Pricing can be a fraught subject, as it is something
which publishers like to control and regard as an integral part of
selling the book. It is quite common for authors to find that their book
is not priced as they think, or had expected, it would be. Increasingly,
even your editor will not have the final say on this, which will come
from the sales department.
It’s worth looking at pricing more closely, as it reveals quite a
bit about how a book is marketed and sold, and may help to explain
apparent – and perhaps worrying - inconsistencies.
The cost of production
There was a time when the price at which a book was sold bore a more
obvious relationship to the cost of production than it does now.
Publishers have always worked towards an ideal cost of goods as a
percentage of the selling price, but this has been, and often still is,
expressed as a mark-up. So typically they might work on a five (or
six) times mark-up, meaning that the selling price in the shops
would be five times the cost of production (i.e. print and paper). Book
packagers, who ‘package’ books for publishers and usually deliver
finished copies, generally work on a four times mark-up.
Publishers’ margins
But, you may be wondering, why on earth does the publisher need to
have such a high mark-up? No wonder books are so expensive! What you
have to remember is that the publisher will typically get only about
50% of the cover price of a book from the wholesaler or chain of
bookshops and perhaps as much as 60% from independent bookshops ordering
directly. Out of that 50%, publishers have to cover:
Margins in publishing are actually pretty tight.
Pricing down
What makes the whole pricing equation very much more complicated is
that pricing is increasingly used as a sales tool to achieve volume
sales. Thus, if a publishing house is launching a new fiction
writer, it may well feel that the book will get its best chance if it is
priced well below the average price for a hardback book of that size and
in that format. £14.99 (or $25.95) might still be considered an average
price for a shorter novel, and £15.99, £16.99 and £17.99 ($26.95,
$27.95 and $28.95) novels can all be found on the shelves in a way that
they would not have been a few years ago.
The publisher might well decide to price that £14.99 ($25.95) first
novel at £12.99 ($19.95), or even £9.99 (the lowest in the US seems to
be $19.95) to persuade book buyers to try out a new author. The sales
logic is impeccable – what the author’s career needs is for their
book to be bought and read on as large a scale as possible to launch
them and establish their name for the future.
The effect of discounting
The problem with all this is that the book trade is also very keen
on discounting, so there is pressure for the publisher to supply the
‘big’ book at a special discount so that the bookshop can discount
it, from £9.99 to £7.99, from £12.99 to £9.99 and from £14.99 to
£11.99, with dollar equivalents.
On more established bestselling authors there is even more pressure
to fund a hefty discount, as these are the books which bring a wider
cross-section of book-buyers into bookshops in search of their favourite
authors and also sell well to ‘light’ book-buyers in
supermarkets and discount stores. But these are of course the very
authors who will have been paid a big advance, possibly creating a major
unearned figure, and whose royalty rate will be at the very top end of
the scale – 15% or even 17.5% on hardback sales.
The battle for market share
So what the intense competition in both publishing and bookselling
has created is a fixation on market share which directly affects
publishers’ margins and booksellers’ discounts. The bestsellers
are by definition the very books which are guaranteed to sell in large
quantities, the ‘bankers’. The publisher is determined to give their
big authors, whether new or established, the greatest possible price
advantage. The bookseller needs to discount bestsellers heavily to
make sure they are not undercut by the competition. The independent
booksellers simply cannot compete, as they cannot get a high enough
discount from publishers to match the chains’ discounts to their
customers.
Both publishers and booksellers are thus pricing down and
discounting heavily the very books which would in the past have brought
home the bacon and helped, in effect, to subsidise the rest of the list.
Other kinds of publishing
It’s a relief to be able to report that many other areas of
publishing have managed to escape this particular general publishing
discount trap. Niche publishers of all kinds and academic publishers in
general are able to price their books according to what the market will
bear. Their reasoning is that the market for their books is a
committed one – book-buyers need or want a particular book – so they
can safely price up and print a smaller quantity, with a reasonable
chance of the book being profitable.
It is only general or ‘trade’ publishing which treats books as
commodities, with all the pressures and risks that involves. But,
even outside the mainstream general publishing areas, don’t expect
your publisher to price your book according to your expectations or even
preferences. They are likely to feel that their expertise comes into
play on this and that they are best placed to come up with the
right market price for the book.
Chris Holifield
