Determining the Right Retail Price for Your Book

Matt: Welcome back to Publish & Prosper, everybody. Today, we are going to talk about how to set the retail price for your book, and how to calculate that price, and everything that goes into those calculations. So understanding where your book's price starts out from the manufacturing level and how to work your way up to a retail price is going to be the big thing for today. 

Lauren: Wow. What a thrilling topic. 

Matt: I know, right? I'm on the edge of my seat. I'm also not feeling well and so is Lauren. So this is probably going to be a really weird episode, but whatever.

Lauren: I mean, that could add some kind of entertainment value, or it could just mean that we're both going to have really weird vocal fry. 

Matt: Or it means that this episode gets half the listens that the other episodes get. So what's half of five, two and a half?

Lauren: I would say let's round it down to two. 

Matt: I'm just kidding. I got cough drops and water. I think we're good. We got this. We totally got this. 

Matt: You ready to do some math? 

Lauren: No, never. 

Matt: You ready to get mathin’? 

Lauren: No. 

Matt: Yeah?

Lauren: I didn't do - there's not a single ounce of math in this outline. I don't know what you think math we're gonna be mathin’ so -

Matt: No, no. I'm gonna throw the math in there. 

Lauren: Oh no. 

Matt: I brought the math with me.

Lauren: So I told Matt that he was gonna have to like, spice up this episode somehow, and apparently his method for doing that is just gonna be to make me do difficult math questions. 

Matt: Yep. Yeah. 

Lauren: And then mock me for getting them wrong.

Matt: Go ahead and pull your calculator up on your MacBook now. 

Lauren: No, thanks I think it'll be more fun for everybody if I wing it.

Matt: Prepare to be embarrassed

Lauren: Can't wait to come into every single one of these episodes, honestly. 

Matt: All right. 

Lauren: All right. 

[2:00]

Matt: Well, let's jump in. Let's start talking about the different costs associated with your book. So in order to set a retail price for your book, whether you're going to sell it in distribution or from your own website or anywhere else, you need to understand what you're going to set your retail price at and how to calculate that in a way that makes sense so that you're not underwater every time you sell a book, but also so that you're not pricing yourself out of your genre or category.

Now, obviously this does not apply to situations where you might be giving the book away for whatever reason, whether that's as a promo or as a lead magnet, something like that. Really what we're gonna be discussing is everything that goes into calculating that retail price so you don't end up underwater. The first thing you need to understand at its core is the actual production cost of your book. Clearly we're talking about print books here. We'll touch on ebooks, but really most of this is about print books. 

Lauren: Yeah. 

Matt: The production cost or sometimes referred to as the print cost, it just depends on what platform you're using. It's basically exactly what that sounds like. It's… what is the actual cost to print that book? And typically it's on a per unit basis. You might get a quote from a printer for a thousand copies or something like that, but it should still be broken down on a per copy basis, which will help you sort of start to calculate your retail price. 

This is also what the price should be if you want to go in and buy author copies for yourself or for something else. You should be paying the manufacturing cost. Some platforms might charge a little bit extra percentage on top of that, but just make sure you know that going in and that you know that upfront. Basically production costs is what it costs to create one copy of your book. And it's the base price that you'll use and build everything on top of to get to your retail point.

Lauren: Yeah. So whether you're buying it for yourself or if you're saying, you know, I want to get some review copies that I can send to potential reviewers - although we just did a whole episode about why we don't think that's necessary, so maybe that's a bad example - but if you're looking for just, I'm not trying to make any money on the sale of this book. I'm just trying to get a physical printed copy into my hands or somebody else's hands. This is the cost that we're talking about for that. 

Matt: Yeah. And again, make sure you're aware of any other fees or charges that might be added on there, depending on the platform you use. So that's production cost, which is sometimes also referred to as print cost, and then the other main price point we're talking about is your retail price, which is also sometimes referred to as list price.

So list price and retail price are pretty much the same thing. This is the number we're trying to get to, and so we're gonna talk about all the things that go into getting to that list price. Which again, is basically the price that you're gonna choose to sell your book at. If you look at a book and you look at the back cover the inside cover, whatever price is printed on that cover, that's the retailer list price, you might not pay that when you buy the book, but that is what the book was specced to be at for list or retail. 

Lauren: If you look at traditionally published books, and self published or indie published books that are very well modeled after traditionally published books, they always have the list price printed on the book. You'll see it on the back cover if it's a paperback, if it's a hardcover with a dust jacket, it'll be on the inside left cover flap. But it'll always tell you what the list price of the book is. 

You'll also see that a lot if you're on third party retail websites. So like if you're on Bookshop.org, Barnes & Noble, Amazon, anything like that, you'll very often see the list price and then it'll be crossed out or in gray or in italics and then an actual price next to it that sometimes is like fifty cents cheaper, but it's still just their little nudge of being like, look, this is a little bit cheaper than the list price, but that original price that's listed on there is the list price. 

Matt: And so next in line would be to talk about, you know, revenue splits or profit splits. So revenue, profit, we use those terms interchangeably, but what we're talking about is the amount of each book sale that you're gonna walk away with as the creator or author. Your revenue or profit, that's the money you're gonna make off each book sale. So when you're selling your book direct, which you should, your revenue, or your profit, I like the word profit, so I'm gonna use that. Your profit will be the retail price that you set on the book, so what you sell the book for from your site, and then you're gonna subtract out your manufacturing cost. 

So if you're selling your book for $20 on your site and the manufacturing cost is, let's make it easy for Lauren, $5, your profit should in theory be $15 through selling direct. It's gonna differ slightly when you're, well, a little more than slightly, when you're selling on certain third-party retail sites. For some of those, it's going to differ greatly, but we'll get into that in just a second.

So understand when you talk about revenue splits, profit splits, and technically royalties. Royalties are calculated kind of the same way. You take the profit after the production cost of the book, subtract out any distribution fees. So again, if you're selling on a third party site, you're gonna subtract out those fees and everything else. And then what's left is your profit or revenue or often referred to as a royalty. 

Now royalties, though, typically take on a slightly more negative connotation because typically if you're in a royalty situation that means that your publisher or somebody else is taking a pretty decent chunk of your money. But when you sell on certain third party retailer sites, like if you sell in the Lulu bookstore for example, if you're working through Lulu and you're selling direct and you're also distribution, you can also sell in the Lulu Bookstore. We keep it pretty simple it's an 80-20 split so whenever you sell a book on the Lulu Bookstore after the manufacturing cost is your profit. You get 80% of that, we keep 20. 

So in that same scenario I gave you earlier, if the book sells for $20 and the manufacturing cost from Lulu is $5, that leaves you $15 a profit, right? So - 

Lauren: Sure. 

Matt: Lulu's gonna keep 20% of that. Lauren, what's 20% of 15? 

Lauren: I have no idea. 

Matt: $3. 

Lauren: $3, I actually did know that. 

Matt: You did, you came back quick. 

Lauren: Oh yeah. 

Matt: So Lulu's gonna take $3 of that and that $3 covers putting you up in our store, giving you an author page, and facilitating that transaction so you literally don't have to do anything. So in that scenario, there was an 80-20 split on the profit after the manufacturing costs. Right? 

Lauren: Yes.

Matt: That's in the Lulu Bookstore. Some other bookstores are very similar. They might do it in 80/20, 70/30. The numbers obviously vary, but that's what people are talking about when they mention revenue splits or profit splits or, more common, is royalty splits.

Lauren: These are all just things that, you know, we'll talk more about why all this is relevant and how all this is relevant and figuring out like what you should be pricing your book at. But this is all just stuff to keep in mind as we're setting this up.

Matt: Yeah, and if anybody was paying attention, probably not, because I'm sure the sounds of our voices right now are very irritating. And you already know Lauren's not mathin’ very well - actually she was mathin’ pretty good. 

Lauren: Thank you. 

Matt: But if you were paying attention, selling direct nets you the highest profit. So.

Lauren: That’s true, it does.

Matt: I just want to point that out there that if you're in the game to make a little bit of money off your work, which you should be, selling direct will net you more profit off each transaction than any other form of selling your book. 

Lauren: And that was our obligatory ‘we must give at least one sales pitch for selling direct in every episode that we do.’

Matt: Yeah, but in this instance, it's probably making the most sense, but nonetheless. All right. So that was revenue splits, profit splits, royalties. Again, those are calculated after the manufacturing costs and they're subtracted from the profit that's left over. 

Lauren: The last thing that you're just going to want to keep in mind is going to be the various kinds of distribution, fulfillment, shipping costs. Not going to get into specifics on these because they're going to vary very much depending on what sales channels you're choosing, what publisher you're using, what different platforms and tools you're using for all of this. So we won't get into the nitty-gritty specifics of it, but just keep in mind as you are figuring out your pricing for your book, figuring out your budgeting for all this kind of stuff, make sure that you're aware of whatever like distribution fees, fulfillment costs, shipping costs, whether or not you're going to pass any part of those on to your customers to pay or whether you're going to be covering them. Whether they're built in or they're an additional fee on top of whatever you're charging for your book. So just something to keep in mind and make sure you're aware of all those as you're doing this math because god forbid you have to do the math more than once. I'm just saying we're creative people, we're not math people. 

Matt: Well, some of us are a little more mathy than creative, not necessarily by choice, but…

Lauren: Would you consider yourself more of a math person than a creative person?

Matt: I don't… I don't know. I do like math, but I didn't start liking it until I got later into my adult years. I mean, I was terrible at math in school because I was more creative. I liked to draw and write and paint and do anything creative and I hated math. I failed most of my math classes. And in college, I only had to take what was called math for liberal arts, which was great. And it was basically like the lowest form of algebra possible, plus how to balance a checkbook, and then a few other things that were more like… 

Which I think is great, by the way. I think kids are given too much math in school that they'll never need.

Lauren: Yeah. 

Matt: I think like my kids for example, if one of them wanted to be a chemical engineer, great. Load them up with all that crazy math. But I mean, I got one kid that wants to be a tattoo artist. Why the hell does he need trigonometry and all this other crazy stuff? He doesn't need to solve for X and Y when S is a, you know, factor three times the underscore of, that's just wild to me. And they're failing kids on stuff like that… Wait, this is a different episode than we started. 

[11:04]

Lauren: Okay. but actually. I'm going to argue that it's a great segue into the first thing that I want to talk about on this outline, so. Good job. And that is one of the most important things that you have to do is know your goals ahead of time. For example, if you know that your goal is to be a tattoo artist, then you know you don't need to take the BC AP Calc class as a senior in college or a senior in high school and put yourself through the wringer. Not that I did that. I took the easyAP Calc class - 

Matt: Be careful, your dad might be listening. 

Lauren: I mean, I just admitted to taking AP Calc, which is also why I haven't taken a math class since I graduated from high school because I didn't have to in college because I went to a liberal arts school and I placed out of the math class that I needed to take as my one single liberal arts requirement. 

Matt: Mr. Vassallo, I have seen her do other math, so please don't be concerned.

Lauren: I was really good at math until calculus happened. I was a math tutor. That was my after-school job in like eighth grade, ninth grade, tenth grade, and eleventh grade. 

Matt: If everybody out there that's listening didn't already think you were a mega nerd, you just put that last nail in the coffin. 

Lauren: I know. I was a math tutor while I was killing time in between the end of the school day and marching band rehearsal starting. 

Matt: Oh my. Don't make me laugh, I don't feel good, but holy cow. 

Lauren: You're welcome. 

Matt: Oh my God. 

Lauren: That's my gift to you today. 

Matt: I couldn't ask for a better gift, it's not even my birthday, I feel really blessed right now. 

Lauren: You're so welcome.

Matt: Oh my goodness. Yes, back to what you were saying though. 

Lauren: Yes. 

Matt: Knowing your goals is extremely important. And so understanding this particular book that you happen to be pricing out, you just finished it. You might have different goals for it than you do some of your other books or the next book you're gonna write, but knowing your goal for each book will help you determine, you know, what your pricing and sales strategy might be. 

So if you're gonna use this book as a lead generator, or as kind of like your promo that you're gonna give out. You're going to use this book to give it away for free basically to get people hooked. If your goal is something along those lines, then you can be a little looser with how you price that book because in the end it's not necessarily going to matter. 

But if you're pricing the book because this is your magnum opus and you're like, you know, you're hoping this is going to fund your retirement account or put your kid through college so they don't have to become a mathematician or maybe they do. I don't know. Then you're going to want to price that book to drive revenue. And that's where you're going to want to pay attention to some of these things and understand… understand how basically you won't end up pricing yourself right out of your genre and not sell any copies. 

Lauren: Right. 

Matt: Yeah. Understanding those goals are extremely important. And then there are other goals too, that don't fall into those two nice neat little buckets of like, lead magnet versus profit or revenue driver, right? There are, you know, middle areas of that spectrum. 

Lauren: Yeah. I mean, think back to what feels like eight months ago when we did the episode on the Thousand True Fans Theory, which was probably the last time that we did math on this podcast. And, you know, that whole idea of like you have to make X amount of money from X amount of fans in order to reach your revenue goals for the year to sustain your business or whatever else your goals are. This is where you're factoring in some of that X amount of revenue from people. 

So if you're saying, okay, like my goal is to sell 500 copies of my book this year and I want to make… I'm not doing this math. I'm not even making up a fake math in my head. But you know, like you, you have to figure out like, this is how much money I want to make off the sales of my books this year so this is the minimum amount that I can price each book at in order to make that money off of the sales if I meet my sales goals. 

Matt: Yeah. So you can play with the price but you can also play with the projected number of units you might sell, right? So this is again, one of the things you might want to factor in when you're setting retail price. As Lauren was saying, if you're gonna use this book basically to support yourself for the next year while you work on other projects, then you kind of know how much money you need to support yourself for the year. 

Let's just say to make it easy, it's $50,000. So you can take that 50,000 and you can calculate that and turn it into number of books you need to sell. And you can also think about retail price and that. So if your calculation comes up where you need to sell, whatever, a thousand books at $50 a piece - we'll keep this easy for Lauren. For some people that might be totally doable. For others, it might be easier for them to sell more books at a lower price point. So you might wanna sell 2,000 books at $25 instead of 1,000 at $50. Right? So you could play with that sliding scale or that balance of like retail price versus units you'll project that you'll sell or that you know you can sell based on past history. 

Which again, shameless plug. If you're selling direct, and you've already sold books direct, you kind of have an idea of how many books you're gonna sell. You can calculate those projections and figure that out. But understanding if your goal is to make enough revenue to support yourself for the next ten to twelve months while you work on something else, figure out what that number is that you need, divided by the number of units you need to sell that you're comfortable selling, that should give you a retail price. If that retail price is still sky high, then you need to find something else to help contribute to your revenue for the year, or you need to sell more books at a lower price.

Lauren: Which not for nothing, but we have talked about this, about diversified revenue streams. And when we talked about that 1,000 True Fans Theory, we talked about the fact that you weren't going to be making all of that off of your book sales. So it's coming full circle on that. But also, more importantly, if you were just listening to Matt explain all of that and you kind of had some like head spinning, eyes glazed over as you were thinking about doing all that math. 

Matt: Like you? 

Lauren: Yes, exactly like me. We do actually have a tool on the Lulu website. If you go to Lulu.com/pricing, we have a pricing calculator that you can figure out the exact production cost of your book based on the specs that you put in for your book. And then the bottom half of that will include like a revenue breakdown and all that kind of stuff. So you can plug in the numbers and say, like, okay, if I want to make this amount of money off of the sale of each one of my books, this calculator will tell you this is what you have to price it at. And especially is what you have to price it at if you want to do it through global distribution versus the Lulu Bookstore versus selling direct. And also will even do conversions… what's the word for money? Oh my God. 

Matt: Currency conversions? 

Lauren: Currency. Thank you. It will do currency conversions for you. 

Matt: Yes it will. 

Lauren: So if you're selling outside of the US market and you are like, okay, I want to make sure that I'm not accidentally selling it at a loss in the UK, because I don't know how to do conversion rates. 

Matt: But if you really want to have fun, why don't you have Lauren do your conversions for you?

Lauren: No, please. 

Matt: Send them to podcast@lulu.com. 

Lauren: That's why I don't travel anywhere except within this country because I can't do the math. 

Matt: One other thing to think about when trying to calculate potentially something like this is to think about did you outlay any cash to have that book created? Did you pay an editor? Did you pay a cover designer? And are you trying to recoup those costs? And if you are, sometimes what you can do is take that total cost, divided into a certain number, and load that into the price of the book and maybe set it up so that the price initially for the first six months is gonna be $26.99.

Once you sell X amount of copies or hit that six month mark, you will have recouped what you calculated as your costs and then you can actually discount the book for the second six months of that one year life cycle. So those are things you can think about too, how you front load or back load. You might wanna sell it at a discount initially, which may or may not make sense and then market at full price later. Either way, you can build those costs in and try to recoup them.

Lauren: Yeah, for sure. 

[18:20]

Lauren: There's going to be a lot that we're going to talk about in this episode that will kind of set you up for the how's and why's. If you take one thing away from this episode, if I had to summarize this episode in a single sentence, I probably could. If you don't care about the why and you don't care about all the mechanics behind everything and you just want the quick TLDR answer to how do I figure out how to price my book correctly? The answer is do your market research. And that's really the primary and only like, essential that you need to do is do your market research because the industry has standards already in place. 

The publishing industry already has standards in place. Look up other books that are in the same genre as your book with the same format. So make sure you're comparing, you know, if you have a trade paperback, a mass market paperback, a trade hardcover, ebook, audiobook, whatever it is, you're comparing the same format in the same genre. There is already a standard price point.

So if you want to get into like, when you want to get creative with it, it's figuring out the like, I want to make sure that I'm covering my costs. I want to make sure that I'm covering everything that I need to, that I'm making the money that I need to on it. But primarily what you're going to want to make sure that you're doing is having your book within the comparable range of other books in your genre. 

Matt: Like when you're selling a house, you want to pull comps for that neighborhood to make sure that you're not overpricing your house. If you're a realtor, you want to sell it either comparable to other houses in the neighborhood that have sold that are similar to yours. But also you need to know like, if your book's parameters or things are in more abundance than the other books that are typically selling in your genre, you'll need to be aware of that because that may or may not inform the cost as well. The other thing you wanna make sure you pay attention to is that when you're doing your research, you're looking at the list price of the book and not like some sale price - 

Lauren: Right. 

Matt: Or discounted price that they might have displayed.

Lauren: Yes, absolutely. Especially if you're doing your research on like third party retail sites, make sure you're paying attention to that original list price of the book. I'm going to borrow Matt's housing metaphor, despite the fact that I've never so much as owned like one square yard. Actually, I, no - I think I own one square foot on the Mexican border from a Cards Against Humanity holiday campaign a few years ago.

Matt: Wow. 

Lauren: I think I own one square foot of land. Thank you, Cards Against Humanity for everything you've done for humanity and against it. I'm pretty sure that this will hold. If you were to try to sell a house within a neighborhood, in addition to wanting it to be a comparable price to the average houses in the area, while part of you might be inclined to be like, haha, I'm going to sell it lower. I'm going to be more likely - I'm going to beat the market by pricing it lower than the rest of these. If you're not careful about how you do that, everyone's going to go, why is this so cheap? What's wrong with it? 

Matt: Yeah. 

Lauren: Why is it priced so cheap? So, something that you want to keep in mind as you're looking at those averages when you're looking at the range on books. I'm gonna say off the cuff for me, I buy a lot of paperback romance novels. Their usual price point for those is $14.99. Maybe a little more, maybe a little less, depending on the content and the publisher and the author, but average price $14.99. If I picked up a book that was $10.99 instead of $14.99 as the list price, my first reaction wouldn't be, ooh, I'm getting a sale on this book. Like I'm getting a good deal on this book. My first reaction would absolutely be why? Why is it only $11 when the rest of them are 15?

Matt: Yeah, I think I agree with the psychology of that. Although I will say today, I would just be happy that I felt like I was getting a deal and probably just try to pay for it and get out of there before they figure out the mistake. But I do agree that with your pricing strategy, it's not a good idea to go into it thinking you'll undercut everybody else in your genre. There's a number of things wrong with that. Obviously it decreases your amount of profit. Number two, you're not gonna make many friends in your genre. And so we don't suggest that. Number two - or number three. Sorry, I can't math today. Number three, you might inadvertently start some sort of weird chain reaction where other people start lowering their prices a little bit. 

And you could therefore, just like using my realtor metaphor, you might inadvertently bring down the price of real estate in your genre. If I have a neighbor that's selling their house and let's say they only need to sell it for two hundred ninety five thousand, because that's what they owe on it, and housing prices in that area put their house, it's appraised at let's say 450. They could, just to get a quick sale out of the deal and if they didn't care, they could sell it for just what they owe on it, but they would completely screw everybody else in the neighborhood. Not to mention themselves out of any real profit. So it's never a good idea to try and undercut anybody. 

If you want to price yours a dollar less for whatever reason, and it makes sense to you, okay, but you never want to get into that game where you're racing to the bottom when it's something to do with pricing.

We have people ask us sometimes, you know, well, on Amazon, they sell the books so cheap. Amazon sells most of their self-published books as basically a loss leader. It's a zero sum game for them, meaning they're not trying to make profit on those books. Those books are there specifically to draw people there to buy other things. So they're not looking at the strategy or the pricing strategy as a way to make profit. You're never really going to be able to compete with those types of costs, whether they're loss leader costs or manufacturing costs that were done in a completely different type of manufacturing. 

Lauren: Traditionally published books - I actually do know the math on this one. Go me. Traditionally published books on average are sold to stores at 40% off the list price.

Matt: Yep. 

Lauren: That is one of the things that we used to run into all the time when I worked at the bookstore that I worked at, people would come in and say, oh, you know, this book is 40% off on Amazon. Can you match this? And we would say, no, we can't because Amazon is selling it at zero profit to them by doing that. 

Matt: Yeah. 

Lauren: So if we were to sell this book to you at the same price as Amazon, we would not be making any money on the sale. 

Matt: Yeah. 

Lauren: Which, unfortunately, as a business, you need to make some money. Even if you're selling it at 30% off, instead of 40% off, you're still making that 10% profit on the book sale. 

Matt: And that's kind of the point of this episode too - 

Lauren: Yeah. 

Matt: Is to help people better understand the economics of books so that they're not out there pricing things based on just, you know, again, seeing something on Amazon and going, well, I have to do it this way. Like, I have to try and compete with that price. You may not be able to because, again, they're a loss leader. Books are, for them. Be careful with that. 

Lauren: Yeah. I think if there's anyone, any online retailer that you want to look at to try to model your pricing off of if, you want a model for this. I would suggest Bookshop.org actually.

Matt Yeah. 

Lauren: Because they don't - even Barnes & Noble has like enough staying power as a big name in the industry that they can afford to do big sales every now and then on their books, they can afford to mark their books down. They have a long standing relationship with a lot of these publishers that they can afford deals and stuff like that. Bookshop.org is almost always going to be selling books - even when they are discounted, it is a reasonable discount to them and the customers. So if you're looking for something to model that pricing off of, I would check out Bookshop.org. That would probably be your best resource for both researching the prices of books in your genre and then also seeing like, what they mark them at. 

Matt: Yeah. Lauren has a note here in the outline too that I think it's pertinent to point out that if your book falls into the category of like, a coffee table book or a cookbook or any other book that has a lot of very HD color-type photographs in them or designs and illustrations and it's printed on thick glossy paper with premium color print on the inside. Of course your book is going to be priced higher, but so are all the others in that category. So if you go look on Bookshop.org, or in the bookstores at Barnes & Noble, those types of books are definitely priced higher. So again this is where doing your, your research in your genre or category of books really makes sense and helps.

And secondarily, there's a note in here, which I agree with, that over the last five or six years, kind of the default price points or ranges for books has fluctuated due largely to supply chain issues that happen because of COVID and some of those other things. So if somebody's listening to this and going, well, that doesn't sound right. That price range sounds higher than… well, I don't know when the last time you looked at books were, but last, you know, five or six years, they've been on the increase because of that. 

I will say they're starting to stabilize and in even some cases coming down, because now a lot of the print facilities are flush with paper, they're flush with inks. There's not really a supply chain issue, necessarily. There might still be some logistical problems, right? A lot of the carriers are still a bit of a dumpster fire, but nonetheless. So understanding again, how all these things affect how you might price your book, whether it's the economics of what's going on around you and the, the retail marketplaces, whether it's supply chain issues based on something happening in a particular region or a worldwide pandemic, you know, or anything else, these things you need to understand when you go into pricing your book. 

[27:00]

Lauren: Yeah, for sure. Actually, on Matt's point with the coffee table books, that's also a great argument in favor of why working on your author brand and having that like kind of established brand for yourself is a good thing for you to build on, and something that you can rely on when it comes to even something like pricing your books. Like, I was thinking about this as I was drafting this outline. There's a I don't know if you're familiar with this, Matt, it’s kind of niche, the publisher Taschen? 

Matt: Yeah. 

Lauren: They are primarily art books, coffee table books -

Matt: Yep. 

Lauren: Those beautiful, full color, larger than a standard book, like textbook size or something like that.

Matt: I have several. 

Lauren: Yeah, so do I. And they are - I don't think I've ever spent less than $50 minimum on one of those. Like minimum, I think the average price - 

Matt: On the big ones, yeah.

Lauren: Yes. I think the average price point for those like big, beautiful, full color hardcover books are like 75 to $125. But because they are specifically a known brand, like they have, like they are, that's what they're known for is creating these beautiful, high quality coffee table books. And so I expect that price point to be higher. It makes sense to me that it's going to be higher because I know what I - I know what the quality is going to be like when I get the book that I'm paying this money for. 

So if you listen to our recent episode on author branding and were still kind of like, I don't really sold on why this is something that I need to do. Having that relationship with your audience and having your audience say, like, I'm getting a little more bang for my buck because I know that I can rely on the quality, both the actual physical quality of this book and also the content within it. I know it's going to be worth the money. I might be willing to spend a little bit more money on it. 

Which is going to transition us into our next point, which is know your audience. You know, I actually was thinking about this. Matt and I were looking at something the other day for another episode and I can't remember what it was, but we had a book pulled up. And the author had - the print copy of their book and their ebook were the same price and they were both $30. And I was so angry at the idea of a $30 ebook - 

Matt: I love it.

Lauren: That I almost threw my laptop off the table. 

Matt: I love it. 

Lauren: I was so angry. 

Matt: I love it. Buy the print version. 

Lauren: Well, yes, obviously, like that's what I would do in that scenario. But that's what I'm talking about when I say know your audience. 

Matt: Yeah, no. 

Lauren: Like, I'm always going to - if you told me here's a $9 ebook or a $14 paperback. I'm actually gonna buy the $14 paperback instead of the $9 ebook. Because if I'm gonna spend that much money on it, I might as well have the physical print copy that I can hold in my hands. 

Matt: Yeah, but what if it's a $4 ebook and a $14 print book? 

Lauren: Hmm, depends on the ebook. I actually don't really ever pay for ebooks. I, you know.

Matt: Ew, you're gonna admit that right here on - 

Lauren: No, I use Libby.

Matt: Oh.

Lauren: I, I don't - absolutely do not illegally download. I'm you. You want to get you on a spicy episode? You want a spicy episode on the schedule? We'll put one about pirating books on the calendar, for sure. 

Matt: I don’t want to talk about that. 

Lauren: Okay. But what I will argue to that point is the idea of the Kindle Unlimited model. Which is and this works for me, it works very effectively on me. If you have a very big catalog of books, or if you're working on establishing yourself as an author who's publishing a lot of books. 

Matt: Yeah. 

Lauren: I've seen a lot of authors that they will have some of their books available on Kindle Unlimited, but not all of them. 

Matt: That's right. 

Lauren: And it's just enough. There's a low cost, easy, no barrier to entry way for me to read some of their content, get that proof of concept that I like their work and that I like their content. And now… yeah, I am willing to go spend a few bucks to buy the ebook -

Matt: Right.

Lauren: Or buy a print copy of their book for later books, because I do want those. 

Matt: Yeah.

Lauren: Because I already know I like them. 

Matt: It's in the form of lead magnet or baiting. 

Lauren: Yeah. 

Matt: Yeah. 

Lauren: Exactly. 

Matt: Yeah, it's not a bad idea, I guess. Ultimately, though, you know, understanding your audience, I think you're right, is key. And again, understanding or trying to understand their purchase habits or, you know, if you're a fan of the genre yourself, which most of the time you probably write in a genre that you're a fan of, you kind of understand already, at least from your perspective, how you like to buy books, or where you like to buy them and what formats. And hopefully you've done your homework, you've been to a few shows or something like that and you kind of have a better understanding of how your audience wants to consume your content. And so yeah, you're right. Know your audience, create the book that they're gonna wanna read and then price it accordingly, right? 

Lauren: Yes. Know what they consider valuable. 

Matt: Yes. 

Lauren: Yeah. 

Matt: Yeah. If your readers love print books and they're super nerds like Lauren, as well as super fans, then you're gonna wanna do something really cool in your print books, because they will buy it no matter what you price it at because they want it on their shelf and they wanna be able to brag about it. Know your audience. 

Lauren: Absolutely. 

[31:45]

Matt: I think some of that, like we were just talking about with the Unlimited model where you can go on and I hate giving it any credence or any name-say, but that plays a little bit into the psychology of how people have traditionally bought books, but also how we've traditionally priced books too. Or anything, for that matter. You're so used to seeing things that end in like 99 cents, right? $1.99. You used to have the 99 cents store. Now it's like the $2 store. Everything's a $1.99 or whatever it might be, but there's definitely some psychology behind that, some consumer and behavioral psychology around how you price things. It's not a bad idea to pick up, you know, a book or two about this and learn more about it. Nancy Harhut writes a really good book about consumer behavior, pricing, those types of things, purchase behavior, and it has a marketing slant, obviously. 

I think being cognizant of those things can help. I don't know how much it weighs these days on people's choices to buy. But nonetheless, there are people out there smarter than us that are talking about it. So I would definitely look into that. 

Lauren: Yeah. One of the other things that I would look into, we kind of referenced this earlier when I was talking about the list price of books on the websites and how you'll sometimes see that slashed out and then a slightly lower list price is written next to it. If that's something that you want to experiment with, if you want to see if you can make that kind of psychology work for you, where you give the impression that your book is discounted and therefore people should want to buy it right now. Factor that in when you're doing the math to figure out what you want the list price of your book to be. If you can figure out that you actually want, you know, you want your book to be $17.99, but you're going to mark it at $19.99 and then have it permanently discounted to $17.99, as long as you did that math to know that that $17.99 is the actual list price that you want your book to be at, then you're good. 

Matt: Yeah, I don't…

Lauren: You don't want to play psychology games?

Matt: I mean, yeah, you can. Like I said, I mean, I would look into it though. I don't know how… how much these days it's a factor as it used to be, but it could be. I don't know. I mean, I'm of the opinion that if you write a good book, you do your research on your audience and you price it fair. I don't know how much it actually matters whether it's $17.99 or $18. But, you know, again, I'm not an expert on that. So do your research. 

I do think there's something to be said for.. there's a different type of, sort of, consumer psychology, right? So we look at things like a lot of people have success releasing a limited number of copies. I've seen several different people create books over the last couple years and they'll say, okay, 4,000 copies, that's it. Once they're gone, they're gone, done. So creating some sort of scarcity or you alluded to in your outline here that, you know, we've all been on the site recently and click to put something in the cart or you're looking at it and this little pop-up comes up. It says 20 people have this in their cart right now. It's like, oh. Okay, well, it must be popular or gosh, I should get one before they run out or something like that. 

Lauren: Yep. 

Matt: So I do think some of those things can be a little more of a motivation for buyers than whether you price it in dot 99 or whatever. But I don't know, that's just me.

Lauren: I would make the argument that because this is self-publishing, because you have control over all of this stuff, you can always experiment with this. You can experiment - 

Matt: Yeah. 

Lauren: With saying like, okay, I'm going to I'm going to try $16.99 instead of $17 for a month - 

Matt: Yeah.

Lauren: And see if that has any impact one way or another. 

Matt: That's true. 

Lauren: You don't have to take our word for any of this. You can experiment with it. That's the whole point of being able to have that kind of total control over your publishing journey. 

Matt: Yeah. 

Lauren: Test it out. See what works better. 

[35:18]

Lauren: Which also kind of leads to the last point that I really want to talk about, which is maximize your profits by maximizing your formats. 

Matt: That's a lot of maximizing. 

Lauren: Yes. 

Matt: Maybe we could have thrown an optimizing in there - 

Lauren: No.

Matt: Instead of a maximum. No?

Lauren: Nope. 

Matt: Okay.

Lauren: I want to be as extra as possible by maximizing all of my alliteration. 

Matt: Okay. 

Lauren: Okay. Matt’s still updating my outline, which no one will see but him and me. And he spelled optimized wrong. 

Matt: Did I? 

Lauren: Yeah, you forgot the E. 

Matt: No, I spelled it right. 

Lauren: Oh, then maybe it's my outline - 

Matt: You spelled it wrong. Optimize is spelled correctly. I just spelled it correctly. Spell optimize. 

Lauren: I'm literally taking a screenshot of it right now. There's no E

Matt: There is an E, I'm looking at it right now. 

Lauren: Well not on my doc there isn't. This is thrilling content, I'm leaving all of this in the episode. 

Matt: Yeah.There's an E on there. I don't know what you're looking at.

Lauren: Okay, fine. Don't worry. I took a screenshot. So I'll prove Matt wrong later. 

Matt: I took a screenshot too. 

Lauren: Okay great. 

Matt: We’ll post them both in the show notes.

Lauren: That's just gonna be the that's the social content that we're gonna provide just social media team -

Matt: Just to be clear. You should optimize your formats to maximize your profits.

Lauren: No notes. Okay. 

Matt: What did you want to say on that optimization topic? 

Lauren: As we've already talked about, you know, the different types of formats that you'll have for your book have different standards for pricing. If you want to make sure that readers at any price point can get access to your books if they want them, make them available in as many different formats as you can. You know, this all circles back to a lot of the other things that we've talked about when it comes to knowing your audience. Like I said I was horrified at the idea of a $30 ebook, but I would pay $30 for a hardcover without thinking twice about it, because yeah, that's what price hardcover books are. They're $30. Yeah, no problem. I'm gonna pay - especially, especially, if it's a limited edition, if it's a collector's edition, if it's got a little something extra in there that's making me really excited to have a copy of it. That's exactly the kind of stuff that you wanna go for. 

Matt: Yeah. 

Lauren: And you can get away with pricing those, maybe at a little bit on the higher end of the average as opposed to a little bit of the lower end of the average if you have the different formats available. 

Matt: Yeah. Understanding what your buttons and levers are that you can push and pull to make those prices also work for you. So if you wanted to be able to sell a hardcover a little cheaper than the other hardcovers in your genre or, you know again, you just wanted to make sure that everybody could afford to get that hardcover, then you may want to play around with what it costs to have the interior black and white instead of color. Or standard color versus premium color. Playing around with sizes - five and a half by eight and a half is going to be priced differently from a manufacturing standpoint than an eight and a half by eleven, you know? 

Lauren: Yes. 

Matt: Or some of those types of things. So understanding what your options are there to affect the manufacturing cost will help you better control the retail pricing. 

Lauren: Yeah. All of those things are available to you. Just do your research, check in with your audience, get to know what they're willing to pay for, what they're looking for, and go from there.

Matt: Yeah. I think the one thing that I'd like to just say before we kind of end it, or wrap this up, is that we've talked about the different ways that you can sort of calculate your retail cost, understanding what your manufacturing cost versus your retail cost is or your list price, and then obviously some of the other things. But you really should try to make sure that you're pricing your books roughly the same across all channels. 

Lauren: Yes. 

Matt: So if you are one of those who's going to go wide and sell direct, and offer other sales channels for people, if you're gonna do it all, try to keep the price the same across all those channels. You don't want to potentially de-incentivize somebody to buy directly from you or incentivize them more so to go buy it from somewhere where you're really not gonna make as much profit because you're not keeping your pricing as close to the same as possible. 

Sometimes you don't have a choice. Amazon sometimes likes to sneak in there and mess with your pricing, but for the most part, you should be able to keep the price the same. 

Lauren: Yeah, absolutely. And if you are gonna go wide with your sales, make sure that you're aware of the different requirements on the different distribution platforms that you're considering.

Matt: Yeah. 

Lauren: Just know what the requirements on the different platforms are so that you can keep that in mind as you're setting your different prices for your different books. 

Matt: Yep, all right. 

Lauren: Cool. 

Matt: Anything else you wanna talk about pricing wise or any more math you wanna do? 

Lauren: I actually would love to never talk about pricing ever again. 

Matt: Mm, okay. 

Lauren: So, no, actually, I mean. 

Matt: That's a very strong opinion or approach. 

Lauren: I like to pretend money isn't real. Especially when it comes to books. For me, I'm like, it's all, it's all gravy. It's okay. 

Matt: All right. Well. 

Lauren: I’m gonna go out and buy some books this afternoon just to make myself feel better. 

Matt: You should. You should pay full retail price.

Lauren: If I'm going to an indie bookstore, then I will. 

Matt: Yep. That's what you should do. 

Lauren: Yeah. Support indie bookstores. Shop local. 

Matt: If you'd like to do some calculations, you can go to Lulu.com and hit up our pricing calculator and have some fun with that thing. If you want to have Lauren do any currency conversions for you, you can hit us up at podcast@lulu.com. If there's a topic you'd love for us to talk about that we haven't yet, you can also use that same email address. And if you did not like today's episode… you can email podcast@ lulu.com. How about that? Thanks again for joining us and we hope you'll listen again soon. 

Lauren: Thanks for listening everyone.