How Much Profit Am I Really Making On A Book Costing $2.00?

10/25/06

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Because I am frequently asked the question of the following type,

"What is the minimum profit you expect to make on a book and how do you know how much to pay for it in order to make that much?" 

And because there is no one answer owing to the fact that there are so many variables, I want to show you graphically what the profit is on a book with the fixed costs factored in and show you how this can vary substantially with the weight of the book. 

In this example, we will assume:

1)      The book will cost you $2.00

2)      You will be paying a marketplace commission of 15%.

3)      The cost of a self-sealing bubble pack envelope and other shipping materials is $0.40.

4)      The book is shipped via USPS Media Mail®

5)      Your marketplace shipping reimbursement is $2.29. 

Thus, the calculated profit for selling prices of $5.00 to $15.00 is calculated as follows: 

The shipping cost will be: $1.59 + $0.48 for each additional pound the book weighs over 1 pound, i.e., 

                    Book Weight                            Shipping Cost

                         0 to 1 lb                                       $1.59

                         1 to 2 lb                                       $2.07

                         2 to 3 lb                                       $2.55

                         3 to 4 lb                                       $3.03

                         4 to 5 lb                                       $3.51

 

 Profit = Selling Price – Book Cost – Marketplace Commission - Shipping – Packaging

               Materials Cost + Marketplace Shipping Reimbursement

Or,

 Profit = 0.85 x Selling Price - $2.00 – Shipping Cost - $0.40 + $2.29

 Or,

 Profit = 0.85 x Selling Price – Shipping Cost - $0.11

 Thus, for selling prices varying from $5.00 to $15.00, and book weights in one pound increments to 5 pounds, the profits are as follows: 

 

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

Selling
Price

 

 $      5.00

 $      6.00

 $      7.00

 $      8.00

 $      9.00

 $    10.00

 $    11.00

 $    12.00

 $    13.00

 $    14.00

 $    15.00

Book
Weight
(lb)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

Profit
($)

0-1

 $      2.55

 $      3.40

 $      4.25

 $      5.10

 $      5.95

 $      6.80

 $      7.65

 $      8.50

 $      9.35

 $    10.20

 $    11.05

1-2

 $      2.07

 $      2.92

 $      3.77

 $      4.62

 $      5.47

 $      6.32

 $      7.17

 $      8.02

 $      8.87

 $      9.72

 $    10.57

2-3

 $      1.59

 $      2.44

 $      3.29

 $      4.14

 $      4.99

 $      5.84

 $      6.69

 $      7.54

 $      8.39

 $      9.24

 $    10.09

3-4

 $      1.11

 $      1.96

 $      2.81

 $      3.66

 $      4.51

 $      5.36

 $      6.21

 $      7.06

 $      7.91

 $      8.76

 $      9.61

4-5

 $      0.63

 $      1.48

 $      2.33

 $      3.18

 $      4.03

 $      4.88

 $      5.73

 $      6.58

 $      7.43

 $      8.28

 $      9.13

 From this you can see that a book selling for $10.00 and weighing between two and three pounds will earn you a profit of $5.84 if you paid $2.00 for it initially.  If the book had weighed one pound or less, you would have profited $6.80. 

I have shown this data graphically below: 

 If you want to use the graph to find out how much a book must sell for to obtain a specific profit, follow the vertical axis (Profit) up to the profit value you wish to obtain and then move to the right until you intersect the sloping line which represents the weight of the book you are evaluating.  At the point where these two values (profit and weight line) intersect, go straight down to read the selling price you want to achieve. 

Thus, from the graph you can see that in order to profit $5.00 on a book costing $2.00 and weighing one pound or less (green line crosses $5.00 profit line), you need to sell it for about $7.90, and if you want to make the same profit on a book weighing between four and five pounds (red line crosses $5.00 profit line), you will need to sell it for about $10.25. 

Note: This graph and the table above only represent books costing $2.00 and the marketplace commissions, marketplace shipping reimbursements, and other costs as defined in our assumptions.

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