Book pricing strategy that won’t work
While accepting the Man-Booker Prize (2013) for her novel The Luminaries, author Eleanor Catton said, “I am very aware of the pressures upon contemporary publishing to make money and to remain competitive in a competitive world…
…I am extraordinarily fortunate to have found a home at these publishing houses and to have found friends and colleagues and people who have managed to strike an elegant balance between making art and making money…”
The balancing act the author speaks of is a tough one and being elegant while striking that balance is like a pilgrim trying to ride a giant unicycle as the Kumbh Mela is in progress while wearing a saree. Publishers operate in a dynamic, ever-changing world of business which has its own arithmetic challenges not just limited to book pricing – demands of rising costs and continued money-making for sustenance.
Like all other businesses the publishing industry too, apart from other important things like promoting art and preserving literature, has to make money that can be ploughed back into the venture so as to be able to invest in more authors and reach out to a wider reading audience. This brings us to an important question even before we delve into how the books price is set.
How do books make money?
The primary source for the traditional publisher (a brick and mortar organization that publishes and sells physical books) is the revenue from sale of physical books. A simple formula to apply:
No. of Books Sold X Cover Price per unit
There are other sources of revenue too like sale of ancillary rights – (like movie rights), but we’ll get to that in a later section.
Pricing a Book
Book pricing strategy is arguably one of the most important aspects in driving sales. In price-sensitive India where there are not enough preventive laws to curb photo-copying and no stringent anti-piracy laws, the publishers need to be very careful in setting the cover price of a book.
Given the threats surrounding the traditional publishing business, complete recovery of cost would be a publisher’s objective while setting the price. (Profit would be nice too but given the cost factors and the sales numbers it is quite a wonder that they make anything at all!)
Though you might come across book pricing calculators, software and apps that magically come up with a book price that you can use, you’d benefit from learning more about the cost factors that come into play while pricing a book.
Here are some of them that would directly affect your book pricing strategy.
1. Cost of Book Printing and Creating a physical copy
This is the actual cost of ink and paper and emulsifier to print everything from the words inside to the printing of the glossy cover and the blurbs, the cost of creating the physical sturdy hard-back or the soft paper-back.
2. Cost of Book Distribution
Partridge Publishing, the self-publishing arm of Penguin Books defines this cost as, “The costs involved in offering your book through various channels.”
These various channels vary from shelf-space of retail booksellers to web-space of online booksellers like Flipkart or Amazon. Often this includes discount costs that are built into wholesaler invoices and the physical cost of logistics that are incurred while delivering your book to the various wholesalers and retailers
3. Cost of Sales and Book Marketing
All costs incurred by the publisher in connection with the publicity of your books including web banners, social-media marketing, traditional print marketing, costs of launching the book (if you’re one of those people who get launched with the flamboyance of a party!), cost of featuring you – the author, in various print and online newspapers and magazines.
4. Royalty paid to the Author (Ah, finally!)
This is the monies paid by the publisher to the creator of the work, the author. Usually this is a fixed % of the retail selling price of the book and this % is usually pre-decided in contracts. Sometimes the % varies for hardbacks and paperbacks because the costs involved are different.
Royalties also include % of revenue from sale of ancillary rights which we will talk about a little later on.
5. Book Designing Costs
The cost of book cover design and all creatives that are designed in connection with the book such as author photographs and purchase of copy-righted cover images, if any.
6. Other ‘invisible’ costs
These costs include employee man-hours spent editing and type-setting the book and other overheads of the publishing firm (light, water, electricity, rent, yada, yada, yada).
The selling price (SP) of a book will thus aim to recover all of the costs incurred above and will look something like this:
S.P = Per Unit cost of (1) + (2) + (3) + (4) + (5) + (6) + any profit margin that the publisher wants to build in
Notice the words ‘per unit.’ In India first edition copies that are printed are in the following ranges:
- First-Time authors: 1000-3000 copies depending on how well-known the person is
- Established Authors: 5000 – 10000 copies
Printing anything more than the numbers mentioned above results in the risk of incurring warehouse space for unsold copies.
The average price for fiction books sold in India ranges from Rs. 100 for ‘quick-reads’ and pulp fiction to Rs. 350 for literary fiction titles. Hardbacks cost more than Paperbacks.
Exceptions: Coffee Table Books, Graphic Novels and Picture Books whose printing costs are considerably higher. The number of books printed to are lesser (because this is a niche market and only a select audience purchases these genres) thus increasing the cost per unit.
Other Factors that affect pricing
1. Comparable price of similar books
A publisher normally will not price a book very differently from other titles in the similar genre. A comparison will be made between one author’s brand and position in the market versus the other author before a price is decided.
2. Market & Reading Tastes
What is the market reading? What has been done before? What hasn’t been done before? These are some of the questions that the publishers ask before fixing a price. A book meant for a niche market (like croquet) will be priced higher because of a small perceived number of readers.
3. Reader Demographics
The logistics costs will increase for remote locations but publishers are not known to use a differential pricing strategy. Instead they use a distribution channel that has reach in places where they don’t have a presence. For instance, Flipkart delivers to most locations so publishers will tie-up with such channels.
Other Sources of Revenue – Ancillary or Subsidiary Rights
Most publishing contracts between an author and the publisher will have the following subsidiary rights. (or alternate sources of revenue, i.e, other than sale of physical books).
- Translation Rights
- eBook rights
- Sale of publication rights to a third party (either publisher or agent)
- Sale of adaptation rights to movie producers
- Sale of adaptation rights to television serial producers
- Audio Book Rights
- Braille Rights
Some authors might have sold some of or all of these rights to the publisher who in turn is free to sell these to a third-party (eg: a publisher in a foreign country) and a % of proceeds from these ancillary or subsidiary rights is paid to the author as part of royalties.
Although book pricing strategies aim at complete cost recovery the final decision will always be a function of demand. Which is why some books continue to retail at launch prices while others retail at significantly lower than launch prices.
Do you think there are other determinants of price? Please leave a comment !