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If you think the larger format would better represent the pictures, I'd go with the larger format. One way to make the price point be a little more appealing (at least for the first several months), is to offer some kind of "bonus" for people willing to pay the extra money. You could, for example, offer a free 8x10 reproduction of the cover - signed by you - to anyone who purchases the book in the first 12 months.
On the other hand, if the original photos were 8x10s, would the smaller format hurt? How does a tight binding affect your margins?
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