Most authors guess too low: This scenario is all too common. I have a fair amount of success getting authors to hit what I call the optimum book size, at least when I meet with them early in the process. As I said in an earlier post, one template is the 160-page small format book. Not only is it a Goldilocks size for most readers ("not too big, not too small ... just right"), the numbers work. You can set a retail price at $20.00 and make money, even if you do a little discounting.
But now the trouble comes. As we near publication, my author goes into Barnes and Noble, sees the same size book selling for much less, and announces "I've decided to set my retail price at $12.95."
Sigh. So I go through the drill.
You are not competing with bookstore books: The books in those stores are printed in mass quantities, thousands at a time. Your book is printed maybe 25 copies at a time. You cannot compete with them on price. If you listened to what I told you, you are not in Barnes and Noble. You know it is dangerous. You know it is unlikely you will sell any books there--and if you do, you will lose money.
You do not price books by weight: I know your book looks like it is less valuable than that 600-page tome you saw selling on the Barnes and Noble remainder table for $5.95. That book is on the remainder table because nobody wanted to read it, never mind that Random House published it. You do not price books by weight. If Intel priced computer chips by weight, they would sell a million of them for the price of a bag of sugar.
You price books based on what you can do for your reader. Sure, there will be price resistance at some level for you book, but yours will save your readers thousands when they buy a used car. Are you telling me it is not worth $20.00?
Your retail price reveals what you think your book is worth: If you set your retail price at $13.95, your buyers will think they got a $13.95 value. If you set your retail price at $20.00, your buyers will think they got a $20.00 value.
You discount from your retail price, but set your retail price at the right value: Your retail price allows you to give wholesale discounts that work financially. (If you set your retail price too low, you might well lose money selling to booksellers.) Your retail price also allows you to set retail discounts that work psychologically. Consider: If you set your retail price so low that you cannot discount it anymore and your customer buys the book for $13.95, she will think she got a $13.95 value. If you set your retail price at a comfortable $20.00 and the customer buys the book at a discounted $13.95, she will think she bought a $20.00 book and saved $6.05.
The mathematics are obvious. The psychology of authoring is a harder nut to crack. The Publishing Pro.