Ranking or Cash Flow?

As is obvious from my last several posts, I’ve been spending a lot more time on the Kindleboards lately.  Considering that Masters is primed and just about ready for release late next month, it seemed appropriate to link up with other indie-types more.  Plus, it’s just fun to talk with people who share your interests, right?

One thing I’ve noticed on there, though, is that folks have a really big focus on Amazon rankings.  As though ranking is everything.  Now granted, your rank corresponds with how many sales you’re making, and how fast.  So it is indicative of how well you’re doing.  But there seems to be a lot of focus on doing whatever is necessary to raise the Amazon rank, and not so much on other business concerns.

A big one being cash flow.  Getting a high (low?) Amazon rank is all well and good, but from a business perspective you really shouldn’t care.  What should you care about?  Cash flow.  And in some cases, seeking the better rank can actually screw you in that regards.  I’m speaking, of course, of those who hop on the $.99 novel price bandwagon.

I’ve seen several people on the boards who are understandably happy to have sold 1,000 or 2,000 copies of their books in a month.  That’s a great thing to have happen, and of course I’m happy for them.  But then I notice that some of them have their books priced exclusively at $.99 (ostensibly because new authors CAN’T price higher if they want to be discovered…which I don’t really buy).  When I see that, I’m a lot less happy for them, because they’ve earned $350 to $700 for the month.  And that’s it.  If they’d priced their books more reasonably, they could be making $2,000 to $4,000 or more.  That’s a lot of money to leave on the table.

John Locke left even more on the table, as Robin Sullivan and others have pointed out, by exclusively pricing at $.99.  But then, he already made a bunch of money in his previous businesses, and he decided on that price point deliberately, as a rational business strategy.

Others decide on it, I’m convinced, based on fear or insecurity.

Well, to heck with that.  I’m in this as a business, baby.  And a business makes cash flow one of its primary concerns.  I did a little cash flow analysis a few months back, showing how one can make good money with relatively low sales if one just keeps putting out product.  Writing and publishing guru Dean Wesley Smith has, for the last couple days, been posting quite a bit about how silly he thinks $.99 is for a novel.  Today, he added another cash flow analysis to the mix, that pretty much says it all.

As usual, I’m in agreement with Dean here.  Full novels shouldn’t be priced at $.99, except MAYBE for very brief periods as a promotional sale.

That’s all I have to say on that.