Every book, like every other item that is sold, needs a price. Unlike clothing and cars and food, the price a book is sold for, like the price of other artistic expressions like paintings, does not have to be related to its cost of production. Vanity presses don't understand this important concept.
When I was in high school, I had a part-time job in a men's clothing store. Periodically, we'd receive a shipment of neckties from a manufacturer in India. The wholesale cost to the store was $36 per dozen, $3 per tie.
At that time, the normal markup or gross profit in menswear and in much of retailing was 40%, meaning that 40% of the retail price was markup. If something cost the store $6, it was sold for $10. The $4 markup paid for the costs of operating the business: overhead (such as rent and insurance), salaries, advertising, and taxes. With any luck, there would be something left over to be kept as net profit for the business owners.
Theoretically, the retail price for those ties that cost us $3 would be $5 each. But that's not the way it worked.
The menswear buyer -- sometimes with assistance from his boss, the merchandise manager -- would spread out the shipment on a counter. Typically 12 dozen ties came in at one time. He�d then sort them into stacks to be sold for $5 each, $10 each, $15 each, and various prices up to $30 or even beyond, determined solely on the basis of perceived beauty. Some of the uglies were ticketed at $2.99 or even 99 cents to get rid of them quickly.
There was no difference in the value of the raw material or the labor of the silkworms or the tie-makers that resulted in a 99-cent tie or a $35 tie. The only difference was perceived value. Ties that looked nicer could be sold for a higher price. A basic requirement for a menswear buyer is the ability to pick the right products and to judge how much to charge for them.
Sometimes a buyer would earn a bonus based on his department's profitability. Sometimes a buyer would get fired if he made too many mistakes, buying products that had to be marked down rather than sold at full price.
Traditional (not POD) publishing has a long-standing guideline for calculating the cover price printed on the book. That price is typically about eight times the cost of manufacturing. In clothing retail terms, that translates into a markup of about 88% between publisher and reader.
The bookstore business does not follow the same pattern as other retailers, and there are multiple paths that a book may take between the printing press and the reader.
Traditionally, a publisher 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 $1.00 to $1.25 to manufacture could be sold to a distributor for $4.50, sold to the store for $6, and sold to a reader for $10.
Some books are sold directly from publisher to bookseller, or even directly to readers. Some books, particularly those promoting religious or political views, 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. 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 Print-On-Demand, the sales path is much simpler. 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. There are no middlemen to keep their pieces of the selling price.
The obvious conclusion is that an independent self-publisher can price a book lower than a big publisher can.
But obvious is not necessarily accurate.
One big difference between POD and offset printing is cost. 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 there's another way to market books.
If you choose to ignore the physical bookstores (except for special orders), you can be much more flexible in your pricing.
Amazon.com will work on a discount of as little as 20%, or even less when they sell below cover price. The book that costs $5.40 to print and has a $15.95 cover price, can be sold to Amazon for $12.76. You keep the difference between $5.40 and $12.76 -- a juicy markup of 57.7%.
But here's where you have to work like the menswear buyer, sorting out the ties. You have to contemplate the perceived value of your book. If most of the competitive titles are selling 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. If not, keep your price in line, or even go lower if you are trying to establish your "brand" and think a low price will attract buyers.
Some books, however, can have much higher cover prices.
If it's vitally necessary for students, business, or government, a book that costs $5.40 to print could bring $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 it will bring. Above $29.95, the book has to look really good physically. It probably should be a hardcover and have several strong endorsements from experts in its field.
Making cents
Most cover prices end with 95 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 that 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.
Vanity press Xlibris uses Walmart-style weirdo prices like $17.84, $18.69, $19.54, $22.94, and $24.64. I don't get it.
From Become a Real Self Publisher: Don't be a Victim of a Vanity Press by Michael N. Marcus
