This posting discusses something everyone cares about — money! Specifically, how much money your self-published book can earn, and the variables that contribute to that profit. The largest variables are the retail price and the pricing plan for your book.
A price plan involves your book’s trade discount. A “trade discount” is also known as a distributor discount. This is the percentage off your retail price that you offer to the publishing trade for distributing your published book. The “publishing trade” consists of wholesalers, distributors, and retailers. Everyone who handles your book takes a piece of the trade discount.
The larger the trade discount, the more money there is to split up among all the parties involved. And since everyone likes making money, the larger the trade discount, the more potential distribution and availability your book will enjoy. Standard trade discounts range from 50% – 70%.
Most self-publishing companies do not offer any information about their trade discounting policies up-front, nor do they give the author any say in the matter.
However some cutting-edge on-demand publishers offer their authors the flexibility of setting their own trade discount. Flexibility varies by publisher, and all this control can sometimes be overwhelming.
That is why Outskirts Press makes this complicated subject as easy (and still flexible and profitable) as possible by offering three custom pricing plans:
These pricing plans offer a 50%, 40%, and 25% trade discount, respectively. Advanced users can alter their discount even further, by going as low as 20% for online distribution, or as high as 55% for industry standard trade discounting. These additional pricing adjustments are offered once the pre-production process has started.
The FTC prohibits different price plans for different types of distribution for a single ISBN, so each book must have one and only one price plan. As a result, there are some decisions to be made concerning the real distribution potential for your book (as opposed to the distribution you hope to achieve).
A 55% trade discount will often result in an industry standard 40% retail margin, which is what a typical book retailer seeks when considering whether or not to order or stock a book for a physical bookstore. Some retailers, like Barnes & Noble, actually “mark” or “tag” books in their system that feature a trade discount lower than 50%. They do this for all books from all publishers as their way of indicating that a book has a “short discount” (less than 50%).
WHO DETERMINES MY BOOK’S TRADE DISCOUNT?
Typically the book’s trade discount is set by the publisher and cannot be altered by the author. There are some publishers that give authors the power to set their own trade discount pricing plans. Of course, as the
saying goes, with great power comes great responsibility. If your publisher gives you the power to set your own discount pricing plan, congratulations! You have a competitive advantage to increase the likelihood your book will be successful; you also have the responsibility to understand how different price plans may affect your book’s availability.
The Outskirts Press pricing calculator is a very handy tool that automatically estimates your book’s pricing before you submit it for publication anywhere, based upon page count estimates that you provide. You also see the advantages and disadvantages (the pros and cons, as it were) for each plan. That way, you are never surprised and can set your pricing plan according to your goals, regardless of where you choose to publish your book.
Each book and each author is unique. A unique pricing plan will reflect that the best.
WHAT PRICE PLAN SHOULD AN AUTHOR SET?
Since the price plan is directly related to both your profit and your retail price, special consideration should be given to picking the right plan. The higher your plan, the higher your retail price and/or the lower your book profits. The lower your plan, the higher your profits, but perhaps to the detriment of distribution.
Remember that a trade discount is different from a retail margin. Wholesalers receive the trade discounted price. Then they turn around and distribute your book to a retailer for a retail margin that is set by the wholesaler. If the trade discount and retail margin were the same, the wholesaler wouldn’t make any money and would go out of business. For this reason, the retail margin passed to the retailers is always lower than the trade discount you set with your price plan.
With the flexibility of setting your trade discount to any percentage between 0% and 55%, authors who are granted so much control may find all the flexibility daunting. For this reason, the below chart offers the 6 most common trade discounting levels:
|0%||No distribution.You will handle all sales directly from your own inventory. This is the trade discount automatically set for you with the Outskirts Press Emerald package, which does not include any distribution or wholesale availability. You need at least a 20% trade discount to secure any distribution at all.|
|20%||For this trade discount, on-line availability is currently available via Amazon and Barnes & Noble. Physical bookstores and off-line retailers may have access to your book via special order and may increase your suggested retail price to pad their profits, but even if they have the option of ordering your book, many will refuse (usually by saying they “can’t order it” simply because they won’t make any money. Bookstores are in business to make money, and physical bookstores don’t make money with 20% distribution discounts. With this discount, offline distribution or availability will be nearly impossible. Advanced users only.|
|25%||THIS IS PRICE PLAN 25 AT OUTSKIRTS PRESS.For this price plan, on-line availability is currently available via Amazon and Barnes & Noble and many other websites (Powells, Books a Million, etc). Physical bookstores and off-line retailers may have access to your book via special order and may increase your suggested retail price to pad their profits, but even if they have the option of ordering your book, many will refuse (usually by saying they “can’t order it” simply because they won’t make any money. Bookstores are in business to make money, and physical bookstores don’t make money with 20% distribution discounts. With this discount, offline distribution or availability will be nearly impossible but this is a solid, money-making choice if you know you will be selling only online.|
|40%||THIS IS PRICE PLAN 40 AT OUTSKIRTS PRESSWith this price plan, on-line availability is equal to or greater than Price Plan 25, plus increased physical bookstore potential at NET 20, which means a 20% retail margin is typically provided to the bookstore as their profit (approximately half of what they typically desire). This is a good choice for authors planning on selling mostly online and through the Wholesale Bookstore at http://outskirtspress.com/buybooks which removes the middle man from the equation — resulting in standard retail margins for the bookstore AND full royalties for the author.|
|50%||THIS IS RECOMMENDED PRICE PLAN 50 AT OUTSKIRTS PRESS.This Price Plan is the recommended plan for authors who want the combination of reasonable retail pricing and royalty plus all the distribution and availability opportunities both online and off. The optional Retail Returns Service is highly recommended with this discount to get the best opportunity when pursuing offline chain retailers.|
|55%||The highest trade discount that can be set in the on-demand publishing industry, resulting in maximum distribution potential for an industry standard 40% retail margin. The optional Retail Returns Service is highly recommended with this discount to get the best opportunity when pursuing offline chain retailers. Advanced users only.|
Interested in publishing with this level of control and pricing flexibility?