Tom Klein, founder and CEO of $6-million NorthWord Press, sees an up side to the recession: it pushed the nature-book publisher to diversify the price ranges of its products.

Until the recession hit, the eight-year-old Minocqua, Wis., company doubled sales each year on the strength of its expensive color-illustrated books. NorthWord's first title, Loon Magic, published in May 1985, sold 20,000 copies in its first six months (150,000 to date) despite a $40 price tag. In the book business, the average new hard cover sells 5,000 copies.

Why change a winning formula? "It would have been easier to keep selling $40 books," Klein concedes. "But in late 1989, sales growth began slowing down. Retailers told us they couldn't sell the expensive illustrated books anymore. It came down to price."

So Klein developed a line of lower-cost books and other items, including $9.95 nature calendars, and nature recordings for $9.95 on tape and $15.95 on compact disc. In 1990 NorthWord introduced the items a few at a time in its consumer catalog. When sales reps took the new products to gift-store and bookstore buyers, "there was an immediate response," says Klein. The company's reputation for editorial quality had paved the way. Today NorthWord carries 31 audiotapes, some of which sell more than 15,000 units a year, at margins almost twice that of the books.

Meanwhile, all but a few of the $40 and $50 tomes (on dinosaurs, polar bears, and the like) went on the extinct list, replaced by similar-quality but shorter books priced from $9.95 to $19.95. Klein doesn't make as much on each book, "but the books are still profitable and there's better volume," he says. He also saved money by bringing typesetting and design in-house with desktop publishing.

In NorthWord's early fast-growth years, "we were at best a break-even company," says Klein. "Our growth rate has slowed to about 22%, but we've been profitable since 1990, and net profit margins have improved each year."

-- Susan Greco