I’ve seen formulas for pricing books based on printing cost, total production cost, or the average competitor’s cost. None of them come close to capturing the whole picture. For starters, book pricing is based on a combination of those three factors, plus an adjustment for page count (maybe the competing books are twice as long) and the distribution discount. Readers may not be able to judge a book by its cover, but most can judge a book by its cover price. If you don’t believe me, think of the last decent book you bought, then ask yourself how you would have felt about if it had cost you 50 cents or 50 dollars. If it makes no difference, you’re a very special person. That’s why when self publishers ask me how to price a book, I suggest first and foremost they have to give their readers good value for their money. If for technical reasons, you can’t publish a book at reasonable cover price and still make a profit, the answer is not to publish the book, at least not if you want to succeed in business.
Since part of the customer’s perception as to whether or not they are receiving good value for their money is based on the prices of similar books in terms of genre, size and binding, it’s best to do your homework at your local bookshop or on Amazon. Frankly, it’s easier to use Amazon, because amongst the other sorts they let you do for a given subject area or collection of related titles, is a pricing sort. Unlike browsing your local bookstore, this is also a good way to find out what the true market price for a book is to a serious shopper who does price comparisons. Amazon lists both the cover price and their discounted price for those titles which they discount. While I’m considering how to price my books, I keep in mind that in some instances, the price paid for the book is what the buyer will remember, not the cover price.
The two factors that I see as most important for pricing a book are the perceived value to the customer, and the net profit to the publisher. This requires that you understand the economics of your distribution channels before you print the book, unless you plan on leaving off the cover price. Some publishers do leave off the cover price to give themselves maximum flexibility, but I see it as a sign of a publisher who hasn’t figured out their business. Keep in mind that there’s nothing holy about the cover price you set, the book will almost certainly be available for less through some outlets and may even be sold for more through others. When retailers sell your book for less than the cover price, they normally brag about it, stating X% off the cover price. When they sell your book for more than the cover price, usually because they couldn’t obtain it cheap enough to meet their own profit margin requirements, they normally resticker the book. Restickering is where they produce a nice sticky label with your ISBN and bar code that shows the new price at which they are selling the book, and stick it over your existing bar code and price.
The only way to determine how to price your book so you can make a profit is to use a combined printing/distribution cost, where the profit (minus returns) is baked in from the start. For large trade publishers, this usually means contract printing combined with their own distribution, since their title lists are large enough to justify going direct with all of their major customers. They may still use distributors like Ingram and Baker&Taylor to cover some independent stores or libraries, but the majority of their sales go through their own warehouses. Some very small publishers also do all of their own warehousing and distribution, simply because they can’t operate with a master distributor who requires a 60% or 70% discount off the cover price and still make a living. Most of the publishers rely heavily on distribution to reduce warehousing costs and in some cases, to get their lists exposure. In all of these instances, if you do your homework before you print the book, you can come up with a pretty good estimate of how much you’re actually going to net for any given cover price.
The easiest way to figure out exactly how much you’ll earn per book is to use Lightning Source or Replica, the print on demand providers who allow you to set one discount rate and get your book distribution through Ingram (in the case of Lightning Source), or Baker&Taylor (Replica). If you set a short discount, 25% is the minimum I’d use, you can net over half the cover price on most books, unless you price them well below the market. Using the short discount and not accepting returns guarantees that you’ll make a profit on each book sold, but it also guarantees that your books won’t be stocked on bookstores shelves, unless you make a separate arrangement with those stores for quantity pricing. So, forget about the rule-of-thumb multipliers you’ve seen that say you have to charge 5X or 8X the printing cost of a book to make a reasonable profit and work it out for yourself on a title by title basis. Sometimes you might get away with 3X, sometimes the market might allow you to charge 10X or more. The printing cost alone isn’t sufficient to tell you how to set the cover price.