How to Price Books for Retail and Non-Retail Sales

Pricing your book properly may be the most important marketing decision you will make as a publisher. The price you choose will determine your sales, revenue, profits and opportunities for long-term growth. However, there is a big difference between pricing for sales through retail stores (including bookstores) and to non-retail buyers. You can improve your business significantly if you price your book correctly for retail or business-to-business (B2B) sales.

Most publishers price their books for sale through retail stores, particularly bookstores (brick and clicks). They consider their costs (production, distribution, shipping, operations) and the desired profit, and then set the price. This is placed on the rear cover and included in all metadata. It tells consumers how much the publisher values the content, and it sets the point from which distribution discounts are calculated.

The second consideration is the price at which it is sold to buyers in the non-retail, B2B segment. This includes buyers in corporations, schools, government agencies, and associations. These people are less concerned with the list price than they are about the unit price they will pay for a large, non-returnable purchase.

Retail Pricing
The challenge with retail pricing is that the price of your book is readily compared to competitive titles nearby on the shelves (or on the computer screen).  If your price is too low, people may perceive your book as not valuable. If it is too high your book may be perceived as not worth the money you are asking for it, especially if there are similar competitive books from which to choose.

Given these circumstances, many publishers price their book the same as competitors. This is dangerous since those competitors may print their books in large quantities, yielding a lower cost. If you print fewer books with a higher cost and sell them at the same price, your profit could be reduced or eliminated. And this strategy does not differentiate your book or give adequate value to your content. Your book becomes a commodity product.

Let’s look at retail pricing form a different perspective to see the impact of pricing strategy on sales, revenue, and profits. The difference among these measures is demonstrated in Figure 1. Some publishers price their book at the lowest possible figure with the objective of maximizing unit sales (shown in left-hand column). The price of $9.95 forecasts the most sales (2250 units). But unit sales alone will not determine how much money you could take in.

Perhaps your goal is to maximize revenue. In this case you would price your book at $18.95. Even though you will sell fewer books (1800), your net revenue will be higher (after deducting distribution fees and direct costs).

Figure 1

If your objective is to maximize profits, then another factor enters the equation: the possibility of selling more books decreases as the price increases, given a competitive marketplace. The solution is to assign a probability factor — the likelihood of making the sale at any given price.

Let’s assume that if you set your price at $9.95 the probability of meeting your forecast is 100%. And it decreases to 10% at the highest price (all figures in the “Probability” column in Figure 1 are not calculated, but only shown as examples). The price at which you will realize the highest profit in this example is $14.95.

Pricing for non-retail sales
B2B pricing strategy starts at a different place then in retail strategy. The price of your book is not compared to other books, but to other choices of promotional items such as pens, coffee mugs, or notebooks. Instead of pricing a potential order from the top down (discounting off the retail price), start with the unit cost to customize and print your book in various quantities, and then go up.

The amount you add to your cost is negotiated separately with every buyer and for each potential order. An important factor is that B2B buyers do not purchase books through a distribution channel, but directly from the publisher. Without the distribution fees you can negotiate a significantly lower selling price without sacrificing profits. Figure 2 shows an example of pricing a B2B sale at different quantities to demonstrate this strategy.

How would this apply in a sales situation? Let’s say your prospects want to stimulate booth traffic at trade shows by giving away an item to people walking past their exhibit. The two products under consideration are your book and imprinted coffee mugs. They expect to purchase 5,000 of the selected item. The cost of coffee mugs ranges from $2.50 to $3.00. Your B2B pricing strategy makes you competitive with the coffee mugs. You now have a good chance of selling 5,000 books. In comparison, if you applied retail pricing strategy and discounted your $14.95 book by 60%, your selling price would be $5.98 and you would have no chance for the order.

These alternatives demonstrate that pricing is more complex then simply mimicking your competition. The answer to your pricing dilemma lies in your ability and willingness to apply strategic thinking to achieve your marketing objectives. It is not an either/or decision. Choose the option that best suits your strategy when marketing your book through retail stores or to business-to-business buyers.