Monday, March 1, 2010

In Book Sales - The Price Needs to be Right


Figuring out the correct price for your work of fiction or non-fiction is key if you want the maximum amount of your target market to be able to purchase your book.  In this economy more than ever figuring out the right price is imperative to your publishing success.  So how do you figure out which price is the right price?

Before you can even think about configuring a final price, you need to first figure out the unit price to print your book, shipping reductions (if applicable).  This will vary slightly depending on the printer.  For Lightning Source it amounts to .013 per page plus a small printing fee.  So for retail buyers, my novel "Burden of Proof" at 378 pages has a printing cost of just under $6.00.   

Next in setting the price you need to look at other comparable books in your genre and their pricing for a new release.  Most new releases run $15 to $30.  I would like the lower end of the price range as I want readers to be able to afford the book, but two additional factors play into final price: 1)wholesale and retail price- two important terms in the world of publishing and distribution. 2) royalty and profit consideration.

Retail Price: the price you see on the book cover and how much publisher's suggest the bookstore sell your book for.  

Wholesale Price: The wholesale price is how much the retailers actually pay for your book. If you want to be sold in stores you need to allot 50-55% off the cover price, this wholesale rate is the actual purchase price for retailers and how your royalties will be configured.  While thinking about the right price for your new release, you must keep the discount/wholesale price in mind constantly along with the second factor:

Royalty/Profit Consideration- How much of a royalty must you earn in order to make a profit, albeit modest, to keep you as an author out of the red and recoup your publishing investment. Don't get greedy about royalty won't make you more money if fact a higher royalty typically equates to less sales and net profit.  Don't sell yourself short or make it so you have no royalty, but realize that the Rate on Return for book sales isn't a lot and to sell in quantity means more revenue and to sell in quantity you need to have a reasonable wholesale rate for retailers and retail price for consumers.

For "Burden of Proof" I studied the prices of books at local bookstores and mega chains.  I knew I needed to make $3 per copy sold in order to feed that money back into my publicity and publishing campaign.  With Lightning Source the Royalty Rate is the wholesale price minus the printing and handling fee.  I originally thought of setting the price at $16.00, but then I wouldn't be able to give the required discounted wholesale rate bookstores require.  I opted to then set my novel at $18.95 with a 50% wholesale discount, therefore costing $9.48 to the retailer.   Since many retailers reduce the cover price in store and online I thought this was a fair price for a new release.

Of course pricing is heavily dependent on your genre.  For instance children's books, unless hardcover should have a retail price around $12-$15 at the max, and a price around $7-9 is better.  This is hard to do with the printing cost and 55% discount, so you will need to figure out additional printing options (for instance paying upfront to print say 1000 copies for a offset printing rate or working with bookstores to have less of a wholesale discount).

For non-fiction books you can get away with having a slightly higher price to a threshold of $25, especially if you have a legitimate expertise in this area. 

One quick note: In pricing it's always better to go with .95 versus going up .05 cents to .00.   Crazy as it is, consumers look at the first too numbers so if my book is $18.95 they might round up to $19, but most consumers see the $18 and erase the .95 cents, making them think the book is cheaper than if it were priced slightly higher at $19. 

Kindle Pricing:

Kindle and e-Book pricing is an entirely different game in many ways to printed books.  For one you don't have to subtract the printing and distribution cost from your overall price.  To date Amazon takes 65% of the profit from Kindle sales leaving the author/publisher with a 35% royalty rate.  This is going to change as authors have the option this summer to opt for 70% royalty, but for longer books the 35% off retail price might be better.  Why?  In the 70% royalty rate - the royalty isn't taken from the book price, but the book price minus a KB fee.  So Amazon takes a certain amount per KB transfered and subtracts that from the retail price and then you get 70%.  For short books with few KB this is great, not necessary more money for longer novels over 300 pages.

In Kindle pricing I had to experiment a little.  I started off with $11 because I wanted to match the royalty ratio I get out of paperback sales and figure $11 is less than the physical copy.  I quickly realized I was overpricing the Kindle book.  The e-book royalty rate is pretty shabby, but I'm also not have to take out expenses of printing and e-downloads are quick and easy sells.  I then moved down to $4, and sold a few copies, but I finally became humble and priced my new release at $1.99.  Since changing the price I've sold 60 copies, after only 4 sold at $4.  

I don't think you should devalue your book by pricing it too low on Kindle, but you need to realize that many users won't pay above a few dollars for a new or unknown author.  I suggest with a lower price and then after a few months maybe move it back up, by then you'll have enough good (and unfortunately you'll get some negative reviews) to cement your e-book sales.

I'll do an entire feature on Kindle and Smashwords in the coming weeks. 

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