Higher costs, lower demand. Not the business model any of us asked for. Whether by cutting costs, raising prices, or other tactical changes, publishers are looking for ways to adapt.
In 2022, inflation hit a 40-year high, creating a new set of challenges for independent publishers. “We’re always looking for less expensive solutions,” says publisher Peter Goodman of Stone Bridge Press. “But at some point, these impact quality, schedule, and job satisfaction. Constantly grubbing for pennies is demeaning.”
It can be hard to weather rising costs as an indie. But publishers who are nimble, strategic, and resilient can survive—and even thrive—through this inflationary cycle.
Beginning in 2020, the COVID-19 pandemic triggered supply chain problems that wreaked havoc in the industry. Production costs rose, with a resulting dip in net revenues. But books were still selling.
Now many of the shortages that affected book production have eased. “The situation for most supplies, especially glue, has eased,” says Clark Matthews, general manager at IPG’s production division, IPG Ink. “We now are oversupplied and even have a stockpile that is tying up more cash than I’d like. We’ve gone from starving to stuffed.”
But with inflation, production costs are still going up. Paper prices, for instance, went up three times in 2022, Matthews says.
Rising labor costs are also affecting production, says Tom Doherty, president at Cardinal Publishing Group.
“We are seeing long delays on printing schedules and large increases in unit costs for books,” he says. Adjusting for these rising costs isn’t easy. “We won’t use lesser quality materials or substandard processes,” says CL Gammon, CEO of Deep Read Press. “So we have to accept lower profit margins.”
As the cost of print on demand (POD) rises, author-publishers also face difficult choices. “The print production costs at Ingram have increased to the point where I’m wondering if it’s worth it to market to bookstores and libraries,” says author-publisher Kay Jennings.
The cost of getting print books to market is going up, too. Rising fuel prices coupled with ongoing problems in the shipping industry have led to what Familius founder Christopher Robbins calls “the most significant issue we’ve ever faced.”
Price hikes in both importing freight costs and domestic customer shipments are causing the squeeze, Robbins says. He notes that during the pandemic, overseas container costs jumped from $3,000 to $25,000. That cost has now leveled off at $20,000, causing his per-unit costs to soar from 23 cents to 80 cents.
Goodman notes the impact of higher fuel surcharges. “Our distributor has found ever more clever ways of nickel-and-diming us on associated fulfillment charges,” he says. “All of this is understandable, but consumers still don’t want to pay more for their books.”
Distributors are feeling the pinch, too. “Inflation affects almost every aspect of our business, from energy, transportation, and materials costs to the number of titles being produced by our publishers,” Doherty says.
As publishers pass along costs to consumers, the demand for books—and for production—tends to contract. “Increases in wages and paper prices this year have caused the cost of the book product to increase,” Matthews says. “Those rate hikes may now have reached a place where it has hampered publishers’ appetites for purchasing additional print runs.”
But as Matthews points out, price isn’t the only reason the demand for print books is off. “As COVID-19 restrictions have eased, it may simply be that demand patterns have changed,” he says. “Consumers may be partying in Vegas and doing other experience- and social-related activities rather than sitting at home with a book by the fire.”
Cut Back, Charge More, Print Differently
For publishers, cost-cutting can ease some of the pain of inflation. The challenge is trimming budgets without compromising quality and hurting the publishing team.
At Deep Read Press, Gammon prioritizes taking care of his team. To accomplish this, he is careful about choosing businesses to work with. “We want the most reasonable prices we can get without skimping on quality,” he says.
With a list that is 65% digital, Jennings says advertising is where she sees inflation’s greatest impact. “I have reduced my advertising budget on occasion and will more carefully target my efforts,” she says. “It’s tough out there. Authors and publishers must prioritize. It’s painful to give up some tactics, but I’m looking at it as a temporary pullback.”
Doherty sees publishers revising their publishing schedules. “Some are trimming their new book offerings, while others are delaying production in hopes of more reasonable prices in the future,” he says.
Another response is to raise prices. But for publishers, price increases bring their own set of challenges. At Patagonia, publisher Karla Olson has increased cover prices by 10-15% to offset higher printing and shipping costs. These price increases have allowed Patagonia to maintain the quality of its production materials, she says.
“It is my opinion that books are generally undervalued and therefore underpriced, with little value placed on the intellectual property itself,” she says. “So I am not totally uncomfortable with this increase.”
Still, she admits sales have slowed. “I worry that continued inflation will make books even more of a discretionary purchase than they already are,” she says.
Consumer resistance to price increases depends on the book’s type and category, Doherty says. “For some of the more technical and specialized books, there remains room for increased pricing,” he says. “Some categories, however, present little room for increased pricing.”
He suggests publishers evaluate a backlist book’s suggested retail price (SRP) whenever they reprint. For frontlist titles, he recommends a close look at the margins and the SRP of competing titles to make sure the price maximizes each title’s competitive advantage.
Price increases also present logistical challenges, with barcode changes having to be manually adjusted on the design end. “There is increasing discussion about doing away with price-embedded barcodes so that publishers do not feel like they are being entrapped by their book designs,” Matthews says.
But not all industry players are on board. “There is friction on this point,” Matthews says, “with publishers feeling handcuffed to their old designs and facing headwinds from industry, where the price-embedded barcode is sometimes considered standard, and a deviation is feared to potentially have adverse side effects.”
Another tactic for publishers to consider is moving production of certain titles from offset to POD. “Digital book printing has been a more expensive but much more nimble approach to book production for more than a decade,” Matthews says. “As the cost of money continues to rise and publishers’ aversion to risk continues to grow, the capability of quick-turn, low-risk digital printing will take a growing bite out of the offset printing model, where lower prices but high turn times and high required volumes create risk.”
The Winds of Change
As the saying goes, what goes up must come down. Inflation will ease eventually, but how long that will take is anyone’s guess.
At the production level, Matthews thinks price hikes may have reached their limit. “A crunch in book demand and its attendant concern—a lack of cash in the bank—is likely to put severe headwinds on many publishers as they think about the size of future print runs,” he says.
As the cycle continues, Robbins expects more consolidation in the industry. He also predicts fewer new titles, high retail prices, and a leveling of wage increases.
Goodman anticipates more author-publishers and more digital print solutions. He also looks to a rise in direct sales as a way for publishers to retain revenues that would otherwise go to retailers.
Challenged by high prices and slowing sales, publishers should pay more attention than ever to marketing, Olson says. “It is going to be even more important to let people know about your book,” she says.
Fortunately, independent publishers are well-equipped to weather the storm. Nimbly, they implement tactics to address the challenge. “Focus on strengthening your balance sheet by reducing all nonessential costs, carefully contain growth, and focusing on what sells,” Robbins says.
Even when pressures feel overwhelming, indies are known for their resilience. “Stick to your guns,” Gammon says. “Be stubborn. Do things the right way and hold on. The current climate won’t last forever. You will make it.”