Answers to Book Discount Questions

by Joel Friedlander on April 6, 2012 · 14 comments

Post image for Answers to Book Discount Questions

Book discounts can be confusing and make your head hurt.

Should you give a big discount to stimulate distribution?

Or a small discount to maximize your per-book profit?

And if you pick the wrong one, will retailers shun your book?

These questions and more have come up recently in blog comments and email queries. Here’s an email from a client who has arrived at the moment when you have to put something into the discount box in your Lightning Source title setup.

This is even more nerve-wracking because at a print on demand vendor like Lightning Source, you can only set one discount percentage for all the books they sell, no matter who they are sold to. (My responses in blue.)




Dear Joel,

My book is almost at Lightning Source. I’ve sorted through so many questions and I’m down to the issue of wholesale percentages in order to complete my contract with Lightning Source. I have spoken to a friend in marketing and an author with a lot of experience, and they all suggest I call you. I didn’t find the topic of wholesale discounts on your web site but please direct me if it is there.

Congrats on getting your book (almost) finished. Now comes the fun part. If you search on my blog for articles relating to “distribution” and “discounts,” you’ll find quite a few that go into this subject. Here’s one to get you started: Self-Publishing Basics: Understanding Book Discounts

I expect most of my book sales to come through me giving talks and my website, Amazon and other online sources. However, I would like to market to independent bookstores that normally expect the 55% discount off the cover price ($14.95).

Bookstores will require a minimum 40% discount, 55% is for distributors or wholesalers.

Can you give me any feedback on the issue of what percentage discount to choose for my Lightning Source agreement?

The only real choice you have in my mind is between 20%, the minimum allowed by LSI, and 55% if you want to try to attract bookstore sales. You need to give LSI 55% because distribution will cost you the 15% added in, and the bookstore will receive 40%.

Do online sources like Amazon, give some priority to your book if you offer a bigger discount?

Nope.

Or do they market it as much if they only get a 25% or 30% discount as is more common for them?

Retailers like Amazon don’t do any marketing at all–that’s your job.


My friend the author thought we should give the biggest discount so they have more flexibility in marketing but that might not serve and it certainly cuts into any revenues.

Perhaps he’s remembering his days as a traditionally-published author. Unless you plan to aggressively market to bookstores, why give up the extra %? Remember: No one will market the book, only you. So what are you paying for?

If I make the discount only 30% off the retail price, can I as a publisher sell it directly to stores like our local indie, by buying for example ten copies myself, then selling to them with the 55% discount and my own promise to take back any unsold books?

I would strongly advise against this plan. First, why give 30% if you only have to give 20%? What are you getting for the extra 10%? Nothing I can see. This store and other indies are unlikely to buy your book, although they will let you consign it. And they don’t need, nor do they get, 55%. Unsold consigned copies will be returned to you since they are your property anyway. I don’t consider consignment a real form of distribution, by the way, but it’s a good way to go if you have an event planned at the store.

Thanks again!

No problem, and good luck!

Learn Things in the Comments

As frequent readers know, often there’s a lot to be learned in the comments on blog posts, and some of them have become lengthy and detailed discussions in their own right.

One of the most popular is Amazon and Lightning Source: End of an Era? with 166 comments so far, many reflecting authors’ personal experiences.

The subject of discounts came up there, too, and frequent commenter James Byrd of the Self-Publishers Online Conference helped out with this comment:

“The distributor … demands a 55% discount because they need to be able to offer 40% to book stores and keep 15% for themselves. If you are selling direct to bookstores, 40% should be fine.

We actually make no effort to sell to bookstores. We agree with Dan Poynter’s philosophy that bookstores are terrible places to sell books. We set our discount to 20% and don’t allow returns, which means our books are sold POD by online booksellers only.

In our experience, if you set the discount higher, the retailer just passes most of the savings on to their customers, which means offering a higher discount is effectively the same thing as lowering your price. We’ve even had Amazon offer our books at a discount when they only have a 20% margin to work with!”

James along with wife Susan Daffron have at least 10 self-published books for sale and consult with many authors.

It’s also good to remember that many people become self-publishers because they want to do things their own way, and why not? Remember, you’re the publisher and you get to make the rules for your own company.

There may be times you want to adust your discounts one way or another, and this was spelled out really well by Gary Roberts of Toolemera Press:

“I don’t think there is any one fit for any one title or publisher. I recently filled an order from a museum store for ten copies of each title on my list. I upped the discount from 55% to 60% as they are buying direct from me and informed them that for the future, they can buy from me or from Ingram. It’s up to them.

The good will gesture produced further orders for titles needed for a conference they were planning as well as contacts from another museum store.

The point is to put books into the hands of new customers who will, hopefully, turn into repeat customers or recommend you to other readers or buyers.”

I’m indebted to all the knowledgeable people who post comments here, because they help give readers a wide-ranging perspective that’s more valuable than any one person could do on their own, and I thank you all.

Do you have questions about discounts? Ask them in the comments.

Photo by Orin Zebest

Be Sociable, Share!

    { 14 comments… read them below or add one }

    Michael N. Marcus April 6, 2012 at 4:43 am

    Self-publishing newbies often confuse the wholesale discount (given by publishers to distributors and booksellers) with the retail discount (given by booksellers to consumers).

    They are not the same thing. Publishers control the wholesale discount, but not the retail discount.

    If a bookseller gives readers a 10-20% discount, the publisher doesn’t collect less money on each book.

    If you give a big wholesale discount (e.g., 40%), booksellers will be better able to afford to give discounts to readers, which may gain you some business. However, there is no guarantee that they will give the discount. Some books with high discounts to booksellers are sold at the cover price, and others with low (“short”) discounts are discounted to readers.

    One of my books has a $15.95 cover price. It is printed by CreateSpace, so Amazon automatically gets a 40% discount. For the last few months it was selling for just $8.44, but today it’s back to full price. This is a strange business.

    Michael N. Marcus
    http://www.BookMakingBlog.blogspot.com
    http://www.BookFur.com (information, help and book reviews for authors)
    – Create Better Books, with the Silver Sands Publishing Series: http://www.silversandsbooks.com/booksaboutpublishing.html
    – New: deluxe hardcover edition of “Stories I’d Tell My Children (but maybe not until they’re adults),” http://www.amazon.com/dp/0983057249

    Reply

    Joseph Lalonde April 6, 2012 at 7:20 am

    Joel, thank you for the great information about book discounts. This is something I was wondering about as I’ve got two book ideas in mind.

    Having worked in a retail bookstore, I knew we sold independent books but never knew the inner workings or the discounts that were offered by the author.

    I’ll be creating a free eBook when people subscribe to my blog, http://www.jmlalonde.com. With the book being given away at a 100% discount on my blog, would you recommend offering for sale on Amazon? I see this as creating an appearance of value and may make me a few bucks in the process. What do you think?

    Reply

    Joel Friedlander April 6, 2012 at 9:46 am

    Hi Joseph,

    No, I wouldn’t recommend giving away a book you plan to sell on Amazon, and Amazon has been known to adjust the price based on what you are “selling” the book for elsewhere, they are sensitive to that.

    But you might think about giving away a sample of the book on your blog, or a shorter complimentary title, or a story if the longer work is a novel. It doesn’t have to be 300 pages to be of enough value for people to want it. The important thing is to make it something people actually want.

    Reply

    Joseph Lalonde April 6, 2012 at 10:22 am

    Joel,

    Thanks for the advice. I wasn’t sure how something like that would work and if it would be frowned upon by Amazon. But I think that’s a great idea as I was thinking of doing a 101 idea type of book. Give away a couple sections of it on the blog as an incentive to sign up and then offer the full deal on Amazon.

    Reply

    Mani Feniger April 6, 2012 at 8:45 am

    Hi Joel, thanks for the great column. So many of us writers are focused on writing, and then on the book production, but being an indie publisher is business. SO MUCH TO LEARN!
    Since I will be selling books, do I need to get a resale number before I start? I would welcome any other blogs or resources on learning the business part of indie publishing. THANK YOU.

    Reply

    Joel Friedlander April 6, 2012 at 4:46 pm

    Hi Mani,

    Since you’re also in California, if you plan to sell books retail to buyers, you’ll need to collect, report and pay sales tax on those purchases. Contact the Franchise Tax Board for info. You only need a resale number if you are planning to buy something wholesale and sell it retail. The resale number allows you to avoid tax on the purchases, since you’ll be collecting it when you sell the product. I don’t think you’ll need one.

    A couple of good books that deal with the business side of publishing are Christy Pinheiro’s The Step by Step Guide to Self-Publishing for Profit and Dan Poynter’s Self-Publishing Manual.

    Reply

    J. Tillman April 6, 2012 at 12:03 pm

    Thanks, Mr. Friedlander. Can I ask a few more questions?
    For an offset printed book can (or should) you give online retailers (Amazon) a different (smaller) discount than the distributor?
    Who pays the shipping costs to Amazon? to distributor? or to a bookstore?
    A difficult one… how much profit over the production cost of the book, in either dollars or percentage, should the author be trying to make in their pricing decision?

    Reply

    J. Tillman April 6, 2012 at 12:07 pm

    Add to my first question: Or does the distributor want to sell directly to Amazon?

    Reply

    Joel Friedlander April 6, 2012 at 4:57 pm

    J. Tillman, I’m happy to answer your questions, but not if you keep calling me “Mr. Friedlander.”

    Please have a look at the article I linked to about Understanding Book Discounts, and also have a look at this one: Understanding Print on Demand: Follow the Money. They should answer most of your questions.

    Printing method does not influence price, value and its perception by your market do.

    Reply

    Tellulah Darling April 6, 2012 at 2:03 pm

    I’m curious if you advocate Plan B for people just starting out, or if you too, believe that they should just stick with CS and not venture into LS as well. Is the smaller discount that would be used with CS in that case worth the potential lost sales of these other markets?

    Reply

    James Byrd April 7, 2012 at 1:13 pm

    Good article, Joel. I like the way you used real questions from a real email to address the issues. It’s a shame that the subject of discounts is so confusing to people. We get more questions about discounts and ISBNs than just about any other publishing subject.

    I’m basically with Mr. Marcus in that I believe discounting is confusing simply because of the term. First-time self publishers initially approach the subject from a consumer perspective: a discount is how we save money on the retail price of something. People who have a business background can probably more easily relate to the concept of a wholesale discount, which is what sets the wholesale price (how much you make as the publisher) and *theoretically* sets the retailers profit margin.

    What makes the situation even more confusing is that the wholesale discount is really pretty meaningless because the retail price is also meaningless. Retailers are free to set the sales price of the item to whatever they want, whether that price is higher or lower than your “suggested” retail price. If Amazon wants a 50% margin, they just double the price they paid for the book (the wholesale price). They can also choose to sell the book at a loss (i.e. lower than the wholesale price.)

    In fact, Mr. Shepherd’s Plan B relies entirely on retailer pricing discretion, which is one of the aspects of Plan B that makes it so confusing: authors not only have to understand discounting, but they have to grasp the idiosyncrasies of retailer pricing strategies. The indeterminate nature of Plan B is one reason we haven’t tried using it; what works great today may fail miserably tomorrow.

    Reply

    Mann December 20, 2012 at 8:19 am

    Waht James mentioned is right about the indeterminate nature of Plan B.

    I published both with Createspace and Lightningsource to primarily implement Plan B.
    I set my book for $25 at CS and then set the price of the book at $28 and kept 55% discount. I was expecting bn.com to least give 20% discount so that the price would have come down there and as a result amazon would price match it.
    But the problem is that bn.com price is stuck at $26 and as a result amazon won’t discount the book.

    I don’t know whether anyone has had any success with Plan B.

    Reply

    Joel Thurtell July 1, 2013 at 4:51 am

    I’ve published five books through Lightning Source, and am pleased with the service they’ve provided. Generally, having Amazon and Barnes & Noble as online vendors has been good. However, I wish I could bypass them and be my own vendor on my website. I would like to have a shopping cart on my website that would place a book order directly with Lightning Source, thus saving the discount I would ordinarily give to amazon. Does anyone know how to do this?

    Thanks.

    Joel Thurtell, Hardalee Press

    Reply

    Joel Friedlander July 1, 2013 at 1:30 pm

    Joel,

    You would have to go to quite a bit of trouble to establish yourself as a retailer and then set up a print on demand fulfillment.

    However, you can accomplish pretty much the same thing by simply ordering a stock of your books and selling them on your website, you would just have to do the fulfillment (and returns and customer service, etc.) yourself.

    And keep in mind that give a choice, most buyers will prefer to buy from Amazon or another larger retailer in any event.

    Reply

    Leave a Comment


    5 + four =