How to Determine Costs and Profit Publishing with Lightning Source – Part 3

In Part One I discussed how we determined one-time costs to publish our gluten-free cookbook called Gluten-Free with Love using Lightning Source.   In Part Two I talked about how much it will cost to print each book.  In this part I would like to go into more detail about determining price and calculating profit from your book sales.  This is the “good stuff” because this why you want to create a book in the first place!

Let’s focus on “Print to Order” selling – that is, selling your books through of Lightning Sources’ partner booksellers such as Amazon.com or BarnesandNoble.com.

Determine the retail price for your book. How do you do that?  A major consideration is is the wholesale policies of the print to order booksellers.  It is customary to give a 55% discount to high volume online booksellers such as Amazon.com and BarnesandNoble.com.

What does discount mean?  It means the wholesale price that you will sell the book to them so they can sell it at a higher price to also make money on your book.  For example, if you set the retail price for your book to be $20, a 55% discount would be $11 off the retail price; therefore, the wholesale price you offer them would be $9 per book.  (I know, that is a lot – I was shocked the first time I heard about their substantial discount).

So they turn around and sell your book higher than $9, say $16, so they make a profit of around $7 for each book sold, but still at a discount from the original $20 retail price.  So you see, if you plan to sell with Amazon.com and BarnesandNoble.com you have to account for this big discount by setting your retail price high enough to cover it as well as the ongoing costs of your book, yet still make a profit.

However, you also need to make sure that your price is not so high that it isn’t competitive with other similar books.  It’s a delicate balance, eh?

I recommend researching your competitors’ prices by browsing Amazon.com, BarnesandNoble.com. or a meta search engine like BestBookBuys.com.   Once you determine the average price for a book comparable to yours, you can calculate the retail, wholesale discount, and profit per book as follows:

• Check the retail price of a comparable book in Amazon.com (it is the first price crossed out labeled “List Price”).  Calculate the wholesale discount by multiplying 0.55 times the List Price.  The wholesale price is the List Price minus the discount.
• Profit from each sale depends on the printing costs, but for small paperbacks with about 125 pages, your printing costs will be about $2.90 per book (see Part Two for details).   So, in this example, if your decided that your List price is $20, then you profit would be calculated like this:  PROFIT = 20 – (20 * .55) – 2.90 =  $6.10 per book

In this case, you would make a positive amount of money per sale – a great thing!  With the Print to Order model you don’t have to pay shipping costs.  But keep in mind you will probably have other costs – such as advertising costs – that will take a portion of the profits on your book.

I recommend doing all these calculations before creating and publishing your book.  It is always to these things up front so that you can eliminate as many surprises as possible before marketing and selling your book successfully.