Just when you think you have the book biz figured out – from a writer’s viewpoint, that is – smug you gets blindsided. This happened to me just a few days ago.

I had had a conversation with the publisher of my just-launched book of short stories a month or so earlier concerning what price the book should be set at. My publisher gave me two options (actually a range of prices, as I understand it now):

- Set the price at $19.99 per copy, which would do two things: first it would allow my publisher to discount the book by up to 50% to stores (I’d expressed an earnest desire to deal with bookstores). Second, since the publisher would sell the book to me for $10, I could make $10 per copy. My concern: by the publisher’s accounting, books like mine were selling for about $16.99, so my book would be overpriced. I saw this something like the old joke about the little boy selling apples during the Great Depression. When asked how much the apples were selling for, the boy said $50,000. Shocked, the man who had asked the question said, “Kid you ain’t gonna sell many apples at that price.” The boy winked and said, “I only got to sell one.” But there was another point to be made here: the book would be more attractive to bookstores because of the discount, i.e., they would make more per book sold.
- At the other end of the pricing spectrum, my publisher suggested $14.99 per copy, which he could then discount at something like 30%. I chose the lower price for two reasons: first, it makes an easier sell per copy – in stores, at book festivals, and solo sales by me. Also, the e-book version was to be priced at $7.99 – a bit pricey. I would’ve preferred it to sell at $5.99-$4.99. But I’ve had good luck in the past selling e-books, so I decided to not quibble with that, reasoning that at $14.99 for print and $7.99 for digital, a potential buyer would have a more difficult time buying the e-book simply for the cheaper price.

Okay. We launched.

Then I contacted the great, popular indie bookstore in my town, hoping to get them to order the book, which was available through the two big distributors, Baker & Taylor and Ingram’s. After some kerfuffle, I got down to terms with the store and was told that said distributors were only offering them a 5% discount, or $0.75 per copy.

This floored me. So I dashed off a quick e-mail to my publisher who as quickly confirmed his 30% discount. I asked if we could raise the book price after the fact (remember: this is an indie publisher, and things can run pretty organically in that environment). But…he told me each store has something of a unique deal with the distributors, and raising the price wouldn’t help all that much. His final suggestion was that the bookstore could buy directly from the publisher’s website for $10 per copy. Could/would the bookstore do that? Yes, they told me, they could. This would give the bookstore something like a 30+% discount, after shipping costs, possibly more if they bought in sufficient quantities.

Then the math guy in me started wondering why the $10 cost from the publisher – was he being greedy? If you like crunched numbers, here’s the story:

List price – $15

Assumed print fee – $3.50

Publisher’s take if sold at $10 – – $10 – $3.50 = $6.50

for a 30% discount to distributor: $15 x 0.7 = $10.50 per copy

or

List price – $20

Print fee – $3.50

Publisher’s take at $10 – $20 – $3.50 = $16.50

but for a 50% discount to distributor: $20 x 0.5 = $10 per copy

So my publisher had his sights set on $10 per copy, from which the $3.50 print fee has to be subtracted to give $6.50.

All right, let’s say the publisher pays $200 for cover design, $550 for editing and proofreading, which means he’s spent, say, $750 to publish the book and will have to pay me 15% of $15, or $2.25 per book he sells. Let’s say I sell 175 copies: 175 x $2.25 = $393.75 for me.

Publishers of this ilk don’t do promo, so that’s nil, and he might make some money from e-books or other residuals, which isn’t taken into account here. What’s he need to sell to recoup his investment (minus e-books etc)? Answer, using $1143.75 ($750 + $393.75): $1143.75/$6.50 per copy = 176 copies. This is probably about right for breaking even with a writer who will only end up selling to friends, family, and a few others. So his price of $10 per copy isn’t out of line. Of course, if the price were set at $20 and he sold a lot over his website, he’d make quite a bit more.

But a final question or two: First, why was the bookstore only offered a 5% discount, and what’s the significance of that? Answer: at a 30% discount, Ingram’s would make: $15 x .30 = $4.5 per book sold, minus the 5% ($0.75) to the bookstore, or $3.75. Meaning the distributor considers his/her value at more than the author’s.

There’s a growing movement in every business, from books to farming, to cut out the middleman/distributor. So if, for instance, the bookstores can buy directly from the publisher, a lower price can be offered by the publisher, and it’s much easier for the bookstore to make a profit.

Another question: what’s the benefit of being published traditionally, be it by a “big house” or and indie? You don’t have, for instance, a $750 initial outlay. If you’re sure you can sell 150 – 200 copies, you can make the money back, probably in less than a year.

One caveat: if you’re dealing with a big house, and they think your book has possibilities (sadly, a long shot in today’s publishing world), they will do some advertising for you, which certainly has value to you in book sales. And you might get an advance, but remember: you only get your percentage after you’ve sold enough copies to pay for the advance. And you’ll probably have to use the advance to pay a publicist and travel expenses for a book tour.

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Yep. Everyone wants a piece of the pie. We might as well not invite so many people to dessert.

The point is, we can do what publishers/distributors do, now that we know indie bookstore don’t need to access anything but a website to obtain books.