​Book pricing



Every book, like every other item that is sold, needs a price.



A book is unlike cars and food. A book is like other artistic expressions like paintings -- its price does not have to be related to its cost of production. Many self-publishing companies don’t seem to understand this.



There’s a long-standing price guideline in traditional (not POD) publishing. The cover price printed on the book is about eight to ten times the cost of manufacturing. There are multiple paths that a book may take between the printing press and the reader.



A publisher usually sells books through one or even two levels of wholesale middlemen before books reach a retail store. The store expects to have a markup of about 40%, and the wholesaler receives about 15%. Combine the two figures and you get the common 55% trade discount.



A book that costs $1.50 to manufacture could be sold to a wholesaler for $7.18, sold to the store for $9.57, and sold to a reader for $15.95. Some books are sold directly from publisher to bookseller, or even directly to readers. Some books, particularly those promoting religious or political views or a business, are sold below cost or even given away if the message is more important than money.

The bookselling sales path is complex, costly and filled with waste. Traditional publishers -- and therefore readers -- pay for the cost of warehousing, handling, shipping books to stores and sometimes returning them if they’re not sold.



With online sales, Print-On-Demand and self-publishing, the sales path is much simpler. There are no middlemen to keep their pieces of the selling price. A book can be sent directly from the printer to the reader. Amazon gets a piece of the action but it has to cover only administrative expenses and profit, not warehousing, order picking or returns.



The obvious conclusion is that a self-published author can price a book lower than a big publisher can -- but obvious is not accurate. A 300-page book sold by a mainstream publisher may cost $1.50 to print, so it can support a $15.95 list price (or less). The same-sized book produced with POD could cost $5.40 to print. With the “8X” formula, it would be priced at $42.95 -- and might be so costly that no one would buy it.



But if you choose to ignore physical bookstores (except for special orders), you can be much more flexible in your pricing. Online booksellers will accept a discount as low as 20%. The book that costs $5.40 to print and has a $15.95 cover price can be sold to Amazon for $12.76. You and the publisher divvy up the difference between $5.40 and $12.76 -- a markup of 57.7%. If you are the publisher, you don’t divvy up anything.



Up or down



It’s generally best to keep your price in line with its competitors. You can go lower if you are trying to establish your “brand” and think a low price will attract buyers—and are willing to sacrifice income. However, if your price is too low, your book may seem insignificant. If it’s vitally necessary for students, business or government, a book that costs $5.40 to print with POD could bring in $29.95 or even $75. If people believe that your reference work or new theory will save them or make them many times the investment, there is almost no limit to the price.



Beware of self-publishing companies that dictate book prices based solely on the page count and binding type. That’s not a good way to do business.



Making cents



Most printed book "cover prices" end with 95 cents. Most e-book prices end in 99 cents.

​

This comes from the common technique of pricing other retail products and even real estate. The long-held assumption is that if someone reads “$15.95,” she or he will concentrate on the “15” and will ignore the fact that the price is indeed very close to 16 bucks.



I doubt that anyone is fooled by this silly subterfuge, but it’s been going on for so long that it has become the accepted way of doing business. It’s like gasoline prices which always end with nine tenths of a cent.



It can’t hurt to stick with the system. There’s probably nothing to gain by having a price of $12.29, $16.50, or $19.99.



Some publishers reject the 95-cent scam and use whole numbers. There’s nothing wrong with it, so try it if you like.



There may be some apparent glamour in pricing in whole dollars. If I was publishing a very expensive book and wanted it to have a classy and confident image that dismisses the need to discount, I’d probably mark it $50 or $100, not $49.95 or $99.99.



Xlibris likes weirdo Walmart-style prices like $17.84, $19.54 and $24.64. Interestingly, Walmart now uses lots of whole-dollar numbers -- with no odd cents. Walmart said its customers prefer simple prices. Maybe Xlibris should ask book buyers.



Two important warnings



To price your book, you have to contemplate its perceived value. You may think your masterpiece is worth $19.95. But if most of the competitive titles sell for $9.95–$12.95, you’d better be very sure you can justify a higher price and that potential shoppers will understand the difference and can afford the extra dollars.



Self-publishing companies may be inflexible in the discounts they offer to booksellers -- insisting on offering 50% or more, even if you are interested only in the online sellers which will accept 20%. The high discounts mean LESS money for you! Mill City Press provides discounts up to 55%, and WestBow Press up to 50%. Cindy, a Westbow rep, told me that no publisher could operate with 20%. She’s wrong. Dog Ear Publishing can do it. So can my company.



Wholesaler vs. Distributor vs. you



With food or clothing, “wholesaler,” “distributor” or even “wholesale distributor” are different names for the same type of business. It’s a middleman company which buys products from a manufacturer and sells them to a retailer.



In the book business, they may not mean the same thing. Traditionally, a book wholesaler passively takes orders and ships books, while a distributor is active, with salespeople visiting and calling booksellers, and probably charging more for its services than a wholesaler does. Some books go through both a wholesaler and a distributor.



Most self-publishing companies have multiple paths to get books to readers, and the path (channel) determines how much royalty you will receive.



On books sold from the publisher’s website, you could get a 50% royalty. This is the highest royalty percentage, but because of limited website traffic, your sales and income will probably be minimal.



On books sold through online sellers such as Amazon.com, you could get 10%, or possibly a bit more.



On books sold through terrestrial booksellers which pass through a distributor or wholesaler or both, your royalty may be just 10%.



If you buy books from the self-publishing company and can sell them yourself, you may make a profit of 50%, and may even get a royalty, too.

​

Self-publishing companies may calculate royalties based on either the retail “cover price” or the wholesale price. Be sure you know what to expect.