Pricing for Profit

December 2001
by Brian Jud

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Price is the element of a marketing mix with the greatest impact on revenue. (The others–distribution, product development, and promotion–produce revenue indirectly.) Yet some publishers establish prices by following a simplistic rule of thumb that says the price should be eight times printing cost and others just match the prices of the competition.

There are problems with both of these strategies. In the first case, your list price will obviously vary with the quantity produced. The unit printing cost for 1,000 copies of a 6″ x 9″ 192-page softcover book could be $2.60. Eight times that is $20.80. However, if you print 3,000 copies of that identical book, the unit cost could be $1.45 and eight times that is $11.60. Given this framework, you might choose to print 3,000 copies in order to match or be below your competitors’ prices. However, if their prices were based on larger print runs, it could be financially dangerous to match them.

So what is a publisher to do? Your immediate response might be to set an arbitrarily high price to maximize your revenue even if you sell fewer books in the process. Unfortunately, this typically results in only a short-term gain. On the other hand, you might decide on a low price to sell more books. But given the book industry’s traditional distribution structure, this strategy may be untenable. The most favorable pricing goal for your circumstances may not be maximum profits or sales–but optIBPA Members – Click here to view the full article (login required).

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