To (maybe) clear up some confusion

There’s a misconception I’m running into with some authors that sell books at my store that I’d like to address here, both because I know authors read this, and because author blogs have linked here before when I’ve made posts like this.

As I am almost sure is standard in independent bookstores, our baseline discount is 40%.  This applies whether I buy the books directly from an author, from a wholesaler, or from a publisher (actually, sometimes publishers will give us a slightly more favorable discount).   This seems reasonable to me, but that’s because I’m on the business side of the equation, so I can see the whole picture.  I want to make the whole picture clear for everybody.  I’ll do the best I can–keep in mind that I didn’t choose bookselling because of my math proficiency!

One of the reasons we often buy books from authors is they have published non-traditionally.  Either self-publishing or publishing with PublishAmerica, xlibris, et al (we don’t buy directly from these outfits as a matter of store policy because of a number of disputes before my time; and even though many places SAY a book should be available through Baker & Taylor or Ingram, what I see from my side is that the books are listed as being on backorder, or short discounted).  In these situations, we ask for a 40% discount, as is standard.  (NB: I know that many chain bookstores do an 80/20 split.  Their finances are a mystery to me, and frankly not something I’m interested in my store emulating.)

What has been pointed out to me, however, is that the math on this can seem unfair.  Let’s say a book’s retail price is $14.95.  That would make the cost to the bookstore $8.97.  However, let’s say that an author paid $6.50 for each copy.  It would seem that the author makes $2.47, while the bookstore makes $5.98.  I can definitely see how to an author, that looks unfair.

But I’ve realized what I have been neglecting to explain to authors.  The profit margin piece.  Depending on where you’re looking and what year it is, the average profit margin for a bookstore is 2-5% (I am sure booksellers everywhere are laughing uproariously at the 5%).  Books basically have the smallest profit margin in retail–you really do not want to know how high they mark up sweaters and necklaces and so on.

What this means, basically, is: of the $5.98 from the above example, only 12 cents to 30 cents is actually profit.  The rest all goes into the bank account and leaves again pretty soon thereafter for payroll, utilities, the free bookmarks we tuck into your books, toner, receipt paper, the plastic stands we put books on that seem to vanish in the night, holiday decorations, crayons for storytime, advertising, and all the other expenses that add up and up and up.

Of course, authors have overhead too–many authors pay out of pocket to send invitations for their signings (which, by the way: THANK YOU!), for example, or make bookmarks to go with their book, or so on, and authors have to pay their electricity bills too.  I also realize that the author’s price for a non-traditionally published book can vary wildly.  I’m not trying to play the who-has-the-most-bills game, here!  I think we all know that books can make money, but except in the rarest of cases, do not make one rich.  I’m just pointing out that in terms of dollars, or in this case, cents of profit, authors who sell their books directly to indie bookstores might not realize that as long as they’re making more than thirty cents a book, they’re ahead of the bookstore.  We might be taking more of the GROSS, but we are almost always making less NET.

Sorry for blurting that out of nowhere, but I’m hoping it will help an author understand why independent bookstores do what they do, or help booksellers do a better job that I’ve been doing to explain why we do what we do.  Let me know if it doesn’t make sense (probable) or my math sucks (even more probable).


2 comments so far

  1. vickie on

    Having worked for one of the chain bookstores, I can tell you there were a few select titles we would consider taking a short discount on (net or anything less than 40%). These were titles we purchased from Ingram or Baker & Taylor, not directly from the author. For some reason computer and medical books jump to mind. As a standard, we required authors selling us the book directly to give us at least a 40% discount. And 99% of the time, we refused to purchase anything POD. It is the only thing financially viable for any bookstore. So if any little bird has been telling you otherwise, they are mistaken. Unless of course they are refering to the other chain bookstore.

  2. Doret on

    I really wish customers knew that the mark up on books is so low and that bookstores don’t set the prices.

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