You have an enormous amount of freedom as a self-publishing author. It’s one of the things that makes self-publishing so compelling and rewarding. Who’s in charge? You’re in charge. And that includes getting to steer your book price and your potential profits.
However, as nice as that freedom is, it doesn’t mean you can just wing it. Successful self-publishing hinges on you making informed choices right the way through. That’s not always easy. Trying to decide how much you should charge for your book is one decision that particularly seems to flummox authors. After all, pricing is not an exact science. It revolves around lots of somewhat arbitrary values, and so it can be hard to know where to start.
There’s a lot at stake, too. Price the book too high and you may not sell many copies. But price your book too low, even if there’s a keen rush to buy it, you’ll barely cover your production costs. Both extremes mean you won’t make any money, and we don’t want that.
Finding that healthy middle ground is one of the most important tasks for a self-publishing author. So how can you work out the right price to set?
In this guide, we’ll talk you through what we’ve found to be the best approach to book pricing by working backward. We’ll start by getting an idea of how much your finished book might be worth to a reader – its list price – and then work back through the wholesale and production processes and see what’s left.
Let’s show you what we mean.
Set a list price
The list price is the amount your readers will pay to a retailer to purchase your book. You might also see it referred to as the recommended retail price (RRP), book price, or sticker price.
A book’s list price communicates a lot to a reader. Books with a higher list price can exude a superior, high-quality image, but fewer people may be willing or able to buy them. Books with a low list price, on the other hand, may be more affordable but readers may also assume they’re poor quality and not worth their time.
It’s a tricky balancing act, and the only way to navigate it is to see what’s worked before.
You’ll need to do some research, comparing like for like, to see what readers have been willing to pay in the past. Try and keep the comparison as similar as you can. Don’t go comparing your text-heavy paperback to a full color illustrated hardback, for example. Look for books of similar production quality, size, and page count, and try and focus on your topic area or genre. No reader is going to pay twice the price for your book if there’s a similar book sat right next to it on the shelf.
Now’s the time to be honest with yourself, too. Make sure you compare your book with authors at a similar stage to you. If you’re a first-time, unknown author, then you can’t expect to charge the same as the latest J.K Rowling. The only time it would be sensible for you to charge a higher price than your competition is if your book is particularly unique, or if you’re confident you already have an established fan base or brand. Even then, it’s a gamble. You can only earn reputation and prestige over time. A higher list price won’t let you leapfrog over authors and brands with years of exposure and reader loyalty, however much you hope you’ll be seen as their equal.
A final tip for setting your list price is to choose a nice number. Some authors like to use a round number like $12.00 or £8.00. Others might prefer to price ending in ‘99′ like $11.99 or £7.99 as they believe it sounds cheaper. Either is fine, just don’t pick an usual number out the air like $11.73. People will only get confused.
Have you now got a rough number to work to?
Great. Let’s move onto the next step.
Choose a wholesale discount
Many self-publishing authors forget about wholesale. It’s a crucial consideration at this stage as it can heavily eat into your profits if you don’t plan ahead.
If you plan to sell your book via a third party retailer like Amazon, you’ll need to sell your book to them at a wholesale discount. It’s this discount that allows them to sell your book at its list price and still make a profit. After all, you’re not the only one hoping to make money here.
The wholesale discount reflects the difference between your book’s list price (the amount your reader pays to the retailer) and your book’s wholesale price (the amount the retailer pays to you). We usually express this discount as a percentage of the list price.
For example, if your list price is $10 and you’d like the wholesale price to be $7, then the wholesale discount is $3, or 30%. Rather than work it out that way round, however, we tend to start with the percentage first.
It’s industry standard to offer a wholesale discount of at least 25%. If you don’t provide this incentive, the retailer will know they won’t make enough profit and may not stock your book at all.
You can’t offer too much either, however. Using our example, if you decided to set a persuasively high wholesale discount, like 80%, then your book’s wholesale price would only be $2. You’re going to struggle to cover your production cost at that price, let alone make a profit.
So, next step. What wholesale discount will you offer? Subtract this percentage from your list price and see what wholesale price you end up with. With that number to hand, it’s time to think about your production costs.
Consider production costs
To make a profit, you need to sell each copy of your book for more than it costs to print. Obvious, right? But remember that you’ll be selling your book at its wholesale price. Only your retailers will sell your book at list price.
How much your book costs to produce will all depend on your design and production choices, and this will be different for every book. A large full-color coffee table book will cost much more to produce than a small black and white paperback, for example.
To work out the next step in your calculation, you’ll need to have already made some production choices. You’ll need to have picked your print house, paper and binding type, and know the final page count for your book. With all this information to hand, your printer should then be able to confirm a price per unit. Bear in mind that the number of copies you order will affect this too. The larger your print run, the lower the unit cost.
Don’t worry about adding on postage costs: your book buyer will pay for delivery costs at the point of sale. For now, just confirm the unit price you’ll pay to your printer.
Finally, we’re ready to work out your royalties.
Calculate your royalties
By now you should have some numbers to work to: your list price, your wholesale discount and resulting wholesale price, and your production costs per unit.
Time to put it all together. We’ll use the example of Gary, who’s about to publish his first gothic horror novel.
List Price: $10.00 Gary looked at other similar novels in the gothic horror genre and decided that his customers will be happy to pay about $10.
Wholesale Price: $7.00 Gary wants to incentivise Amazon to stock his book. He knows he needs to offer them at least a 25% wholesale discount, so to make it a bit more tempting, he offers them 30%. This gives him a wholesale price of $7.
Production Costs: $4.00 Gary’s book is 200 pages long and will be perfect-bound on creme paper. His printer has confirmed production costs of $4 per copy.
Royalties: $3.00 By subtracting the production cost per unit from his wholesale price, Gary can see his royalties. This is the profit Gary will make for every copy of his book he sells.
What do you think? Will Gary be happy with that? Would you?
Understand different currencies
Before we make any further adjustments, there’s one more thing to bear in mind. If you’re planning to sell your book abroad, the impact of exchange rates and foreign currency might also affect the figures.
If you are a US author, for example, and you sell your book in the UK, you’ll earn your royalties in GBP. Exchange rates go up and down so that royalty’s equivalent value in USD will vary too. There’s not much you can do about this: it’s the nature of exports. If you’re hoping to appeal to a big foreign audience, however, it’s definitely worth thinking about.
If the exchange rate suddenly moves a lot, then you could decide to update the price of your book in the foreign currency to protect your royalties. You don’t want to do this too often, though, and only ever if there really has been a sizeable currency shift that’s going to throw out your bottom line.
So how are you feeling? Did your starting list price leave you with a net royalty figure that you’re happy with? Or has it left you worried?
Don’t panic. We’re doing this now so you can get it right. Better to put the work in now rather than guess at a list price and have to change it once it’s on sale.
If you’re not happy with your potential profits, now’s the time to change a number in your equation. Could you reduce your production costs somehow? Maybe lower your wholesale discount? Or do you think your customers might be prepared to pay a little more for the list price?
Carefully play around with the numbers until you come up with a royalty you’re happy with at a realistic list price and wholesale discount. Steer clear of big jumps or extremes and just fine tune. You’re hunting for that magic sweet spot where the whole process harmonizes.
Keep trying, and you’ll find it.