How is a list price set for a book?

I was recently asked the question, "How do you set a list price for a book?"

Sometimes our authors want their books to sell at a certain price, mostly because they want to make the book affordable for readers. And that's definitely an important goal to keep in mind.

But a list price isn't something you can just pull out of thin air. There's actually a formula you need to keep in mind to make sure you can financially justify the price that's set. That's why it's typically the publisher setting the list price rather than the author. The publisher has key information about production costs that need to be factored into the final price.

Understand the Market

At Emerald Lake Books, we start by looking at the prices of other books in the genre. From a reader standpoint, if two books on the same topic or of similar interest are both of good quality with positive reviews, the price may be a determining factor in their purchasing decision. So you don't want a list price that's too much of an outlier compared to other books on the shelf with yours.

Different genres have different "norms" for anticipated list prices as well. If you're setting the list price yourself, you should be able to figure out the norms based on your research of competing titles. If not, use Google or another search engine to look for something along the lines of "average list price for books" or "average list price for paperback books," etc. based on the specific information you're looking for.

While this will help identify a range of potential price points, eventually, we need to decide where your book falls within that range.

Often, that's based more on the author's platform and perceived sales potential of the book. If the author is a first-time author or has a small following, the list price may be in the lower half of the range to entice potential readers to take a chance on it. A-listers or well-known authors can anticipate more sales simply because of their name recognition, so it's easier to justify a higher price point for their books.

Run the Numbers

Once we've identified a range of prices we think might work for each format of the book, the next thing to do is "run the numbers." As with any business, we want to make a reasonable profit on a sale, and we certainly don't want to lose money on the sale of a book.

So, we have to identify the production and delivery costs of a book and factor that into its list price. These costs differ based on format, obviously, which is why there's such a difference in pricing between eBooks and printed books.

Pricing eBooks

For the most part, the pricing of eBooks has to do with the genre. But we also need to consider the delivery costs of the eBook and that’s based on its file size.

The formula to calculate the list price for eBooks is:

(Royalty rate x list price) – delivery costs = royalty

For Amazon, the delivery fee is calculated by multiplying the file size by 0.15 (Amazon charges $0.15/MB at the 70% royalty rate).

Therefore, to set the eBook price, we calculate the delivery charge and adjust the list price until you reach your desired royalty rate.

Let’s say we want to receive a royalty payment of $2.00 on an eBook that's 9MB. We can easily calculate the delivery charge (9 * 0.15) to see that Amazon will charge $1.35 to deliver the book.

Now our formula looks like this:

(0.70*x) – 1.35 = 2.00
Add 1.35 to both sides.
0.7x = 3.35
Divide both sides by 0.7.
x = 4.79

Therefore:

(70% * 4.79) – 1.35 = 2.003

Once we've identified what we think the list price should be, we go back and compare it to the range of prices for competing titles and adjust as necessary. Does it fit? Does it make sense? Does this author have a large enough platform that we can justify being in the top end of the range?

Pricing Printed Books

While you don't have delivery charges for printed books, you do have printing (and possibly shipping) costs that are incurred to produce the book. And this is where authors can get into trouble if they’re hoping to distribute their book beyond just Amazon.

If a book is sold directly to a library or retailer, their anticipated wholesale discount is 40% off the list price. However, if a book is sold to a retailer through a distributor, the distributor receives anywhere from 5–15% of the list price (on top of the retailer discount). So, books can conceivably be sold wholesale to retailers via a distributor for up to 55% off list price.

Therefore, your royalties might be calculated on only the remaining 45% of the list price. But, wait! We haven’t accounted for printing and shipping!

It is essential when setting the list price to make sure that all printing and shipping costs (commonly referred to as just "print costs" or the "price per book") can be covered and still have something left over. I’ve seen some authors price their books in such a way that they are actually losing money if a retailer wants to sell their book. And that’s no way to stay in business long.

Amazon, like other retailers, gets 40% off the list price. The publisher’s royalty is calculated on 60% of the list price, less the printing costs.

So, the formula to calculate the list price for printed books is:

(Royalty rate x list price) – print costs = royalty

To settle on the list price then, we need to estimate our print costs (most printers have calculators where we can check that quickly).

We've a simple spreadsheet that shows us the royalties of a book whose total print cost is x and list price is y. All we need to do is plug in those two numbers, and we can see immediately what the royalty will be when the book is sold at both 55% and 40% off the list price.

We continue to play with the numbers until we know we'll earn at least $2.50 (preferably $3.00) when a book is sold at a 55% discount. We focus on that specific number knowing that if we can make that work, then books sold at a 40% discount will simply produce a larger profit for us.

Setting the list price for a book is all a numbers game. Know your numbers and adjust them until comfortable.

We Book Like a Boss, and You Can Too!

Building a business often involves a few growing pains, whether you're a writer or you sell some other product or service. Demands on your time begin to outstrip the time you actually have available to give, and it becomes necessary to find solutions that help you manage your business better.

As a tech lover, I get excited each time I come across a product, service or tool that I believe can help reduce my workload. So, for awhile there, I became a real AppSumo junkie. As soon as I turned the alarm off on my phone in the morning, I'd check out what the latest AppSumo deal was.

If you're not familiar with AppSumo, it's a platform where you can buy lifetime deals to neat new products, tools and services. And I was definitely addicted.

I'm not complaining, though. (Although my business partner might grumble a bit about how much I spent during that phase of our growth…)

This was where I found many of the solutions that helped us grow our business in ways that protected my sanity and allowed us to serve our customers best.

One of my favorite early finds is Book Like a Boss. We still use this tool all the time.

Back in June 2017, I wrote this testimonial for Book Like a Boss:

I've spent decades working with software developers, and an unfortunate trait of many programmers is that they focus on their great idea rather than what the user wants or needs. BLAB is refreshingly open to user feedback. They started with a great idea that's been made even better by its user community and, in the end, we all benefit. BLAB has made it that much easier for me to coordinate my client meetings and payments in ways that work for me and my organization. BLAB has a lifelong customer in Emerald Lake Books!

Since that time, they have grown to over 12,000 users in over 100 countries. And that approach to customer service continues to this day, making it an easy solution for us to recommend to others. So, what is Book Like a Boss (or "BLAB" for short)?

It is your online personal booking assistant. It provides an all-in-one solution for entrepreneurs looking to create a booking page that sells products or services, takes appointments, and collects payments.

It allows you to skip the frustration of playing email tag, and makes scheduling meetings and selling your services effortless with an all-in-one, simple, custom booking page.

For a detailed look at what's available, check out this review video.

Emerald Lake Books' review of Book Like a Boss

As you can see, we're pretty pleased with all that Book Like a Boss can do. And their development team is continually seeking to make it better.

When Emerald Lake Books contacted the creator of Book Like a Boss to let him know that we planned to write a review of his software, Nachum Kligman provided us with an interview for our readers.

Since our main focus was to provide our authors with a great tool to simplify their business lives, we asked Nachum if he had any advice specific to authors. Little did we realize at the time that Book Like a Boss was developed after Nachum's own book came out and he experienced firsthand the need for a simple scheduling platform that allowed people to both schedule appointments and sell products and services.

Listen in while Nachum shares his story.

Nachum Kligman, creator of Book Like a Boss

So, if you like what you see here, we encourage you to get your copy of Book Like a Boss at emeraldlakebooks.com/blab* and use the coupon code "EmeraldLake" for a significant discount.

[Note: Please note this* is an affiliate link. If you purchase Book Like a Boss, Emerald Lake Books will receive a small commission at no cost to you. Rest assured, though, that we only promote products that we use ourselves and can recommend without hesitation.]

What’s In Your Writer’s File?

Perhaps you’re familiar with Samuel L. Jackson’s punch line in his commercials for Capital One. After he tells you everything that the card is not, he tells you what it is and asks the viewers, “What’s in your wallet?”

I’m going to ask you a variation on the question, though, and it has nothing to do with your credit cards or your wallet.

I’m going to ask instead, “What’s in your writer’s file?”

“What’s a writer’s file?” you might inquire in return.

While its form may vary from one writer to another, its purpose remains the same. 

A writer’s file is a repository of thoughts and ideas too good to risk losing, but that don’t have a place to call their own yet. Sometimes, they are things that strike us funny throughout the day. Other times, they’re thoughts or emotions that we know will fly away if we don’t capture them before they flee.

My guess is that the popular book Anguished English, by Richard Lederer (otherwise known as “An Anthology of Accidental Assaults upon Our Language”), probably started out as a stack of scrap paper with scrawled notes recording such assaults discovered by Richard or sent to him by his friends and students.

These notes would have all had a home in his writer’s file, until such a day and time when he realized that his file was spilling out onto the floor and he needed to do something with them. Unable to bear the idea of parting with these precious gems of humor, he decided that an anthology was just the thing for them! And writing an anthology would then justify his continued hoarding of such dastardly assaults on the English language so that he could go on to write other books in the series.

These days, though, we have the benefit of using digital writer’s files. (My personal favorite is Evernote.) No more senseless cutting down of trees or household safety hazards from runaway scraps of paper.

Of course, some of these tidbits just tickle my funnybone and would never make their way into my writing. Things like the auto detailing shop I once saw while I was traveling with a large banner hanging outside advertising “Clear Bras!” To get the full sense of this, though, you have to understand… I saw the banner before I had any clue what the store was. So I was a bit puzzled by what these odd Midwesterners were up to.

Or another entry memorializing the day I found my cat licking a page of my erasable notebook. To get the full impact, you have to understand that the pages of this notebook are erased by wiping them with a damp cloth… So, when I saw my cat licking an open page, I had a momentary panic wondering if his rough tongue had blotted out all my client meeting notes. (Thankfully, it hadn’t!)

As a nonfiction writer, I have no idea when I might ever use those entries in my writer’s file, but they’re too precious to just let slip.

So, what’s in your writer’s file? Share your favorite entry with me. I’d love to hear it.