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How to Set a Price

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A book’s price should depend more on its genre or category than on its production costs.

Here’s a formula for determining how to price a given book. As you’ll see, it requires looking at price both from the bottom up and from the top down.

 

Bottom Up: The Traditional Method

To make a profit, you must price your book at least eight times (8x) its printing and trucking-in costs. This is your “delivered production cost.”

Do not include the prepress costs (design, typesetting, and layout) in your calculation. These are one-time charges that should be written off. In days past, we used to mark up both prepress and production costs 8x, but prepress costs have been considerably reduced because of computers. Besides, your book will be around a long time, so you will be able to spread those costs over many printings.

Why eight times? Because of distribution and promotion costs. If you charge less than the 8x mark-up, you won’t have enough money to promote the book.

Distributors (66%), wholesalers (50-55%), and stores (40%) have to be paid for delivering your book to the reader-buyer.

Promotion is also expensive, and it’s normal to invest 20-30% of the gross back into publicizing and promoting. Depending upon a book’s subject matter and the size of the potential audience, we often send out more than 500 review copies to appropriate magazines, newsletters, newspaper columns, and opinion molders. Reviews are the most effective and least expensive promotion you can do for your book. But they are books not sold.

 

Top Down: The Additional Method

“Neither the customer nor the retailer knows or cares what it costs to print the book. They only know what is worth to them,” columnist Roger Pond has pointed out.

The price you put on your back cover, imbed in your bar code, put on the order blank on the last page of your book, and list in all your promotion should be as much as the market will bear.

This means that you have to check out the prices of books like yours, books that will be competing with it in the marketplace.

Yes I know; your book has “no competition.” Everybody thinks their book is unique. But buyers do have a choice.

And don’t fall into the trap of thinking your book is for “everyone.” For instance, I publish books on skydiving. I would like everyone to jump out of a plane to have fun, to skydive safely and to come back, make more jumps, join the club, buy equipment, and buy more books. But I am realistic. I know skydiving is not for everyone. It’s important to determine the profile of the potential purchaser for your book realistically.

So visit local and/or Internet bookstores, and look for other books on your subject that would be purchased by readers like yours. When you find them, look at the formats: shape, color of printing, length, type of cover and binding.

You want to learn what your potential buyer is willing to spend. If you are selling to teenagers, your price will have to be low and your format will have to be softcover. If yours is a business book, $34.95 for a hardcover with a dust jacket may be right. If it’s a professional book–aimed at doctors or lawyers, for instance–a hardcover book without a jacket at $90 would not be out of line.

If you poll bookstore managers on pricing, remember that lower prices will sell more books, so they will often advise a relatively low price.

You have only one smart choice with the top-down approach. Set a cover price right in the middle of the price range for books that will sit nearby on bookstore shelves. Customers will compare. If your cover price is too high, you will price your book out of the market and it won’t sell. If it’s too low, the book will not be credible and potential buyers will think there’s something wrong with it. You also won’t make enough to invest in further promotion.

Often you will be surprised what people will pay for your book. Many publishers have actually ended up selling more copies by raising prices, but only when buyers had been convinced of the value and benefit of the book.

 

The Final Figure

Compare your bottom-up price with your top-down price. Ideally, the bottom-up (8x) figure will be lower than the figure that fits the competition. If not, you will have to reformulate your book. In other words, cut back the size, leave out color photographs, use less-expensive materials, or do something else that will let you price the book to sell.

Dan Poynter is the author of “The Self-Publishing Manual” and a past Vice-President of PMA. His company, Para Publishing, provides valuable guides on book publishing. Web site:

http://ParaPublishing.com.

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