Cost- or Traditional x8 Methodology
One of the most difficult things a publisher has to do is to set the price of books they sell. There are a few rationales for pricing, such as: Cost- or Traditional x8, Competition-based and Customer- or Reader-based. At least, these are the most frequently referenced pricing mechanisms.
So how do these methods for determining the cost of a book break-down?
This reverts back to Marketing 101. How to cost or price retail. Again, in Marketing 101 these are the three methods to price a product:
- Cost- or Traditional x8 Methodology
- Competition or Other Publisher-based Pricing
- Customer or Reader-based Pricing
This story covers these areas in further detail and speaks to rationale over equations.
Cost- or Traditional x8 Methodology:
Using the Cost- or Traditional x8 Methodology title print and production costs are estimated and multiplied by eight. In "today's market," this results in a "higher-than-routine" cost margins and is offset by artwork, coloration, illustrations, page count, binding and etc. In the past, this was the normal rationale used for pricing new titles.
Also, in the past, this traditional or "legacy" publishing x8 Method could be adjusted by increasing print production and lowering print costs, capping illustrations and/or artwork (images) and lessening cover design or cover print requirements, such as hard-bound or dust-jackets.
However, currently, most print production requirements are overpriced. This is largely due to increasing environmental concerns, green technology requirements and the general trend by readers to lean toward a decrease in the deforestation print production requires.
Print production costs are projected to continue in an upward spiral, which is not a short-term trend. As green technologies and environmental concerns are on the increase, print production is on a solid path of increasing cost, yet for books the trend is also to continue pricing lower and lower.
Already, over 600% of the annual book sales reflect digital media and this is driving print sales way down while digital media is often ridiculously low - less than a McDonald's sandwich except, maybe the dollar menu; however, many digital books price lower than $1.00.
Certainly, the Traditional x8 Method does not typically apply today, but Authors are continuously decrying their desire for traditional representation, which based advances on this methodology. In the emerging market, advances are figured against, the dollar menu not the x8 Method.
Competition or Other Publisher-based Pricing:
The Competition or other Author|Publisher-based Pricing Method is used fairly unilaterally in the marketplace today, especially noting do-it-yourself and/or self-published Authors. The reason for this is three-fold:
- For Novices - this form of price analysis and costing is easiest. Going to a bookstore, finding titles of relative content, flair, size and coloration then taking the prices of ten to twenty such titles and averaging the cost - sets an easy range of price. Especially, noting the best-sellers in a genre, and including them in the cost estimation results in a good final determinant for an emerging author; however, this also means the market is no longer a free-market and is, in fact, an arbitrary market. For this reason, this form of price analysis isn't so much scientific as it is populous approved - or in the case of books - predetermined market analysis.
- Competitor Based Pricing - formulating more regarding publishers than bookstore sale shelves is a true form of competitive-based pricing, which hails from marketing instruction. Using a comparative analysis sheet from select publishers with same and/or similar titles in a specific genre can result in a decent baseline to develop costing; however, putting a company moniker on price is wise. Even though an analysis sets a baseline - the capitalist epic can be played out and cost can be increased or decreased as determine by the seller.
- Going With the Flow - it is easier to do what everyone else does, then to do something different. Many Authors, Publishers, Publicists and Agents tend to go with the flow today. In a capitalist society such as America, this seems adverse to the representation of business paradigms, yet the book market is generating preconceived standardized pricing without "any" room for any fluctuation without fear of reprisal from what appears to be an insular though large community of minds. This, in and of itself, is mind-boggling. Free enterprise appears to have died when referencing modern price vehicles of book producers. Amazon, for instance, set the eBook bar and then lowered it so there's no room for competition. Now, no one considers alternative price mechanisms, albeit sequestration of titles is beginning to increase, but we'll visit the topic in another story.
Customer or Reader-based Pricing:
This is another conventional method to cost a new book release. When using reader-based pricing, publishers reflect on mass appeal and reader purchases. For business titles purchased by professionals pricing scopes higher than average. It is anticipated these titles will be higher than the cost of say a Harlequin Romance Novel. Conversely, a pocket-book novella is anticipated to cost a significantly reduced predetermined rate.
Over-pricing will turn readers off and under-pricing will also turn readers off. Therefore, the reality is the readers' anticipated price has to be represented. Yet, there are occasions where higher than average costs result in increased sales contingent on marketing proforma.
Conversely, for many titles, the reader has no anticipated cost and industry educates readers on cost by pricing uniformly rather than enacting their free enterprise and pricing per title independently or truly embracing the Traditional Publishing Method and using the x8 cost analysis. This is a generalized affirmation, but true nonetheless.
Other Factors:
There are a myriad of additional considerations for pricing a new book. Some include distribution where classically 55% of title cost goes to a distributor, such as Amazon, Barnes & Noble, Books-a-Million or Mass Marketing, which conveys unique parameters.
For digital copy, everyone knows Amazon set the bar and then lowered it dramatically through their KDP Select program. The redeeming characteristics is Amazon makes book production and marketing easy, the down-side is it also removes the free enterprise dramatically and like a Wal-Mart epic - Amazon is cornering the publishing industry while PubIt and others hold a dim candle to Amazon's prowess.
Can an Author, Publisher, Publicist, Agent Price Outside of What Are Community-based Pre-determined Industry Standards or Can the Traditional 8x Method Be Used Today?
The short answer is yes, but be prepared for some flack. Organizations such as "Predator and Editor" often take the free enterprise method of setting a cost or price analysis apart from the crowd as a negative connotation, yet they are ascribed to be fair in their interpretation of publishers. However, as a self-promulgated watchdog organization, they fall under no scrutiny of the United States Government as a regulatory authority. And, self-service the community-at-large as watchdog fielding industry complaints. Noting competitive pricing, and the general nature of publishing as a competition based industry, therefore, it is not a stretch of the imagination the community watchdogs fall victim to complainants attempting to stage generalized publishing landscape by filing false complaints, which appear to have no infractionary repercussion. In other words, black-balling to community watchdogs for self-ascribed purposes is definitely a moniker of the publishing environment today and many unscrupulous individuals - can promote false accusations by stirring a writers group or misappropriating information in social networks soliciting others to file complaints. They then sit back and watch the demise from their rank and file with chagrin.
The thought is, though, returning to variant pricing. . . to do so means sales margins increase; therefore, the seller is seeking financial gain, which is frowned upon as unacceptable among the publishing arena watchdogs and even authors. This is because it would facilitate higher earnings and royalties and afterall Authors are artists and artists like to work for free. It speaks to propriety in their art as a starving artist is an appealing presentation. Or is that wrong? Even in our capitalist society where free enterprise is the cry of the land, Authors price exorbitantly low and cut off their noses to spite their face and then decry this is the way it should be - how dare anyone increase their royalties?
Readers, of course, love $1.00 books, who wouldn't? It is a readers market.
Final Rationale:
The reality is cost and price have to use a conventional wisdom. Pricing is not arbitrary and it is not illegal to price higher than average or lower than average or to use the Traditional x8 Method for pricing your newest title as a Publisher or an Author.
Using the science of marketing can result in pricing, which reflects the royalties Authors deserve and readers enjoy. Otherwise known as a happy medium!
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