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POD Math

coins-72714_1280A number of you have asked me about how the math works when you go to IngramSpark for POD.  Here is an example:

A 204 page POD paperback book costs $4.98 to print. (.02 a page plus .90 for the cover)

The book is priced retail at 16.99

Ingram will purchase the book from Ingram Spark at 55% discount off of the retail price.  That will leave you $7.65

Ingram Spark will take the $4.98 out of that total due for the printing and send you $2.67.

Ingram will then take the book that they bought from  you (through Ingram Spark) and sell it to bookstores and libraries at a discount of anywhere from 20% – 42%.

You make $7.65 but have to pay for printing out of that.

Ingram Spark makes $4.98 for printing

Ingram Wholesalers make $2.21 – 5.95  but they have to pay for shipping and handling out of that.  (FYI-If you choose the short discount and only let Ingram offer a 20% discount, you are severely limiting the number of places that will take your book….)

The bookstores and libraries make between $3.40 – $7.13 but they have to pay for employees, rent, lights and the rest out of that.

Does that make more sense?

A number of authors have questioned why they only get to “net” $2 or less in some cases.  I would argue that once the stores and wholesalers pay THEIR expenses, they make a LOT LESS than that!

As long as you are making 11% of the retail price as a net before taxes, you are in good shape! (most established publishers would be thrilled with that)

Math Lessons for Small Presses – Part 2

Lesson #2

WHOLESALERS and how they sell books:

Book wholesalers are companies that buy books from publishers at a deep discount and hold them in their warehouses so that Internet and “brick and mortar” stores can order the books from them. Bookstores like to use wholesalers for a number of reasons: namely speed, convenience, and less financial exposure.

Book Distribution is not easy!

When a bookstore orders a book from a wholesaler, they will usually get their order in twenty-four hours. Next-day service is the standard from the top wholesalers. The discount a store can usually expect to receive off the retail price of the book from a wholesaler is 40 to 45 percent. What the bookstore loses in profit margin, they often make up in convenience and risk reduction. A book ordered from a wholesaler can be combined and shipped with hundreds of other books.

Some stores hire wholesalers to stock, manage, and handle all aspects of their book departments. There are large “big-box” chains that happily hand their title selection and discount negotiations over to a wholesaler that will manage the entire department for them. The same can sometimes be true for libraries. There are many U.S. library systems dependent upon wholesalers for all their new books. People at the chain or library office work with the wholesalers and oversee the choices, but how closely that is managed depends upon each individual situation.

The difference between a wholesaler and a distributor is this: A distributor works FOR the publisher.  A publisher hires them to handle the warehousing, shipping, order processing and sales of their book.  A wholesaler does not work for a publisher, they are the publisher’s customer.  They buy books from the publisher and resell to THEIR customers.

Most wholesalers have the word “distributor” in their name. This is to identify them as companies that distribute books to bookstores and libraries, but they are not the same sort of distributor that you need when B&N sends you a letter telling you to “get a distributor”.

If you want your book to have a chance at a bookstore chain like Barnes & Noble or BooksAMillion, and if you don’t want to hire a distributor, a wholesaler is your next best bet.

The two biggest book wholesalers for the book industry right now are Ingram and Baker & Taylor. You can find their application processes on their websites. Send your books in with the proper paperwork and try to get your titles into at least one of these wholesaler’s warehouses.  Ingram and B&T do not usually take small presses, but B&T will sign up a small publisher if they have enough marketing and sales plans to support the book.

Ingram has recently partnered with IBPA and through them, a small press CAN get listed in Ingram’s system.  However, only a very small fraction of those books get ordered and stock at Ingram.  Only the books with strong demand get stocked, the rest are just listed and Ingram will order a book from the publisher when a store backorders one.  (and the kicker?  Most bookstores will not back order.)

Remember, if you get an order, you will be selling your books to the wholesaler at a discount of at least 55 percent. They will usually order only as many as they need to fulfill the demand coming in from their customers … stores and libraries. If they are overstocked or books come back from the stores, they will return those books to you for a full refund. (Having fun yet?)

So, back to the math:

A book priced at retail is $16.95

A publisher sells it to a wholesaler for $7.63 (55% discount)

The wholesaler has paid $7.63 for the book.

They then turn around and sell it to the bookstore for $9.83 (40% discount off of the retail)

The wholesaler pays for the overnight shipping and packing materials.  The profit for the wholesaler is $2.20

Many of my clients want to know why they have to give so much of the profit to distributors and wholesalers. The short answer is: they don’t.  It is possible to convince your local stores to stock your book on consignment or to sell them directly on Amazon yourself.  However, the shipping costs, time spent and number of venues that will not take your book often turn out to cost publishers FAR more than a wholesaler’s cut….