What Are Publisher Discounts? What Are My Royalties? WTF Does it All Mean?
And Does it effect how I price my book?
If you're a new author - and a self-published author at that, you are very likely running into the questions of how much to charge for your book, how much money you will get (a impolite way to say royalties) and how much to discount the book to buyers from your distributor- discounts in other words to book stores.
Don't worry. In this blog post, I am going to walk you through how discounts work, how royalties work, and offer a bit (a wee bit) of insight on how to price your book.
Ok. First let's start with the easy one: Amazon Kindle. Although they are a little different business model, you do pay them certain fees, though not through discounts and cost of production. However you do end up with a royalty formula.
For Amazon, it's super simple. you can choose a 30% or 70% royalty (depending on your books selling price. Once you plug that in on their website, it automatically spits out your expected royalty to the penny.
Simple so far. Since the royalties are so much higher than the typical publishing model, you're in essence incentivized to keep your selling price low. You are also encouraged to do so by your competition.
Where should you price your Kindle book? It's up to you, but this article by Smashwords analyzed the sweet spot.
Do you want my Kindle Launch Timeline? Here it is!
Also, from my experience- both for print books and ebooks, pricing is largely inelastic. In other words price doesn't matter as much as you might think. What appears to be more important, especially for the self-published author, is the opportunity cost. (Sorry for those economic terms, it's really all I remember from college!) What I mean is- if you can get blurbs or big time reviews, they are more important than the price of the book. People just don't want to waste their time.
Ok, now that the easy one is out of the way, let's work up the scale. Next stop Create Space.
Create Space is Amazon's publishing on demand arm ( and they actually publish for Ingram Spark but I don't want to muddy the waters) If you choose to use Create Space ( and I believe you should consider it because there royalties are higher than other distributors ) they have their own discounting/fee framework.
The downside to using Create Space for all of your distributing are twofold. First, some think their books are of poorer quality (and in my experience they are- but not as bad as a few years ago.) Second, many many bookstores simply will not carry your book if they see that it is from Create Space. (the way around this is to create your own imprint, and to buy your own ISBN and not use Create Space's.)
Like Kindle, Create Space makes it quite easy. You plug in your price and they tell you the royalty. Easy Peasy:
However you may notice that there are two royalty figures. One says Amazon, and one says Create Space e-store.
Ok- this is simple yet confusing.
The Amazon number is for people buying your book on the Amazon website.
The Create Space number is if they encounter your book- say on your own website- and buy it through the create space pay button. You will see really quickly that it's awesome if you can drive people to buy your book from the create space button!
Now, on to the hard stuff. Don't worry it's not too bad.
Most bookstores ask for a discount. No. All bookstores ask for a discount.
No surprise - this is where they make their money. The discount comes off of the cover price. But the cover price is not necessarily where they will price your book. So they need a little leeway.
Here's a simple way to think about it:
Your royalty is the the discounted price of your book minus the cost to produce the book.
Let's do this with simple math.
Let's say you price your book at $10.
Let's also say that the cost for Ingram to print and ship your book is $4. (that's actually what is costs for my 236 page paperback..)
And, let's say you set your discount at 50%.
Your royalty would be: 50% of $10 minus $4 OR $5 - $4 = $1.
Suddenly, Kindle and Create Space look great don't they?
But sadly that is not where the majority of book stores or libraries purchase their books.
The industry standard discount is 55%-60%.
You might say what if I sell my own books?
Out of the trunk of my car?
Well, it's almost the same- except you might get a better price by buying quite a few, but every bookstore you go into will ask for a discount.
My book is about $3 if I order a ton of them. And every bookstore has asked for a discount - in the same range.
Ok, so where should you price your book?
My advice? Look at your competition. Don't go too cheap just because your a first time author. Price about where other books in your genre are. And don't worry if you put your price on your ISBN/bar code (Barnes and Noble demands this.)
Like I said- it's a guideline.