Publishing and Distribution Question

[Michael01]

Okay, I undertstand the the publisher supplies bookstores through a distributor at wholesale prices, and often at a discount. How does this work? For example, the publisher supplies a bookstore with several copies of a title with a $9.00 cover price, and I suppose the wholesale price may be around $6.00. If the bookseller only gives the publisher $6.00, how do the publisher and author make any money?

 

[Ian Whates]

I can't talk for the big boys, Michael, but, as an independent publisher, I can respond with confidence: "with difficulty".

I supply NewCon Press titles to a number of book stores, mostly specialist genre ones, although I'm just in the process of finalising a deal with Waterstones, one of the biggest chains here in the UK.

The discount I sell at varies between 35% and 50% for the very largest (Forbidden Planet etc). On top of this, shipping comes out of my own pocket. The same sort of margins apply to sales via online retailers such as Amazon.

At the lower end of the discounts, this means that profit margins are very small, at the top end it means that, for many titles (particularly the paperbacks) they're non-existent.

From my perspective, selling this way achieves two things:

1. It raises the profile of the book.
2. It shifts stock and frees up cashflow.

I don't expect to make enormous profits this way. Since a high percentage of books are sold either from the website or at events such as conventions, the books still remain profitable, but I know I'm not going to get rich doing this. The reason I do it is that I love genre fiction and am very proud of the titles I've released to date, which have garnered several awards and honours. If I can manage to do that without actually going broke... I'm happy!

 

[Scarfy]

I think it basically comes down to volume.

The publisher will request a print of X number of books and get a bulk discount. They will then sell them to the bookstore, also at a discount, and finally the bookstore will charge the cover price (or whatever) for it.

So its possible that the actual price of each book is very low when printed this way. I know that Random House had an initial print run of something like 2.5 million copies of BRISINGR, so I expect they got a hefty discount on that.

 

[Michael01]

Thank you, Ian. I'm more interested in the small presses anyway. Do the booksellers pay for the copies right away, or do they wait until they're sold? I understand they like to have the right to return the books if they don't sell.

Scarfy: Okay, yes, I can see if they print 2.5 million copies! But many initial runs are between 500 and 1500, right?

 

[Scarfy]

Yes, that was a rather extreme example. 500 to 1500? I thought it would be ten times that in most cases..?

 

[chopper]

Thank you, Ian. I'm more interested in the small presses anyway. Do the booksellers pay for the copies right away, or do they wait until they're sold? I understand they like to have the right to return the books if they don't sell.

Scarfy: Okay, yes, I can see if they print 2.5 million copies! But many initial runs are between 500 and 1500, right?

ian will know better than i do, but i suspect stock is purchased by retailers on 60 or 90 day invoices - meaning that you have up to 3 months to sell your stock and accumulate enough money to pay the bill. obviously this leave the suppliers hanging for a while.... and yes, if there is a returns agreement on unsold stock after that, that has to be taken into account. the maths is probably quantum-level.

all of which may help explain why royalties are not paid until at least 6 months down the line (assuming you've already earned off the advance).

(again, this is what i'm familiar with from HMV. other markets may vary.)

 

[Ian Whates]

Thank you, Ian. I'm more interested in the small presses anyway. Do the booksellers pay for the copies right away, or do they wait until they're sold? I understand they like to have the right to return the books if they don't sell.

My experience more or less mirrors what chopper says, particularly with the larger concerns. Often these will quote a 60 day turn around of invoices but actually take considerably longer -- 3 to 4 months.

The smaller concerns, however, tend to pay much more promptly, often within a week or two. Perhaps because they know what it feels like!

For whatever it's worth, I've never yet had any unsold stock returned to me, although that may well change once I start dealing with Waterstones.

 

[Michael01]

I'd almost forgotten about this question. Thanks, Ian and Chopper. That actually does explain a lot. If I think of any more questions, I'll be sure to stop by!