The reason people have Penny books for sale on Amazon

Anyone who spends any time on Amazon will notice the penny books for sale. And there are not just one or two copies for sale, but sometimes hundreds of copies. Do people really make money selling books for a penny? Why are they listed for just a penny? I know that curiosity drives some people to search for an answer because they wonder if they are missing out on a sales opportunity. The only sure way to get criticized on Amazon forums is to ask these questions there. You will be immediately scolded for not seeking an answer before posting the question. After all, the logic is; This question is asked once an hour on the forums and has been answered hundreds of times. Just look it up!

The only problem is that I have looked it up and the explanations given in the “answer” are partial answers at best. So I have decided to take a risk, put it on the record and try a more complete answer. After all, if you are an expert in selling books online, you should be able to answer this question, right? It’s like the number of angels dancing on the head of a pin for a theologian or why the Detroit Lions can’t win a super bowl for a sports analyst (or win a game for that matter). So sit back, relax, and let me explain.

The first concept to understand is a product called reprimand. This product will check every listing you have on a place like Amazon and compare its price to all other current listings and then update its price for that item based on the rules you set. You can choose, for example, to be the cheapest, the most expensive or the average price of the package. You also have some control over how often your repriser will run. This is usually a standalone product that you buy, a web-based service, or some places even have it built in like Alibris.com. The tool is based on the theory that people will buy the cheapest product that meets their needs.

This has been largely validated by new media outlet Glyde.com, which recently went online to compete with larger retail sites. When you go shopping, you will only see the cheapest list of any product in a particular condition. If you search for a book, you will see a price for new and another for excellent, for example. When you list an item to sell there, you are given a suggested price for that item in your state, and when you enter the desired price, you are given its location in the queue. Until you are the cheapest (first in line), you will not have a chance to make a sale.

The second concept involves understanding the priorities in the daily activities of a large commercial online bookstore. Let’s say you have 20,000 books online and you sell more than 100 books a day. They pay you when the books are sold. This means that you must list the books to sell them. Once they are sold, you need to mail them as soon as possible to keep Amazon and your buyer happy. The more you list, the more you sell and the more you get. That’s your priority, and to keep your overhead low, you hire enough staff to make sure you meet your priorities in a timely manner.

The last concept to understand is acceptable profit. What I mean by that is where do you look to judge your success? Do you feel like a failure if you don’t make a profit on every item sold or you look at the general numbers and judge based on them? When I ran an online bookstore, I was happy when overheads were less than five thousand grand and total sales were over fifteen thousand dollars. I figured if I lost a few dollars on a few books a month it would be acceptable considering my overall earnings. After all, nobody is perfect.

Now let’s review the scenario. You have configured the repreciator to run four times a day on all of your inventory. You have left it set to the default of $ .01 for the lowest price and it wants to be the cheapest at $ .03. Then, he leaves his inventory in the hands of the repreciator and concentrates on listing new books. All the books you put up for sale start with a price of at least $ 4.00. One particular book you have listed has a competitor who is also running a repricing set to be the cheapest at $ .02 and also left the default of $ .01 as the lower price. Your re-appraiser sees your price at $ 3.98 and changes the price of your copy of the book to $ 3.95. Your re-pricer notes on the next pass that you are cheaper and lowers your price to $ 3.93.

This process continues until both are at $ .01. However, you don’t really realize why you would have to spend time looking for this. Once identified, you would have to pay someone to find the book on the shelf, remove it from the list of your places, and then pay to have it discarded. Not only are you paying for this whole process, but you are also diverting resources from the new book list, reducing the number of books you sell. So the cost to you of removing the penny books is much more than selling the book and shipping it for a penny. When shelf space becomes tight and you need to remove older unsold books to make room for newer ones to be sold, systematically remove lower-priced older books and dispose of them. I used to do this once every six months or so. By doing this once or twice a year, you can streamline the process and keep the effect on your sales to a minimum.

In short, this is why there are penny books. Nobody starts selling books for a penny. They are just the results of using re-pricer technology. So relax, you’re not really missing anything. There is no secret of the coin books. One more thing before I go. The humorous part of the repreciator is the novice bookseller who manually checks the price of his 100 or so books every day. You find that every time you lower your price, you quickly lower yours. Then you try different strategies like lowering the price to next to nothing and then setting it very high. You start taking your actions personally. Imagine that you are in front of your computer day and night changing your price just to annoy him. In fact, I have received emails from these sellers almost threatening me with bodily harm. I had to explain that they were trying to make fun of my rebuke and that I would always win.

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