The Price of Books

Last month’s column, about the differences between hardcover and softcover books, generated a lot of emails from readers asking me to elaborate about the price of books, particularly hardcovers. So here goes.

The printed pages in a hardcover book and in its trade paperback version are vir-tually the same size, if not exactly the same in many cases. And, they almost always contain the same number of pages. The only difference is the cover – the trade paperback has a soft cover which is the same size as the printed pages; and, the hardcover has a hard cover covered with a dust jacket which is slightly larger than the printed pages.

I’ve been told by publishers and others in the book business that the difference in production costs of hardcover versus trade paperback is approximately $4 per book. In other words, it cost about $4 more to manufacture a hardcover book than a trade paperback, much of that due to the higher binding costs in a hard-cover edition.

If that is true, then why is the retail price of a hardcover at least $10 more than its trade paperback equivalent? The price of a hardcover book has inflated over the years to $25 to $30, with many new releases, particularly nonfiction, hitting the $35 mark. The typical trade paperback book retails for about $15. If it only takes $4 more to produce a hardcover, shouldn’t the price of that hardcover book be somewhere in the $20 range? What gives?

What gives is the discount pricing systems of the big box retailers, of the big chain bookstores and of Amazon.com. The marketing survival of these super-stores is based on the consumer believing that they offer great and wonderful discounts on all of their merchandise. Sometimes that perception is true – due to huge volume purchasing at the wholesale level the retailer is able to offer some products at a low price. Sometimes, as in the case of books, that perception is usually just an illusion.

It’s kind of like a phony sale – a retailer inflates the price of a product before put-ting it on sale for the original price, giving the consumer the illusion of a bargain. After all, it’s marked down by 25%!

The reality is that a significant part of the book business is directly and indirectly controlled by the superstores. In fact, at the bestseller level of the business, they not only dictate pricing terms to the publishers, they also have input on who and what gets published. Regarding pricing, they need that $20 hardcover book to have a retail price of $26.95 printed on it so they can discount it by 25% back to its $20 value. The consumer is given the illusion of a bargain.

The newest phenomenon in the book business is the e-book, the electronically downloaded book, which is now cheaper than both hardcovers and trade paper-backs (but not mass market paperbacks). Cheaper only if you don’t count the $400 cost of buying an electronic reader.

Amazon.com offers e-books at about $10 per download (again, assuming you purchased their $400 reader). Several book industry commentators have specu-lated that the pricing model of e-books will evolve in the relatively near future to a “demand” structure. In other words, the more demand for a book, the higher the price, automatically calculated upward as you are placing your order.

Interesting, to say the least. That’s all for now. I’ll get back to discussing actual books next month.