When compared to books that are printed in large quantities, the price of printing on demand, often one-at-a-time, is expensive. A book that costs $.75 when printed in quantities of 50,000 costs about $4  or $5 when printed on demand. Here is how the prices are calculated for a book that is 5x8, 5.5x8.5 or 6x9:

        Number of pages x $.015 = cost of book block. 

        Add to that $.90 for a paperback cover

        or $6 for a laminated hardcover

        or $7.55 for a dustjacketed hardcover. 

In addition, book distributors are used to getting a 55% discount.  This means that Ingram or Baker & Taylor would get a $10 POD book for $4.50. 

Some POD publishers don't care about this and charge high prices for the books. The author has to get his royalty, and the publisher has to cover costs and make some profit, so there are only three possible ways to lower the retail cost of the book.  One is to use another printer. Unfortunately, the POD industry is limited in that in order to get Ingram distribution (and that includes Baker & Taylor, Amazon, & Barnes and Noble Online) it's necessary to use Ingram's Lightning Source POD division. Every POD publisher offering such distribution is doing so through Lightning.

The second method is to reduce the price of the book by reducing the number of pages in the book.  This can be done by using a smaller font, filling every page with text, by using a larger book size, or by using design elements that increase the amount of text on a page (smaller chapter headings for example).

Another way to reduce the retail price is to lower the distributor discount.  Since part of this discount will go to the bookseller, it's important to be careful when using this method. Go too far and booksellers may think twice; but keep the price too high and retail customers will look elsewhere. It's worth noting that online booksellers will not care too much about how high the distributor discount is.  They have no inventory, no store, and very low cost.  Anything they make on a book is good.

However, if bookstores are part of your marketing plan, keep this balance in mind. It's usually inadvisable to lower the discount unreasonably.  I wouldn't recommend going lower than 40-45%.  There are some POD publishers who will tell you incredible retail prices for POD books.  And if you question them closely as to how they can do that, they often become evasive.  If you ask them directly what distributor discount goes with their list price of $16 on a hardcover book, they may even say they don't know.  This is because they're figuring a discount that's so low, there's no money left for the bookseller.  I know of one POD publisher who actually give NO distributor discount but offers high royalties.  Now, I wonder who's going to buy that book since no one can make any money on it? I'm not naming names because I still can't believe it.  Even though I have it straight from the sales floor and in writing.

Once again, as always, the more you know, the more you can protect yourself.