How to Set a Price

July 2002
by Dan Poynter

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A book’s price should depend more on its genre or category than on its production costs.

Here’s a formula for determining how to price a given book. As you’ll see, it requires looking at price both from the bottom up and from the top down.

 

Bottom Up: The Traditional Method

To make a profit, you must price your book at least eight times (8x) its printing and trucking-in costs. This is your “delivered production cost.”

Do not include the prepress costs (design, typesetting, and layout) in your calculation. These are one-time charges that should be written off. In days past, we used to mark up both prepress and production costs 8x, but prepress costs have been considerably reduced because of computers. Besides, your book will be around a long time, so you will be able to spread those costs over many printings.

Why eight times? Because of distribution and promotion costs. If you charge less than the 8x mark-up, you won’t have enough money to promote the book.

Distributors (66%), wholesalers (50-55%), and stores (40%) have to be paid for delivering your book to the reader-buyer.

Promotion is also expensive, and it’s normal to invest 20-30% of the gross back into publicizing and promoting. Depending upon a book’s subject matter and the size of the potential audience, we often send out more than 500 review copies to appropriate magazines, newsletters, newspaper columns, and opinion…IBPA Members – Click here to view the full article (login required).

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