August 25th, 2013
Wholesalers charge money for the service they provide bookstores and publishers. They work as a sort of middle man and are necessary for in-store book sales. The trade discount is based on a percentage of the retail price. It’s the amount the retail price is discounted for the wholesale price. It can range from 40% to 55%. If you want your book in stores, you’ll need a 55% trade discount. Unfortunately, this cuts right into your royalties.
The best of both worlds is to find a publisher that sets different trade discounts for your book based on the type of retailer, rather than one sweeping discount for all retailers. By doing this you don’t have to publish two different versions of you book and try to get away using the same book cover design. For example, Amazon.com will allow as low as a 20% discount which leaves a lot possible for royalty earnings. CreateSpace works with a 40% book trade discount which works out to a very generous payment to authors. They have a separate program for book store sales where you can sell your book in stores, but you don’t make as much in royalties because they have to give a 55% discount, leaving little money for you. The upside is you get to do both, with maximum benefit to you.
I’ve had a surprising amount of success with the CreateSpace program for bookstores. I’ll never make nearly as much as I do on Amazon, but I won’t argue with an extra 10% per month.
If you’re trying to decide on an option and find yourself in a tough position, go for the lower trade discount. You’ll make more money on your book sales that happen on amazon, which will be roughly 80% of your sales. You’re book cover designer will be sad to miss out on the publicity of bookstores, but you make pennies on those sales anyway and they’ll be far and few between. Give up your pride about “seeing your book cover on a shelf” and put a lot more money in your wallet.
If you have goals specific to bookstores, you’ll have to bite the bullet and accept very little in royalty payments. Your book is one of the most important projects you’ve ever worked on, so honor what’s true to your heart. It will make the right decision.
Inexperienced writers often pay little attention to trade discounts because they have no idea how much it affects the bottom line. That, and they’re hard to understand at first glance. Take a slower more deliberative approach to your research. You’ll be glad you did.