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Understanding Penetration Pricing and Premium Pricing of your ebook on Amazon | Tiffany Writing

One of my daughters is a capable artist and headed to an undergraduate program in Medical Illustration soon. As an aside, she is getting smarter about posting her art to websites and beginning to think about how to charge for her work. I’ve recently had similar discussion with some other writers about how they price their novels. What is really being discussed here is “Penetration Pricing” vs. “Premium Pricing”. Based on my own experience, it sounds more complicated than you might first think, but it is really not that complex.

As a newbie writer, when I published my first novella, I priced it at $.99. It is only ~17K words, and I’m a newbie and started (like all of us) with zero reviews. In effect, what I was doing was “Penetration Pricing”: “Penetration strategies aim to attract buyers by offering lower prices on goods and services. While many new companies use this technique to draw attention away from their competition, penetration pricing does tend to result in an initial loss of income for the business. Over time, however, the increase in awareness can drive profits and help small businesses to stand out from the crowd. In the long run, after sufficiently penetrating a market, companies often wind up raising their prices to better reflect the state of their position within the market.” Quoted from this site.

Over time, as the reviews came in on my book and they were positive, and my “star rating” on Amazon was at 4.8 at one point, I raised the price to $1.49 (In two years I’ve only once run a promo and have never “pulsed” the price). In effect, after about 6 months, I switched to “Premium Pricing”: “With premium pricing, businesses set costs higher than their competitors. … Because customers need to perceive products as being worth the higher price tag, a business must work hard to create a value perception. Along with creating a high-quality product, owners should ensure their marketing efforts, the product’s packaging and the store’s décor all combine to support the premium price.”

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Understanding Penetration Pricing and Premium Pricing of your ebook on Amazon ⋆ Tiffany Writing.

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