Why Are Books So Expensive?

Expensive BookThey’re not. Especially if you buy online. It’s your expectations that are out of kilter. But don’t worry, that’s not the end of another of my acerbic articles.

Everyday in bookstores around the world, customers grimace in a manner suggesting that they have just taken a mouthful of vinegar and wasps when they hear that the hardcover book they want is around $30 Canadian.

To be honest, it is hard to know what to say to a customer who pulls a face like they are about to vomit. Whether or not something is expensive is subjective, so what do I say? “Well, actually, I don’t think the book is expensive”. Yeah, that wouldn’t go down so well. It might seem to imply that I think they are tight-fisted. Usually I just tell them the price is typical for a hardcover book, in an airy sing-song kind of way. It tends to be less confrontational, but it does make me look airy and sing-songy. It exacerbates the belief that sales associates are all a bit dim.

Before I start talking about why a hardcover book is priced at around $30, let’s have a ponder over WHY people think books are expensive.

1) Discount, discount, discount!

Sale signs

Lots of places offer books at a cheaper price than traditional bookstores, so this needs to be broken down further.

Online Bookstores: Most of these online bookstores have significantly lower costs than a traditional bookstore, and these savings are passed onto the buyer. In the traditional bookselling world, an author writes a book which is bought by a publisher and then sold on to a distributor. The distributor, err… distributes the book to bookstores. Amazon is essentially a distributor who is selling direct to the public via their website. They are cutting out the bookstore altogether and passing the savings on.

Grocery Stores, Department Stores, Wholesale Outlets: Places like Walmart often reduce the price of books by around 30-40%. There is hardly any mark-up left on the book, but they can afford to do this because various other products in their store still have higher mark-ups. Clothing, for example. Walmart is a multi-national company and can harness the advantages this offers in economies of scale. In other words, a book might only earn them $1 per sale, but they are getting dozens of sales, in thousands of stores. A place like CostCo (wholesaler) makes almost nothing on books, but you do pay for a membership of at least $50 per year. Both of these types of location can afford to gamble that most people will buy more than just a book. Especially since it is such an ordeal to take a trip to these places with their dire line-ups and generally terrible service.

Traditional Bookstores: Waterstones, WH Smith, Indigo, Barnes and Noble and so forth, often give discounts on newer books. This is usually to compete with places like Tesco, ASDA, Walmart and Costco. Suddenly, saving a couple of dollars to line-up and fight through crowds at Walmart has become a bit less attractive. Unless you were going to Walmart, anyway. But this discounting works for impulse purchases and for bookstores that are local to a given population. The downside for traditional bookstores is that customers think to themselves, if a best selling book can be sold for 30% less, why can’t a an older title? Discounting devalues the brand and the industry in general, but overall leads to more sales in newer titles (obviously, else it wouldn’t happen).

Book binging2) Books don’t cost that much to make

Customers often just don’t get it. You are not just paying for a physical item when you are purchasing a book. You are paying for the creative process that bought the book into being. The physical cost of a hardcover book is only around 10-20% of the cover price (at most). But you are also paying an author for what could have been years of work and you are paying for their talent. You are paying a publisher to format the book, to get it printed and to promote it (a significant cost). You are paying a distributor to buy the book from a publisher, hold the book until a bookstore wants it, and for them to then ship it out to that bookstore. You are paying a bookstore to sell it to you and all the costs associated with running a bookstore (which I may write about at a future time).

3) The Internet and The Broadband Generation

Information can be found for free and in an instant on the internet. This has been harming the newspaper industry in particular, especially in The UK where there is a lot of competition. People expect instant gratification and they expect if for next to no cost. This has eroded the value of the written word, especially in non-fiction genres.

Sony E-reader4) E-Books

E-Books are significantly cheaper than hardcover books partly because there is next to no cost to mass produce them. This saves the 10-20% manufacturing cost over a hardcover book. A bookstore usually gets around 40-50% of the money you pay for a book, but since e-books are not sold in bookstores, they are sold online, that saving is also passed on to the buyer.

5) Books used to be cheaper

This is a misconception. While hardcover books used to be around $10 in the early 70’s, adjusted for inflation, the cost of books has not changed a great deal. But of course, it’s easy to look back and see a 60% rise.

 

Another issue I have already covered (to death) in another post is how the price of a book in US dollars appears lower than the price in Canadian dollars. Customers get mad about this because the inter-bank exchange rate gives the Canadian dollar a higher value from time to time. The fact is, everything costs more in Canada. The cost of living is higher, and that translates to more expensive goods – including books. The prices on the back of books DO NOT represent exchange rates. They represent different COSTS. But customers still get mad and some probably withdraw their custom.

 

So why do books cost $30?

First a book has to be written. James Patterson and Nora Roberts might be able to knock out a book every couple of weeks, but for many authors, especially first time authors, writing their book can take years. An author deserves to be paid for this work. Having said that, many first time authors might find they are only offered something in the region of $5,000 – $10,000 for their work. Only a more established author will receive a lump sum AND a percentage of future sales. For the majority of new authors, this few thousand dollars is all they will see. Not much for a lot of work and (hopefully) talent. Especially since the author normally needs an agent to even be considered by a publisher.

The publisher has several jobs. Their staff read manuscripts, negotiate deals with agents, edit the work, request changes, format the work, have cover art designed and see to the manufacture of the book. A significant cost is the promotion that is required for a book to stand any chance of being discovered, if it is by a new author. This might be as simple as running commercials or as complex as running author tours. Publishers send out free copies of books to the media for review, to influential bloggers and to bookstore staff and other industry workers. These days, publishers all have a social media presence. All of this is expensive. Finally, the publisher sells the book to a distributor. Something to add is that, in most circumstances, it is the publisher who takes liability for any books that are stolen from a bookstore or that simply do not sell (the bookstore is usually able to return unsold books for their money back). However, it is the publisher who sets the price of the book.

Book warehouseA distributor sources books from publishers and sells them on to bookstores across the world, as and when they need them. It is a huge logistical under-taking that is beyond the scope of many publishers. As already mentioned, Amazon is essentially a distributor, but they sell their books directly to the public. One of the best known distributors in North America is Ingram. They are used by the majority of independent bookstores.

A bookstore receives books from distributors (or direct from some publishers) and sells them on. The bookstore generally gets around 40-50% of the cover price. This may seem a lot, but it is no cheap business to run. I will write more about the life of a bookstore in the future.

I know that none of this is very specific and I am not giving hard, solid numbers. But it is very difficult to do so when every single book is a different story. The economics of every book is different, depending on the author’s fee and the size of the print run. Obviously the more copies that can be printed, the more profit can be made (assuming they can be sold). But I know that’s what you want. So here are some generalisations:

Bookstore: 40-50%
Author: 5-15%
Distributor: 10-20%
Publisher: 20-40%

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