would mean a $5 book that makes it into the Top 50 and does well would generate $98,000 for its author.

Could an author write one such book every year and earn $98,000 per year? You would think so.

Could an author write one such book every 3 months and earn $392,000 per year? It’s possible though not probable.

It should be pretty obvious that $5 books are a very viable proposition – at least for authors.

Can indie authors survive on $1 books?

Indie authors are in much more trouble than authors. They have to compete against established authors like Suzanne Collins at $5, and against superstar authors like John Grisham at $10. They even have to compete against $1 books from Lisa Gardner, $2 books from Brad Meltzer, and against the $4 The Lost Symbol.

Their only hope is to price their first book at $1 and price subsequent books at $1 to $3.

Is this a sustainable model?

Well, let’s do guesstimates using a few hypothetical scenarios.

Scenario 1: The solitary $1 indie book

All the same assumptions as the $5 book.

  1. We get a 25 day stay in the Top 50 with 700 copies sold per day.
  2. This time the author is getting just 35% of $1 which is 35 cents. That’s one-tenth of what the $5 book is earning per copy.
  3. It translates to a paltry $6,125.

While there are enough indie authors who would be perfectly OK with selling 17,500 copies of their book, and earning $6,125, that isn’t what our question was. Our question was –

Is there a way to make a living on $1 books?

Well, you might say that when ebooks have 75% of the market the earnings will be 4 times – translating to $24,500 per book. You might even say that an indie author could write two such books per year and make $49,000 per year.

It’s certainly an interesting possibility. It’s remarkable than even while earning just 35 cents per copy, indie authors have a shot at making a very good living – Provided ebooks really, really take off.

There are, however, two other possibilities that are far more enticing.

Scenario 2: The $1 left with the $3 right

Again, it’s the same assumptions. Except here we have the indie author releasing one $1 book per year and one $3 book per year.

The $1 book earns her a paltry $6,125 and the $3 book earns her a healthy $36,750. And that’s right now – at the beginning of the rise of ebooks. If ebooks take off she would be earning $24,500 from her $1 book, and $147,000 from her $3 book.

That’s a very healthy figure.

However, our third scenario is the one that’s really mind-blowing.

The problem of the one-off super winner

What throws everything into disarray, and seduces all indie authors into going with $1, is the one-off case of an indie author who hits the Top 10.

That’s an author selling 2,000 to 5,000 copies a day. That translates into $700 to $1,750 per day in earnings if it’s a $1 book. If she stays in the Top 10 for 50 days – she’s made $35,000 to $87,500.

Now, contrast the difference –

  1. $1 Indie Author book hits the Top 10 – Generates $35,000 to $87,500. 
  2. $3 Indie Author book hits the Top 50 – Generates $36,750.
  3. $5 published Author book hits the Top 50 – Generates $61,250, out of which the author gets $24,500.  
  4. $1 Indie Author book hits the Top 50 – Generates $6,125.

The first two scenarios are so attractive that lots of indie authors and some published authors will take a shot. They might end up in the 5th scenario or they might never make it to the Top 50. However, the possibility that they hit the Top 10 and earn $87,500 in a 50 day stretch is too enticing for them to turn away.

Almost every single indie author, and lots of published authors, will end up going with $1 and $3 and $5 books.

Additionally, whether or not an author wants to go with low-priced books, it becomes necessary – How can a $10 book compete with a $1 book? How can a $10 book compete with 10,000 $1 books?

Is there a way to make a living on $1 books?

We end up with a rather interesting answer to our question –

Yes, there are a few ways to make a living on $1 books.

  1. You can hope that one of your $1 books, and one of your $3 books, make it to the Top 50 every year.
  2. You can hope that your $1 book hits the Top 10.
  3. You can hope that Amazon starts giving a 70% cut on books below $3, and that two or more of your $1 books hit the Top 50 every year.
  4. You can hope that the ebook market increases to 75% of books, and that one or more of your $1 books make it to the Top 50 every year.

Please do keep in mind that it’s only the top 0.1% of authors selling their books for $1 that will be able to live off of book sales. Also, you’ll have to be prepared for the time when Lisa Gardner isn’t the only top author selling her books at $1, and when 90% of indie authors realize that they must come in at $1 to have any chance.