There's a guest post by writer Erin Kern (via PV) that was apparently designed specifically to give me a stroke.
The short version: Kern wrote a book. No one would publish it. She self-published. Following the patented Darcie Chan Method To Screw Yourself Out Of The Most Money Possible, she priced her book at 99 cents and left it at that price even after it took off. The book got huge--she sold 38,000 copies in a single month--despite Kern doing absolutely zero promotion. So she signed with a publishing house so that someone would do promotion, because obviously a book won't sell--certainly not to the tune of 38,000 copies a month--without promotion. Oh, and she wants to do a paper version of her book (because e-books are only a tiny fragment of the market, and when you're selling only 38,000 copies a month, you obviously have grounds to worry about your reach), and we all know that's completely impossible to do without a publisher.
Boy.
OK, for one thing its really obvious from her post that Kern loves the status of being published by a fancy house. And she doesn't want to do anything except write, so she is willing to sacrifice potentially enormous sums on the alter of I'm An Author (And That Is All I Do). So, you know, she's rather fond of prestige.
But the thing I want to look closely at is, What are the sums she is sacrificing? And that brings me to my major issue with the 99-cent price point as a permanent price for a longer work (promotional pricing or short stories are another matter).
Like I wrote about Chan, Kern found a gold mine, sold her gold at the going rate for nickel, and then convinced herself that she needed help with the business end of things because she's just a nickel miner. I can't help but think that if she had made $76,000 in the month she sold 38,000 copies instead of just $13,000, she would have been that much more reluctant to change business models. You look at $13,000 a month, and that averages to $156,000 a year--good money, to be sure, but for someone who is already pretty comfortable and perhaps is worrying about the long term, that might not seem like enough to bank on. (What if my books stop selling? Where's my nest egg?) But $76,000 a month means $912,000 a year--close to a million dollars.
As I've mentioned before, people will throw away potentially huge sums of money if that money is not in hand. If it's abstract, future money? Forget it. That money's gone because in our minds, it never existed. We are hard-wired to hold on to what we have and to devalue what we don't have. That is called loss aversion.
You can see how loss aversion works with writers like Kern. First, they lock themselves into a situation where they are making as little money as it is possible to make from self-publishing.
Then as a result, they devalue their self-publishing business. Kern looked at her work and said, Oh, well, the most I could possibly hope to make on my own is $150,000 a year! That's no great shakes, and it's a lot of work--I want a traditional publishing contract instead!
She never saw the potential to be making $900,000 a year, because she wasn't actually doing it--it's too abstract, it's just me, some whiny blogger, second-guessing her and making projections that might never come to pass, yadda yadda yadda.
But if she had been willing to play with her prices just a little bit once sales took off, then Kern might have had a very different idea of how much her self-publishing business was worth. (Or perhaps she would have discovered that she could never make more than $13,000 a month--but at least she would know that for a fact, rather than just assuming that the worst-case scenario is the only possibility.) If it turned out that Kern could make close to a million dollars in a year--well, that's some real money. That's getting to having enough money so you can invest it and live comfortably off the investment income without having to work.
In that case, loss aversion would have started working for her instead of against her. Very few people, even rich people, are willing to throw a million dollars away, even if they love prestige and have long yearned for a traditional publishing deal.
And that, my friends, is the value of experimentation--with prices and with other things. Experiments = knowledge. Knowledge (like, how much is my self-publishing business actually worth?) is key to making good business decisions--both because you'll have the data to make logical decisions and because your gut will be telling you Don't let this go!!!