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Posts Tagged ‘cost of book distriubtion’

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Pricing - Retail and Discount Schedules

You, as the publisher/author, get to set your own retail price. You also should set your own pricing discount schedule for your various types of distribution. The law says that you must offer the same discount to the same "class" of customers. It is a little confusing what this means, but generally the type of customer and the terms under which your book is sold to those customers determines the pricing schedule.

 

Typically they look something like this:
THIS IS AN EXAMPLE ONLY

Retail/end user (for instance on your website) Satisfaction guaranteed (returnable if not satisfied)
1-2 copies - no discount, payment upon purchase
2-10 - 10% - payment upon purchase
10+ 15% - net 30 days

Wholesale -

all quantities - 55% discount, returnable, net 90 days (pretty standard)

Retail book stores -

1-2 copies - 20%, non-returnable paid upon order (called a STOP order)
2 + copies - 40% discount,returnable, net 90

Special sales - maybe gift stores, food stores, pet stores or other genre specific
(these are less standard, but might be something like this)

1-5 copies - 25%, non returnable, paid upon order
6-20 copies - 40%, nonreturnable, net 30 days
20+ (or full case) - 50%, nonreturnable, net 45

Once you determine your discount schedule, the law says you must apply it in an even handed way. If you want to offer a different discount to a particular client, you must establish a new discount schedule with some terms that are different than your existing schedules that justifies the difference in terms. another variable that I didn’t mention above and that can effect your schedules is who pays shipping.

Now, in a very practical way, do I think the full force of the US government is going to descend upon us little publishers? No. But is it good business practice to do this and treat your customer equally? Yes.

Once you publish a book and have it listed in Bowker’s Books in Print with a specific retail price and establish your discount schedules, your work with pricing is done. Anyone who buys a book from you may resell it at any price they choose. You have no control over that - nor should you. You’ve set your terms, gotten paid according to your price schedule and released it to the world.

One word of caution that should be noted is that of credit terms. Once you establish your discount schedule, you also need to consider who you consider to be credit worthy. You do not have to extend credit to anyone, however, you do need to assess each companies credit worthiness. Having a standard credit application and terms under which you extend credit can make the difference between the success and failure of your business. There is no point in "selling" books to a company that does not have the known ability to pay for them. There is nothing wrong with asking for money or a credit card upfront. That one small act will save you a world of heartache with companies and individuals who can’t or won’t pay their bills.

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Is Distribution for POD an Oxymoron?

Recently a question was posed to me about distribution for POD books. While I believe that is really an oxymoron, it does cause considerable confusion, even among authors that do traditional off-set book printing.  Distribution in the traditional sense, implies book stocking at some level - either at a warehouse or in a retail location. With the advent of print on demand, the idea is to eliminate warehousing and provide just-in-time delivery to the consumer. So how can you have both? Or should you want to? Here is my reader’s question:

In your opinion, if trade distribution doesn’t work well for the POD publisher, what do you think is best to get your books sold and distributed? I’m a little confused by the statement that stores ’seldom stock’ books from LSI. Do they order from them or not?

Here is my answer:

You have to understand the difference between “available nationwide” and “in store stocking”. In a BN (or other large store) there are approximately 80,000 titles at any one time – out of several million books, that isn’t many. And those titles have approximately 6-8 weeks to prove themselves, or they are out of there! 

What LSI gets you (through Ingram) is availability – BN has access to it in their system via the Ingram database as “available” for order if someone comes in and asks for it. If they get enough requests, they may actually put it in the BN system, vs having to look it up on Ingram’s system and their stock.  If BN (for example) decides to “stock it” or “carry it”, the first level of doing that is to have it available in their (BN) warehouse vs through Ingram’s warehouse. If that goes well, they may try store stocking in a few stores where the demand is coming from. If that does well, then they may try it in other similar stores, etc.

 To get regular store stocking, you have to have one of two things. A distributor that has enough confidence in your ability to promote your book regionally or nationwide as apprpriate (and therefore be “worthy” of store stocking) or enough people coming in and asking for it because of publicity that you have done to generate the buzz and demand for your book (see above).

 So when I say “seldom stock” I mean that the only way a POD book will be stocked is via the first method above. To have a trade distributor, you must have stock in the distributor’s warehouse (usually hundreds, if not thousands of books or it isn’t worth the distributor’s time) and that model does not fit a POD model. If you are going to print thousands of books for a distributor to sell, then you must have an off-set run to make it viable financially – and then you have to be confident in YOUR ability to “pull through” the consumers to buy the books, or you will end up with those books back in the distributor’s warehouse and eventually back to you because the didn’t sell through.  Something no one wants to see happen. You have to plot your marketing strategy very carefully to know what will work for your book.

 That is why my first question to a prospective client is always “what are your goals for your book and how will you reach those goals?” A goal of a few hundred books in a local or nationwide market has a much different marketing and distribution plan than a client who wants to sell 50,000 this holiday season. I’ve had both clients this year.

 So to answer your question, it depends upon what your sales goals are for your book and do you have the time, money, know how and other resources to make it happen.

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A Bad Distribution Experience

I recently had a conversation with an author who was trying to understand why her distributor “oversold” her book and she got so many returns. She had even done an additional print run to try to keep up with “demand” and was now stuck with hundreds of books that didn’t “sell through” to the consumer. This is a very good illustration of what can happen when you decide to play with the “big boys” without really understanding the full implications of doing that. The sad thing is that this author really only wanted her book in a few local stores, but didn’t fully realize what she was getting into when she signed on with a distributor. Here is part of the advice and information I provided to her:

 

A distributor only responds to the demand placed by the book stores and wholesalers – they weren’t “unsure of the demand” – they were obviously getting orders.  They don’t order books from you just to have them sit in the warehouse.  If orders are coming in from their clients, they fill them – and order more.  They are used to the returns game, so they just keep ordering.

You have to realize that this is a huge business – you can’t just play the game “partway” – it is an all or nothing game.  The distributor doesn’t “test the waters” – their job is to sell books and to fill orders – nothing else. The book sellers want to sell every possible book of yours they can – they have to have them in the supply chain to do that – in their warehouse, in the stores.  And they do this thousands of times a day – they don’t have time to worry about your individual titles – you’ve signed up to play the game and they are “gaming the system” for you.  It is nothing personal – it is all done by computers – no one is looking at your titles – it is only numbers.  YOU are the only one looking out for you.

As I said, you needed to understand that all the books “in the field” weren’t sold.  Your distributor can look that up for you, but they won’t unless you ask. Their computers are just whirring away placing orders and taking returns.

So, all that being said, what are you going to do now to sell your books?  How many do you have left?  Unfortunately you just have to chalk this up to experience and move on with your sales efforts.

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This is why having people on your team that have been through these very situations is so important. A few dollars spent on some consulting would have saved her a print run, a bad experience with distribution and a lot of heartache.

 

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