How to Set MSRP Pricing for a Business Book
How much do you make for each copy of your book that sells from a retailer?
I get this question a lot from the authors I publish. Their eyes are filled with a mix of hope and angst, fueled by their dreams of glamorous independent living – soaking up sun and umbrella drinks in the shade of a palm frond on a sugary beach, as their royalty checks roll in.
The answer to the book pricing question is complex, and it depends on several factors. The tough part is that a lot of authors glaze over when we break it down. Book pricing is subject to genre, book binding, and even the retail venue where the books are sold. These factors weigh in when calculating the likelihood of your tropical sabbatical.
For example, let’s look at the price of a top selling Business book. The hardcover edition may sell for double the price of the paperback. But that same hardcover book may sell for 50% off it’s sticker price at a live event such as a keynote speech or book signing.
Profit margins are highly variable according to the volume of books printed. Walk into any bookstore and you’ll find this scenario played out in stunning clarity. Pricing at a brick-and-mortar store is quite different from what you’ll see on Amazon, where multiple booksellers compete on price for both new and used editions.
Adventures in Publishing, as Told by the Jet Set
Let’s say that once upon a time, you loaned your cousin a copy of Tim Ferris’ The 4-Hour Work Week, and he took the author’s sage advice a bit too literally.
Now he’s off taking salsa lessons in Buenos Aires – or maybe it’s scuba diving in Cozumel. Anyway, you never got your cherished book back, and now you’re on a mission to replace it at your local Barnes & Noble.
You saunter over to the Business aisle, and you find the now-classic guide to business & high adventure, stolidly taking up shelf space alongside such gems of thought leadership as Jim Gilreath’s Skin In the Game (published by Made for Success Publishing, by the way).
You find a hardcover copy of the Ferris book, and instantly notice a major change. The gold-on-white dust jacket of your first edition volume has been replaced by a lusty orange color with the title in red text, evoking the promise of Mai Tai soaked sunsets on a beach bedecked with palm trees.
You pick up the book. You feel its satiny texture and hefty weight as you notice the annotation on the cover: “Revised & Expanded”. Somebody put a lot of thought and heart into publishing this, clearly. That brings us to the price.
The price you can expect to pay for the hardback is $24.99 – $29.99. The paperback edition is available on Amazon for $19.95 (probably discounted to $12-$13).
Usually the hardback price is a lot higher than the softcover. Hardbacks are expensive to print, and they also have a higher perceived value in the mind of consumers. Regardless, there’s almost always a major disparity between the two, based on materials, retail venue and the timing within the book’s life cycle.
Most retailers expect books to be priced based on the genre and page count, per industry standards. If you price a book too high, the vendor will not purchase it for their inventory. Getting the pricing right the first time is essential to the success of your book.
Unlocking the Coveted Book Pricing Schematic
For professional speakers who want to sell books directly to the public at speaking engagements, the price printed on the back of the book does not preclude you from selling it at any price point you want. In fact, the higher the perceived value, the better your sales at the back of the room.
For paperback books, the calculations for low volume books sold through retail look better than hardcover books because paperbacks cost so much less to print.
Let’s say you self-publish a 220-page book, and you want to print one copy at a time through print-on-demand (POD). Your paperback book will cost you roughly $5.70 to print, and shipping is extra.
If your paperback book’s suggested retail price is $16.99, that means your wholesale price is $7.65. This is based on an industry standard that dictates the wholesale price at 55% of retail.
With printing costs of $5.70, you are now in the black, making $1.95 per copy. The good news is, if you print 100 copies, the cost drops to $3.41 per book, giving you a margin of $4.24 per book.
Now let’s look at the same example for a hardcover book. If your suggested retail price is $27.99, then your wholesale price is $12.95. Using print-on-demand, that same 220-page book in hardcover format will cost you roughly $11.17 to print one copy. Again, shipping is extra.
Despite the retail price of the book being relatively high at $27.99, your book is marginally profitable at $1.78 per unit. Typical shipping costs would be $3.80 per unit, meaning your book is in the red, selling at a -$2.02 loss for every unit you ship.
This is why many publishers opt to print a minimum of 100 copies and ship to central warehouse (such as Ingram). Printing 100 units gets the cost of hardcover printing down to roughly $7.65, or less as printing quantities increase. Now we have a gross profit of $5.30 to work with.
All this background economic information comes into play when setting book pricing for retail distribution. For speakers who operate back of room sales, you only need to calculate the cost of the book and then the rest is profit to you – 100% in your pocket.
Often it makes sense to work with a publisher to print a minimum of 2,000 copies of a book and to ship inventory to Ingram’s central warehouse for retail distribution. In the case of the paperback example above, your printing costs could be lower than $2.35 per copy. This gives your book the best chance for profitability in the marketplace. And you know what that means – more salsa lessons and scuba diving adventures! Such is the stuff of dreams and the inspiration to write your next best seller.
Bryan Heathman is the President of Made for Success Publishing. Bryan works with best-selling authors in the role of publisher and marketer, including the late Zig Ziglar, Chris Widener and John C. Maxwell. Bryan is the author of Conversion Marketing, a marketing book that condenses knowledge on website conversion from 7-years running an online ad agency. Bryan’s Fortune 500 experience includes running high impact marketing campaigns for Microsoft, Eastman Kodak and Xerox.