The Bookseller.com

14th October 2008

Neill Denny is editor-in-chief of The Bookseller. He will be blogging on the book business and on how the print magazine is produced each week.

Prices can go up as well as down

29.05.08

The last decade has been all about a relentless, downward ratchet in book prices. But is it time to reverse that process and start, dare we say it, charging more?

Since 2001, the date at which the sales figures first became truly comprehensive, the average sales price achieved per book in the UK has fallen from £7.81 to £7.57. It doesn't sound a great deal, but factor in inflation at an average of 3% a year and the fall is far steeper—that 2001 a.s.p. is worth £9.32 by 2007, meaning prices have dropped in real terms by nearly 20%.

It seems strange to be arguing for higher book prices at a time when consumers are being hit by price hikes on essentials such as petrol, food and energy—but perversely these increases are creating a climate where people are expecting prices to rise generally.

And it is hardly as if publishers and retailers are immune from the effects of spiralling prices. Both are using distribution operations designed in an era of cheap oil, now gone for good. Margins are under pressure elsewhere as staff start to push for higher wages to cover the ballooning cost of living, while a host of other business costs, principally taxes and rents, are on the up. 

The sheer cheapness of books has arguably become a problem. If a paperback costs less than a pint of beer, a cup of coffee or a magazine, what does that say about the value of books as gifts? Discounting may have expanded the overall market in recent years, but there must come a point where the trade is attracting bottom-of-the-barrel customers who are just not profitable.

Certainly we are now seeing the deflationary othodoxy of the last decade being questioned. Last year the a.s.p. crept up (only by 4p admittedly) while Tesco, one of the arch discounters, is planning to generate an extra £1.5m in revenue by raising its own a.s.p. this year. Given that both publishers and retailers are now facing fast-rising costs, prices are probably going to have to rise anyway right across the trade.

The worst route would be to merely slap an extra pound or two on cover prices, thereby further widening the gap between nominal ­prices and actual ones. This would cripple those retailers—largely independents—who still rely on cover prices. A better answer would be for retailers to merely discount less on average, and hold a higher price on terms. In turn, publishers may need to be more imaginative than just beating up retailers on terms when it comes to protecting their own margins.

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