How to Price a Book

Pricing a book is one of those areas in publishing where if you do everything else right but price the book wrong, you can cancel out all your hard work. How wrong you price the book would be directly proportional to how much harm you do, and it cuts in both directions. If you price your book too low, you can easily get into a situation where you are losing money on the average copy sold. If you price a book too high you can end up with no sales at all. It all depends how far you misgauge your market.

One way to approach the pricing challenge is to establish a low price and a high price, then pick a number in between. The low price is fixed by the minimum at which, after all of your expenses (authoring, editing, design, printing, warehousing, shipping, and distribution discount) your net per copy is just enough to break even at your projected sales. If you're smart, you won't project sales of more than a couple thousand copies unless you've had quite a bit of experience publishing, in which case you probably aren't reading this. If you go work with Lightning Source, the main provider of print-on-demand services in the US, you can nail the printing and distribution costs down to the penny before you publish, and not take on any inventory risk.

On the high end, the place to start is pricing competing titles, or at least books in the same genre. The rough measure is simply looking up a dozen titles on Amazon and noting the cover price. A better approach is to find titles of a similar cut size, page count and binding to compare with. If you plan on Amazon being your main outlet and you really want to get fancy, you can use the new selling price on Amazon rather than the cover price. In addition to determining an average price for competing or similar titles, you want to note the highest and lowest of these.

Now we get into the fuzzy math. You've figured out how to price your book so you can break even if you make your projections, but obviously, that's not the price you want to go with. The important thing is that this price better be well below the average selling price you worked out for related titles, and at least a little below the low cost of your cheapest competitor. If not, I'd strongly suggest you rethink your business model, There's no set rule for how much a publisher should try to earn on each book sold, but it's nice to target 40% to 50% of the cover price. I say "nice" because small publishers using large distributors for offset books may find themselves giving away 60% to 70% of the cover price just to get the book into distribution!

Once you establish that you can pick a cover price substantially higher than your break even point, the math gets even fuzzier. I like to price my books below the average competing titles when possible, but I also like keeping the profit up around 50% of the cover price so I can generate revenue without having to go the bookstore stocking route. It's a risk vs reward game. I may lose out on substantial sales, but I earn substantially more per sale than I would if I'd chosen a business model that would have given my titles a shot at store shelves. I stick with the short discount model available through Lightning Source so I net a little over 50% on every copy sold at cover price of $14.95, which I've used on all of my titles to date.

I know some small publishers who change their cover price several times after publication, trying to find the sweet spot. I've never fooled around with this myself; one of the issues I have with it is they end up making pricing decisions based on such short term trends that I don't see how they can trust the data. Book sales go up and down with the season, with the news, with the school year, and with your promotional activities. If you do your homework before you publish, you should be able to set a price that, if not ideal, is at least a price you're happy with. Last but not least, don't forget about taxes. If you're successful as a publisher and you keep your expenses low, you may find at the end of the year that you're counting out your money saying, "One for me, one for Uncle Sam. One for me, one for Uncle Sam."

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