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SHELF HELP : Art and Science of Book Pricing

October 09, 1994|JOSH GETLIN

If you're looking for a bargain on Jackie Collins' latest bestseller, "Hollywood Kids," be sure to take your pocket calculator. Chances are you'll stumble on a bewildering array of prices, depending on where you shop.

The old neighborhood bookstore that's independently run might sell the steamy thriller at the suggested list price of $23.50 or offer you a modest 10% discount. In some malls and super-stores, "Hollywood Kids" will cost $19.98, or 15% off the regular price. Other chains might offer a 20% to 40% discount, bringing the price down to $14.10. If you happen to shop in a Price Club or other warehouse outlet, the discount could rise as high as 50%.

Amid this competition, customers might be forgiven for asking: What's the point of the $23.50 suggested list price? And how do publishers arrive at that figure to begin with?

For years, the book biz has offered a standard answer: The list price, publishers say, reflects costs that go into production of a book, such as paper, printing and binding (PP&B, in the trade). It also reflects more variable expenses, such as royalties paid to an author, office salaries and money for promotion.

Most publishers hope to average at least a 10% net profit per book, but they also claim to have an acute sense for what the consumer will pay. And that's where publishing--like movie-making--becomes a profoundly inexact science.

"So much of the time you back into it (the list price)," says Phyllis Grann, Chief Executive Officer for Putnam Books. "You have to be careful." Publishers rarely price a book until all the data are in, ranging from printing expenses and mailing to the size of an author's advance.

Last year, average book prices rose 5.6%, according to industry statistics, and Grann predicts they'll grow even more when paper prices jump by the end of this year. Bestselling novels that now cost $23 could rise to $25, she says.

Although consumers will pay less, publishers still have financial goals to meet. As a result, they'll set list prices to get a decent return from bookstores, which typically purchase books at discounts of 40% or more. There's also a psychological factor: Publishers keep the list price in mind when considering what the public will pay, and the barriers they won't cross.

"When we published 'Truman' at $30, it was probably under-priced," says Carolyn Reidy, president and publisher of Simon & Schuster's trade book division. "But we wanted the book to be accessible . . . we wanted people to think it was affordable."

Sometimes, you roll the dice and pray.

When Knopf published "The Civil War" as a companion book to the PBS series, it raised eyebrows with a $50 list price. The book shot to the top of the bestseller lists. Last month, Knopf published "Baseball," a companion to the latest Ken Burns epic. This time, the suggested list price is $60--but it doesn't seem to have hurt sales; the book debuted at on the Los Angeles Times bestseller list last week.

"There's only a one-way fluctuation in book prices," jokes Putnam's Grann. "And that fluctuation is up."

When you spend $23.50 on a book, where does the money go? Paper, printing and binding: $3.06 Publisher: $4.93 Bookseller: $11.28 Author: $2.00 Promotion: $1.88 Agent: .35 Sources: Association of American Publishers, Industry interviews

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