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.

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