RARA-AVIS: Short and cheap

From: hardcasecrime ( editor@hardcasecrime.com)
Date: 14 Oct 2007

> Patrick King said: "I'd love to see a
> return to a $2.00 paperback book. Don't
> tell me no one can make money doing
> that."

Sorry, Patrick, but...no one can make money doing that.

I agree wholeheartedly with all the posters who lamented that books these days are longer than they need to be -- as I've told countless authors whose over-written books I've rejected, there are stories you can tell at 50,000 words that you just can't tell at twice the length. Hard Case Crime books almost all run between 208 and 256 pages, with fairly large type (we could bring them in at 160-192 pages if we were willing to use the tiny type they used in the old days, but readers have begged us to spare their aging eyes). I'd almost always rather read a 35,000 word book than an 80,000 word book. There are exceptions, of course, but I am a big believer in the shorter-is-better philosophy.

I'm also a big believer in the cheaper-is-better philosophy, and looked seriously into whether we could price our books at $2-3 -- but for a variety of reasons (some better, some worse), it just couldn't be done.

To start with, even if you assume there's no discounting (and people sometimes do pay full cover price for mass-market paperbacks, or something very close to it), you have to take into account that the cover price gets split (roughly) in half -- half goes to the publisher and half to the bookseller. If your book sells for $2, that's just $1 for each of them. On the bookseller side, that $1 has to pay for the use of a piece of precious shelf space for a certain amount of time. You might not think of a paperback book taking up all that much space, but it does take up some, and a whole section of paperback books takes up as much space as a section of any other sort of goods -- razors, cold medications, cans of soup, whatever. The retailer has to pay a certain amount of rent each month for those square feet, he has to pay a certain hourly rate to his staff each month to keep those square feet stocked, and if a shelf of paperback books is generating just $1 apiece each time one sells, the retailer has to decide a) whether that's enough money to cover his rent and staff costs, and b) unless he's selling books because he's got a consuming passion for books, whether he could have made more than that $1 by stocking the same space with some other product. Sadly, the answer to (a) is generally no, except in some very inexpensive parts of the country, and the answer to (b) is almost always yes.

That wouldn't be the case if books were more popular and just flew off the shelves in huge numbers, and you could argue that maybe they would if instead of $7-10 they cost $2 -- but honestly I don't think anyone believes this. Publishers have experimented over the past few years with selling some titles for $3.95, and the difference in the number sold was not enormous. Penguin even did a line of skinny $1 books, as I recall, and they were a huge dud. Cover prices being high may be the reason some readers buy only 1 book/month instead of 2 or 3 or 4, but that's not the reason that people who don't buy books at all and aren't in the habit of reading for pleasure don't buy books. At the margin, the appearance of a $2 book might tempt a few people who are right on the borderline to try a book when they might otherwise not, but it wouldn't turn a generation of non-readers into readers any more than the existence of iTunes selling music mp3s for 99 cents apiece (a very nice, low price) has made me go out and buy an iPod. I just have no interest. They could drop the price from 99 cents to 20 cents, and I'd still have no interest.
(Meanwhile, the people who do have an interest might buy *somewhat* more if they did that, but not the 5 times more they'd need to in order to justify the price cut.)

That's from the retailer's point of view, a topic about which I know a little less, since I'm not (currently) a retailer; now let's look at it from the publisher's point of view, about which I know more.

To begin with, you have to be prepared to print two copies of each book for every copy you sell. Often more than half the copies you print come back as returns (or, in the case of mass market paperbacks, get destroyed in lieu of being returned), sometimes less than half do; using 50% for modeling purposes is actually on the optimistic side, but what the heck, let's do it. This means that whatever it costs to print a book (depends on paper quality, fancy cover treatments, etc.), you have to double that number and take it off the top. Some fat, fancy paperbacks cost almost a dollar to print; some skinnier, cheaper ones cost 35-50 cents. If your paperback were printed in enormous volume you might be able to get it down to an even lower price, but unless you're publishing Dan Brown you're not going to be printing millions of copies. The kind of mystery novels we love might sell 5,000 copies or 15,000 or maybe even 50,000, but not 500,000 and definitely not millions. Back in the Gold Medal days, you could reliably sell 100,000 copies of any book you printed -- but those days are long gone (and cutting the price to $2 wouldn't make them return; radio's still free, after all, and you don't see people listening to radio dramas the way they used to; life moves on, and entertainment tastes change).

Let's be generous and say you print your skinny book for 25 cents and sell one for every two you print (both unrealistically optimistic numbers, incidentally). That's 50 cents of cost that comes off the top of your $1 share of the $2 cover price. Which leaves you with just the other 50 cents to cover the amount of money you paid to the author, the cover painter, the copyeditor, the typesetter, the proofreader, the accountant who produces your royalty statements, the salesforce that gets your book into stores, etc.; and of course you have to pay your own rent and electricity and insurance bills and photocopier rental and phone bills, etc. But even ignoring the latter sorts of overhead, consider that if you sell 5,000 copies, this model says you only have $2,500, total, to cover your costs; even if you sell 50,000 copies (which you rarely will), you only have
$25,000. The up-front costs of getting a book out the door will vary from publisher to publisher (some tiny houses pay the author nothing up front, some use all-type covers to avoid paying an artist) -- but I can tell you that Hard Case Crime is about as tiny and as cash- strapped as they come, and it costs us nearly $10,000 per book to get a book ready to be printed. (And that's despite our paying our copyeditor and proofreader -- i.e., me -- nothing.) How many copies does the model descibed above tell us we'd need to sell in order to cover a $10,000/book up-front cost even if our other overhead costs were zero? 20,000. How many Hard Case Crime books have sold 20,000 copies or more? Not many. Not zero -- but a very small minority. And this is in spite of *outstanding* distribution (we're in Barnes & Noble, we're in Borders, we're in hundreds of independent bookstores, we're in drugstores, we're even in Wal-Mart, albeit in small numbers), and outstanding reviews in every major publication, and lots of award nominations, and occasional TV appearances, etc., etc.

And that's just talking about breaking even -- not about "making money." No one's in business to just break even. If somehow you managed to make $1000 on each book and you published 120 books/year
(ten times as many as we do), you'd have a company that's earning
$120,000 per year. For the entire *company*. Not exactly a businessman's dream.

On the other hand -- let's say that instead of $2/book you charge
$7/book. Now the publisher keeps $3.50 from each sale instead of $1, which after deducting 50 cents of production costs leaves $3 instead of $0.50. You'll sell fewer copies at $7 than you would have at $2 --
  but not a lot fewer, I'm certain of that (maybe a factor of 2, but not a factor of 10...and I'd bet not even a factor of 2). If you were selling 20,000 copies at $2 and just breaking even, compare than to selling 10,000 copies at $7. Instead of having $10,000 to pay all your bills, you'd have $30,000. Now, instead of having to sell 20,000 copies to break even, you'd only have to sell 3,333 copies -- much more achievable.

Now, keep in mind that all of the above numbers are wrong; this analysis is a gross oversimplification; but making it right would make it worse. Real returns rates are higher than 50% on average; retailers sometimes keep more than 50% of the cover price; books cost more than 25 cents to print; overhead costs are not zero. On the flip side, it is possible to get a book to the printer for less than
$10,000 (even we spend a bit less than this) -- but that positive difference isn't enough to outweigh the other, negative ones.

The key numbers to keep in mind are that paperback crime novels
(other than ones by Grisham, Brown and their ilk) sell ones of thousands or tens of thousands of copies, not hundreds of thousands or millions (unlike razors or cans of soup), and that cutting the price from $7 to $2 would almost certainly do no better than doubling your unit sales. (You can choose not to believe this, of course. But for whatever it's worth, I'm speaking from years of experience doing direct marketing on a very large scale -- when I ran Juno we spent millions of dollars doing direct marketing tests both online and in the real world, marketing a wide variety of products at a wide variety of price points -- we sold books, we sold DVDs, we sold electronics, we sold lots of things, and one of the things we spent lots of time testing is how consumers respond to variations in price point.)

Sorry for the length of this post (you're thinking: Didn't he say he likes things *short*?), but I had to respond. Nothing's simpler than saying, "Damn it, why can't shirts cost a buck the way they used to?" or "Don't tell me no one can make money selling paperback books for
$2!" But that doesn't make it true. Try doing it. You'll be broke in no time.


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