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New Self-Publisher’s FAQ
Discounts and Returns
A lot of people ask why they must discount their books. Why can't they just sell them at the list price (the price on the book)? And why must they allow returns?
If you have ever been in a retail
business, you know that you don’t buy things to sell at the list price.
You couldn’t because you’d never make a profit. If you don’t have that
price difference— the margin—then you can’t pay rent, the light bill,
the payroll or anything else.
Booksellers aren’t being mean when they ask for a
discount. They have to
make money on the sale of your book. Most businesses in retail look to
double their money—and many industries mark up 100% (called “Keystoning”)
(I’ve heard that in the jewelry biz, from raw stone to the sparkler on
your finger, it’s 3500%). So booksellers aren’t very abusive when they
ask for a 40% discount.
If you set your books on no- or short discount (20%), bookstores will not order it, unless they already have a customer for it. This works fine if you have a very targeted niche market and the bookstores aren’t ever going to stock it anyway.
Wholesalers tack 15% on the
booksellers’ 40% discount because they:
a) create a database that the booksellers can access and order
from
b) stock titles
c) ship books
d) receive returned titles (ie: your book didn’t sell)
e) do the bookkeeping for all this.
You want booksellers to order from a wholesaler. Most
independent booksellers will pay their wholesaler bill promptly—they
must, or they don’t get books. But paying indy publishers... not so
much. If they stiff you (me, anyone else), no harm no foul. They just
don’t get books from us. So forcing the booksellers into the
wholesalers’ arms is good for your bottom line.
If you set your wholesaler discount to less than the standard discount of 55% (say, 20%), bookstores will only special order it. This works fine if you have a very targeted niche market and the bookstores aren’t ever going to stock it anyway.
Distributors tack 25-30% on the
wholesaler's discount because they:
a) create a database that the wholesalers (multiple companies)
can access and order from
b) stock titles
c) ship books
d) receive returned titles (ie: your book didn’t sell)
e) maintain a catalog
f) sometimes have a sales staff
g) sometimes have contacts with companies such as
Borders,
Barnes &
Noble, Costco, etc
h) do the bookkeeping for all this
Distributors rarely carry books that don't use the
standard discount schedule.
Being your own distributor is a great way to cut some middle(wo)man costs out. Just make sure you know what you are doing when you represent yourself to the wholesalers.
The returns problem is what it is—welcome to the book trade. I’d love to change it, but I haven’t figured out a way to do that yet. I’m pretty sure it’s easier to solve than curing world poverty or ensuring world peace, but you’d never know it by the intransigence of the trade to other ideas.
If you set your books on no-returns,
bookstores will not order it, unless they already have a customer
for it. Wholesalers will note its special order status in their
databases, this will limit the number of orders.
Distributors
rarely carry non-returnable titles. This works fine if you have a very
targeted niche market and the bookstores aren’t ever going to stock it
anyway.
If you are planning to have the book available to
the general public and you want bookstores to stock it, then you MUST
take a 55% discount and you MUST take
returns.
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