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View Full Version : Explain discount rates please.



Artphotos
05-16-2009, 08:25 PM
I've been reading about price setting and discount rates retailers usually need to see in order to carry a book. Can someone please explain this to me in more detail and give an example?

(I get a retailer won't carry a book without making a certain profit, but would like to know what this is and it fits mathematically into the price setting equation.)

- Thanks.

Thump
05-16-2009, 08:36 PM
Basically, if you want a bookseller to buy your book, you need to give them a discount that will allow them to make a profit on resale. Big booksellers like Borders for example, can command discount up to 70% of the price of the book. This means that the publisher only makes 30% of the price from selling to them but because they can buy and sell such large amounts, they have to accept these rates.

This makes it very hard for small publishers because they can't necessarily afford to give such large discounts. Booksellers also want more security when dealing with small or self-publishers because they have less of a marketing budget which affects sales and Booksellers don't want to end up with a bunch of stock taking up shelf and warehouse space and isn't selling.

How this factors in to the price of the book: basically, take the cost of producing the book, this is the very minimum money you have to make in other not to make a loss. Then slap on the highest price you think you can sell this book at (look at the price of comparable titles on shelves, Amazon etc and by comparable I mean not just content, you want to look at the size of the book, the quality of the paper, hardback vs. paperback and size of the publisher). Then you have to decide how much of a percentage of this price can you afford to give up.

ETA: also, since you're posting this in the Self-pub, POD section, I assume you're self-published. This makes it even harder because a lot of stores won't carry self-publishers at all, regardless of what discount or returns policy you offer them (basically, if they can't sell it, you refund them their money). If it's a very local book, they might stock a few copies. Booksellers are predators.

ResearchGuy
05-16-2009, 08:59 PM
Ok. For example, I published Wyla the Witch, by Evelyn Swift. List price (cover price) is $15. I can put it on consignment in bookstores at $9.00 (40 percent, which is pretty much standard, from list). They pay me $9.00 for each copy they sell.

I published Capital Crimes: 15 Tales by Sacramento Area Authors, edited by Patricia Canterbury and Kathleen Asay. List price, $15.95. I provided 100 copies to a local Borders store with invoice for $957.00 ($9.57 per copy, which is 40 percent discount from list). They sold them all and corporate sent me a check in the full amount.

Recently a local bookseller handled sales of Capital Crimes for a local signing event. They wanted a 45 to 50 percent discount from list price (more than the normal, but I was ok with it). I gave them a special deal, at $8.00/copy (for those sold -- books were on consignment), or just under a 50 percent discount from list.

If you want to sell into the trade via a distributor, then you'll be getting maybe 35 percent of cover price (and of course they can return unsold books, probably at your expense and not necessarily on good condition). But getting a trade distributor for a self-published book is nearly impossible.

If you want to place the book with a wholesaler (which is not the same thing as a distributor), then they will be looking for a discount of 50 or 55 percent from list. Amazon I believe takes 55 percent discount from list.

That is why it is so hard for a self-publsher or small independent publisher to make money selling through bookstores.

FYI, bookstores do not pay up front. They will either take books on consignment or with a bill to be paid later (90 days is typical). They are not refunding anything, as they have not paid you for unsold books. They will only pay for ones they actually sell. And maybe not even for those without effort.

--Ken

P.S. You will learn more by talking to bookstore owners/operators/managers than by seeking answers on message boards.

Artphotos
05-16-2009, 09:26 PM
Thanks both Thump and ResearchGuy. I'm currently selling a book regionally, but both the retailer and I are willing to accept less profit in order to have the book sell competitively.

I was actually wondering about the numbers if I were to publish directly through LightingSource (future book) and whether it's possible to meet a discount rate necessary for any of the retailers. I realize there are other issues including those mentioned by Thumb. I don't think I would want to count on non-local retail sales, but want to be as informed about what I'm facing as possible.

ResearchGuy
05-17-2009, 02:49 AM
. . . want to be as informed about what I'm facing as possible.
If you have not read Dan Poynter's Self-Publishing Manual (currently in about 16th edition), let me recommend that you do so, Some folks prefer Tom and Marilyn Ross's comparable book, but that one has not been updated as recently, and might not be.

Also you might want to look at Poynter's website, www.parapublishing.com (http://www.parapublishing.com).

--Ken