How much should a book cost? This may sound like a simple question, but your answer has a huge impact on how well your book sells. Get the price-point right, and your book has an edge. Get it wrong, and your book will fail. Price is so important it is one of the Five Ps of Marketing 101. 

When pricing a book, there is a psychological phenomenon called “anchoring” that will give you the edge you need. 

What is anchoring, and how can you use it to make your books profitable? 

What is Anchoring?

What your book is compared to is a critical part of pricing your book. Marketing psychologists call this anchoring. Anchoring is what gives a number it’s meaning. Put another way, prices have no value without an anchor. 

Is $80 a good price? It depends on what you’re buying and what the anchor price is. If that thing normally costs $100, it’s a deal. If the thing normally costs $50, it is a rip-off. 

When people look at the price of your book, the price itself is only half the story. The other half of the story is what they compare your price to. 

In the marketing and sales copy for your book, you can influence what readers compare your price to. Choosing an anchor for your book’s price is critical for making your book profitable. 

Anchoring Determines Perceived Value

As a kid, I internally anchored all prices the $0.25 it cost me to play an arcade game. For $0.25 I could buy 1-5 minutes of entertainment. My buying decisions centered around the anchor of that $0.25 of gameplay. 

Should I buy an action figure for $5 or spend that money on an arcade game? To decide, I would calculate how much fun the action figure would give me compared to the arcade game. 

Now that I am an adult, my anchor is a two-hour movie. It costs about $25 to take my wife to a movie. That comes out to $12.50 per hour of entertainment. 

When I’m making buying decisions about entertainment, I compare the cost to that hourly rate. The movie price is my universal anchor for all entertainment.

Category-Specific Anchors 

More commonly, people use category-specific anchors. 

When I was a child, I compared every price to the arcade game. Now I compare only entertainment to the cost of a movie. 

When people shop for a car, they compare the price to similar cars. In the same way, when readers shop for a book, they compare the book’s price to similar books. 

With category-specific anchors, the other products in the same category anchor the price of the item under consideration.

The category you choose for your book determines how you price it. While $4.99 for a romance ebook may seem expensive, it feels like a bargain for a legal book. 

Any Number Can Be an Anchor

Anchoring is a well-studied phenomenon. 

In 1974, two well-known psychologists, Kahneman and Tversky, conducted a famous study on anchoring and wrote a paper called, “Judgment Under Uncertainty: Heuristics And Biases.” 

Their goal was to research what kinds of numbers anchored, whether any number could be an anchor, and what the connection was.

Wheel of Fortune Experiment.

To learn about the connection between numbers and their anchor,