Think Like A Publisher #8… Price, Discounts, and Sales

As some of you said in the comments, I sort of left this on a cliffhanger talking about how to get the other 79 book outlets to make at least 100 book outlets for sales. Please go read Think Like a Publisher #7 if you have not, or some of this will make no sense. This sales series is meant to work as one large unit.

Alas, before I can go into how to get the other 79 plus sales outlets, I need to once again talk about pricing.  I have done a number of major posts about this topic, so not going into it again here. Go argue price somewhere else if you have a problem.

Those of you who think you should price your novel for 99 cents on Kindle and that’s it, just stop reading now. You are a discount publisher and I am talking to regular indie publishers.

—Discount publishers, both traditional and indie, are a different entity and make money on vast numbers of sales with very tiny margins to a small number of outlets. Discount publishers have no regular distribution or bookstore sales.

—Regular publishers, both traditional and indie, make their money in regular sales at regular prices to a vast network of stores and outlets. Regular indie publishers are who this chapter is for.

Here is the price structure I suggest for indie publishers and that works in all the math you will be doing.

PRICING

Electronic Fiction:

…$2.99 for 5 story collections or short novels

…$4.99 for ten story collections

… $4.99 for novels.

(Nonfiction and other projects, including enhanced books are different.)

POD Fiction:

…$7.99-$9.99 for 125-200 page short novels or collections in trade paperback. (5.25 x 8 inch or 5.5 x 8.5 inch trim sizes)

(Note: Price would vary by page count costs. Check the calculators on CreateSpace.)

…$10.99- $14.99 for 200-300 page short novels or collections in trade paper. (5.5 x 8.5 inch or 6 x 9 inch trim sizes)

(Note: Price would vary by page count costs. Check the calculators on CreateSpace.)

…$15.99- $16.99 for 300-450 pages trade paper novels. (6 x 9 inch trim)

(Note: Price would vary by page count costs. Check the calculators on CreateSpace. If you can’t get your book under 450 pages with leading and font and margin issues, you might think of writing shorter books. I have no suggestion for you except to take the price to $17.99 or higher and hope. Large fantasy novels can go to that length and handle the doorstop-book price. And nonfiction can go that large and handle higher prices.)

Okay, we set on pricing? Good, because the above pricing structure works for everything I am about to talk about. Again, check the price calculators on CreateSpace with your trim size and page count to set your exact price. Always look to the Pro Plan number and try to keep the price at least in the 8% and up profit range.

Note: I am using CreateSpace for all POD. For hardbacks, you must go to LightningSource or elsewhere, but for the moment in the early days for trade paper, stick with CreateSpace unless you are out of the States, then go LightningSource and be careful. These calculations are CreateSpace. Make sure you check your own costs of each book.

Discounting

Besides setting normal pricing, now comes the most important element of opening up more outlets for your books: Discount schedules.

As a former publisher of Pulphouse Publishing, I knew the discount schedules that would allow independent bookstores to buy Pulphouse books. And over the last six months I’ve been talking with every independent store owner I could find to make sure these numbers are still valid. They are, and actually make many of the store owners happy. And WMG Publishing has already gotten orders, even though WMG has not started any catalogs, flyers, and only has three varied books in POD.

So schedule your discount as such:

1-5 books: 40% discount (of cover price) plus freight costs.

6-10 books: 45% discount (of cover price) plus freight costs.

11 books and up: 45% discount (of cover price) and free freight.

CRITICAL!! The bookstore must be able to mix and match titles.

(Put no restrictions on numbers of titles. Just overall order numbers.)

Critical!! Dealer Must Pay Ahead for Order at these rates.

Paying ahead and being able to mix titles in an order need to be your company policy. Trust me, you do not want to run an accounts receivable from bookstores, especially in these tough times. I shut Pulphouse down with a solid five-figure accounts receivable and never saw a penny of that money.

Examples

Say you have five books in a series. A book dealer or indie store (to make the best discount) can order two of each of the first four books and three of the newest one. That makes a total of eleven books in the order.

All books in the series are $15.99 cover price. Dealer would pay (11 books x $15.99 =$175.89 x .55 =) $96.74.

Assume your books are 6 x 9 inch trim, cream paper, all around 420 pages.  Your cost to order the book would be about $5.90 per copy. (Will vary on page count up and down by a few cents.)  So your costs for 11 copies are ($5.90 x 11=) $64.90. Shipping media would be around $10.00 making your total costs $74.90.

$96.74 – $74.90 = $21.84 profit. Or about $2.00 profit per book.

Or to put another way, a 12.5% profit margin.

That is the lowest you would make per book. On the highest discount you give. Period.

Example #2.

Say the dealer ordered five copies, one each in your series. That would qualify the dealer for a 40% discount and the dealer pays frieght. The dealer would pay (5 x $15.99 x .60 = ) $47.97 and pay the $6.00 shipping for a total of around $54.00.

You would have to pay CreateSpace $5.90 per book plus shipping or a total of (5.90 x 5 = $29.50 plus $6.00 shipping =) $35.50.

Your profit is ($54.00 – 35.50 = ) $18.50.

Or about $3.70 per book. Or a 23% profit margin. Wow!

If you sold the same book electronically at $4.99 and 70%, you would make about $3.50 per sale.

The correct discount schedule is critical to selling to bookstores.

Setting a correct price and knowing your costs allows you to set these discounts. Think like a publisher.

What Work Does The Publisher Have to Do to Make this Money from Bookstores?

I had one writer say to me one day, “But I don’t want to have to pack all those boxes.”

After I stopped laughing, I realized the writer, many writers, are still thinking in what is called the “Warehouse Model” of publishing.

Up until a few years ago, and with most publisher’s today, the warehouse model is still used. Vanity publishers make their living getting self-published writers to fall for the warehouse model.

Simply put, the Warehouse Model is when a publisher pays ahead for massive printing costs of a certain set number of books and then the publisher stores the entire print run in a warehouse waiting for sales. (Vanity self-publishers used to store the books in piles in their garages until they rotted and were tossed out.)

POD (Print on Demand) publishing is when the is book ordered and paid for AND THEN is printed and shipped from the printer.

There is no warehousing at all. None.

The book is only paid for by you and printed after you have an order and a check from a bookstore.

So when you get the order from a bookstore and a check, you deposit the check and then go to CreateSpace or LightningSource and order the copies.

You get the copies at your publisher discount.

And then you just change the shipping address of where the books are going.

That’s it!

Let me repeat: Once you get the order, you deposit the check, order the books online from CreateSpace, and change a shipping address.

That’s it! You need to do no more work for the order. You never touch the books or even see them. They go direct from the printer to the bookstore.

Of course, the real work comes first in getting the books available on CreateSpace or LightningSource. And then the work comes in letting the bookstores know about the books. And that’s the part I will talk about in the next chapter.

So I am afraid I have to do another cliffhanger and not yet talk about how to get the other 79 outlets. But you wouldn’t have gotten them if you didn’t first understand discount schedules and pricing structures. Stay tuned.

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Copyright ©  2011 Dean Wesley Smith

Cover photo copyright © Vladimir Melnikov/Dreamstime

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This series is part of the income streams for me. And, to be honest, donations keeps me going on these chapters. And anyone who donates a little to the Magic Bakery tip jar, I will send a free electronic book of all these chapters combined when I am finished.

And  speaking of the Magic Bakery, this chapter is now part of my inventory in my bakery. (Confused on that, read the Killing the Sacred Cows of Publishing post about making money with writing.) I’m giving you this small slice as a sample. I’m giving you a taste, but not selling any of the pie.

If you feel this helped you in any way, toss a tip into the tip jar on the way out of the Magic Bakery.

If you can’t afford to donate, please feel free to pass this chapter along to others who might get some help from it.

And I would like to thank all the fine folks who have donated over this last year. The donations and the comments both after the posts and privately are really keeping me going on this. Thanks!

Thanks, Dean