Wednesday, December 05, 2012

Wordsworth Books: a great example of the free market in action

 

Last week, I purchased the above book on Amazon for a mere £1.99 including postage. When the book arrived, the quality of the paper and print seemed just as good as a regular off-the-shelf book. Yet somehow, the publisher had managed to produce and ship the book to Amazon, and Amazon had managed to ship it to me for a small mark-up, all for £1.99. This stirred my curiosities enough to fire an e-mail off to Wordsworth, the publishers. The next day, the Director of the company wrote back with a wonderful explanation. See below for the communications:

"Hi, as a big fan of your classics and also as someone with a keen interest in economics, I was wondering how you are able to make any margin on your books that sell for £1.99. Surely the postage costs alone must be about a pound? At first I thought the price was perhaps due to surplus stock or a special offer but it's held steadfast for ages. Well done, however you do it"

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"Hi Riz,

Thanks for your email.

The reason we can manage to do this is a mixture of economics and history. We launched the ‘£1 Classic paperback’ twenty years ago now, and it was hugely successful right from the outset. Because in those days there was no discounting of book prices, it massively undercut all of the competition, and the income derived was ploughed back into the company to produce further titles. To publish a new title is quite expensive – typesetting and proofreading alone costs £3.50 a page – but the vast majority of these titles are still in print, so they have been generating an income for us for two decades now.

Because we sell only to trade customers, postage isn’t a major factor, as we ship mainly in pallet loads. The profit per copy of the classics is only about 35p per book, but if, as in some cases, we are selling 50,000 copies per year, and with around 500 titles in print, you can see how the sums work for us. You can also see how it would be next to impossible financially to replicate our business model, which is helped by the fact that there are only a handful of us involved in the running of the company.

Your final question might be that, bearing in mind that we can produce high-quality books so cheaply, how do larger publishers justify the high price they charge for their equivalent editions, but of course I could not possibly comment!"

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