Q&A: Should I ignore books that sell online for less than $10?

QUESTION: My business model is simply to avoid buying books that sell for less than $10. Though this has worked well for me and I'm bringing in a steady income, I wonder if I'm missing out on some profit.

I've considered lowering my minimum price to $5 or $6. But even assuming I'm only paying about $1 per book, I wonder if this is worth the time and effort. I don't want to invest hundreds of dollars only to make a small return. However, I have plenty of storage space and time to work on my business.

ANSWER: I agree in principle with your notion of ignoring books worth less than $10, but I think you've set the bar a bit too high. Lots of people would probably disagree with me, but...

I think you should experiment with making your cutoff $6 or $7 instead of $10.

Here's the way I look at it: Say I'm at a library sale, and I spend 30 minutes there. I find five books worth an average of $20 apiece. All of the books are priced at around $1 or $2, so of course I snap up those gems in a heartbeat. Assuming I sell them all for about $20 apiece, I've earned a profit of about $100. Not bad.

And, let's say, at the same sale I come across another 10 books worth an average of $6 apiece. Let's say I'm buying those for $1 apiece, so assuming I sell them all, my profit margin (before listing fees or commissions) is $5 apiece. So, I've picked up an additional $50 worth of stock. I'm going to end up with 50 percent more profit without much more time or expense -- my time spent traveling to the sale and the transportation costs were spent already.

So I'm willing to snag those "commodity" books when that's the best option I see. And this gets to the real weakness of selling used books online as a business: The supply is finite -- there's only a certain amount of opportunity. Online bookselling is not something to get rich at, but the other side of the coin is, it's extremely low-risk and easy to start on a dime.

If you were willing to go to the trouble, you could analyze exactly how profitable this part of your business (lower priced commodity books) is for you. I've done this several times myself to judge how profitable certain inventory sources were for me, although I've never done it to analyze the effects of selling price alone. My tracking mechanism is to assign an SKU suffix to all the books in the category I'm considering. For example, I'll add an X to the end of all the SKUs for the category of books I want to track, so their SKUs are 1X, 2X, 3X, etc. Then when I want to run the numbers, I search for sales containing that SKU suffix and compare the sum of the sales to how much cash I've spent acquiring those books. How do I determine success or failure? Generally, I want to double my cash within a certain number of weeks.

Having said all this, these days I am ruthless about getting rid of low-value books that don't sell after a couple of years, and that adds considerably to the labor involved in this. Also, I've raised my bar considerably since I started selling six years ago. I remember when I'd be tickled to death to sell a book for $6.