Having recently set up direct sales of my novels on my website, it seems as good a time as any to talk about how authors/publishers settle on pricing their books. In the course of a recent discussion with my street team (more details on what that is here), I realized that some readers might not be aware of how book pricing works—namely, what format yields the best returns for an author. Readers might think a hardcover gives an author the most royalties because it’s the most expensive, but the truth is a bit messier. I’m here to pull the curtain back a bit and explain why books are priced as they are, at least based on my experience in the indie sphere.
Terminology
Before we dive into the pricing, just a few notes on terminology. When it comes to the book publishing industry, we have a few different players, some of which only apply for certain formats and some of which overlap/serve multiple roles. At the most basic level, there are publishers, printers, distributors, and retailers.
Publishers take a manuscript and get it to look like an actual book. That means dealing with formatting, cover art/design, editing, and so forth. They can be companies or people if we’re talking about small presses or indie authors. I publish my own novels through my company HypIn Publishing.
Next up are printers who, obviously, do the printing for physical copies of books—paperbacks and hardcovers. Distributors are a kind of behind-the-scenes entity that acts as an intermediary between publishers and retailers. Some distributors are also printers. Retailers are the ones a reader typically buys a book from, aka bookstores (e.g., Barnes & Noble, Blackwell’s, WHSmith, Indigo). These days, it’s not uncommon for companies to take on multiple roles. For instance, Amazon is a printer, a distributor, and a retailer.
Format
Ebook, paperback, or hardcover? Format is key to this discussion, so let’s run through each type and how that affects their pricing.
Ebook
Ebooks are by far the easiest format for everyone in the industry to produce. Nothing is physically made, so the costs are essentially just the different players taking their cut. The amount an author takes home from an ebook sale depends on the distributor/retailer the book is sold through. Each company sets its rates differently, and most give different royalties based on the price a novel is sold at. For example, Amazon KDP offers 70% in royalties for novels that are $2.99–9.99 with novels outside that range only getting 35% in royalties. Smashwords gives 75% in royalties for novels priced at $2.99 or higher. Kobo offers 60% in royalties for all prices. And so on; you get the idea. I price my novels at $4.99, which means I make anywhere from $2.99–3.74 per sale.
Those direct sales I mentioned having setup on my website let me bypass the distributors/retailers entirely. This means I can discount the books and still make a good profit. Ebooks purchased via my website are $3.99, and I make $3.10 after PayPal fees.
Print books are trickier, but the advent of print-on-demand (POD) has been a huge boon for indie authors. Prior to POD, bulk printing was the only option. This meant an indie author had to order books in bulk, store them, then ship them to customers. This is quite the headache, and for someone like me, who’s based in Germany, it’s not even an option given the customs charges for shipping books outside the EU. With POD, you bypass all of this because a novel is only printed as it’s ordered, and the POD company deals with the shipping. It’s a god-send. The only downside is the cost as POD is more expensive than bulk printing.
In terms of the factors affecting the price of the book, we have page count and size. Have you noticed how 6×9 inch books seem to be more common these days as opposed to my personal favorite of 5×8? That’s partly owing to cost considerations. More pages means a higher print cost so if you make the book page larger, you will have less pages overall. I, personally, despise 6×9 paperbacks and opted to go with 5.5×8.5 for my own books.
For hardcover copies, there’s an added complication related to the fact they can come in one of two styles—case laminate or dust jacket. These will also affect the cost. For my own hardcovers, I’ve kept things simple thus far and opted for case laminate. The dust jacket would require a different design, which I don’t have the budget for at this time. Who knows though, if at some point I can afford it, perhaps I will rerelease the hardcovers with a dust jacket.
Going back to the pricing, I set the cost of my paperbacks so that online sales through a distributor will net me about $2 per copy. That’s for both paperback and hardcover. I don’t make more money from my hardcovers; they’re priced higher simply because they cost more to print. I think this surprises many readers.
I also sell my books in-person at events. When I do that, I have to order copies directly from my printer, which means I get hit with shipping and customs charges. The latter comes from the fact that my printer is based in the UK, whereas I’m in the EU. As such, I must price my novels to account for those added costs, which aren’t insignificant. The shipping and customs adds over $2 per book if I order a crate of 20 books. Selling at events also incurs additional costs, including tickets/memberships, table fees, and travel expenses. Additionally, I opt to price my books at events so that they’re competitive with the other vendors. The plus side? These copies come with a signature and a chance to chat with the author at length.
For direct sales of my print copies, I can usually offer these at a discount because I’m bypassing the middleman. I tend to price these about $1–2 cheaper than the online prices and tend to make about $4–5 on each. The downside to this route is that only people in the US and UK can currently order the books. This is a limitation of my POD company. Hopefully, one day they will expand to other markets. Until then, this is the best I can do seeing how I’m a one-woman shop.
Which is Best for Me?
Taken altogether, I make the most money off of any one book if someone buys it directly from me in-person not at an event. This doesn’t apply to the vast majority of people and has basically been limited to my friends and co-workers thus far. The next best option is buying paperback or hardcover copies directly from my website. After that, I make the most royalties off of my ebooks with Smashwords being the best, followed by Amazon, followed by direct purchase on my website, and then all other ebook retailers. Last and worst for me are actually print copies purchased through a retailer. The table below summarizes my earnings for these different methods in order of best to worst earnings for me.
| Format | Method | Net Earnings Per Copy Sold($) |
| In-person | ~6.00 | |
| Direct sales | ~4.00 | |
| Ebook | Via retailer (Smashwords) | 3.74 |
| Ebook | Via retailer (Amazon) | 3.49 |
| Ebook | Direct sales | 3.10 |
| Ebook | Via retailer (others) | 2.99 |
| Via retailer | ~2.00 |
So there you have it. This is book pricing in a nutshell. Are you surprised by any of this? Would you change your book-purchasing habits to help out indie authors? Let me know in a comment.
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