Aaron Shepard’s Aiming at Amazon: The NEW Business of Self Publishing, or How to Publish Your Books with Print on Demand and Online Book Marketing on Amazon.com describes one way to self-publish if your goal is to focus on online bookstores. In fact, the first sentence in version 2.0 is:
“Yes, I said it: Forget bookstores.”
Why does Shepard say that? Well, people who don’t know anything about publishing probably imagine the author pocketing a large portion of every sale, but that’s not usually the case. Let’s break down what happens for a hypothetical book with a cover price of $10:
Brick and mortar bookstores need to make money. To do that, they need to earn something on every book sale. To do that, they need to buy the book at a lower price than the cover price. The standard right now is to offer booksellers 40% off the cover price. So a bookseller would buy our hypothetical book for $6.
However, booksellers don’t usually buy books directly from publishers. They buy them from distributors and/or wholesalers, and these middlemen want to make money too. Since the bookstores expect to buy books at a 40% discount, the middleman has to buy books at an even greater discount, so that it can pass along a 40% discount to bookstores and still make money. Therefore, wholesalers usually buy books at a 55% discount. Distributors expect a 60-68% discount. Jacqueline Simond’s self-publishing FAQ explains wholesalers and distributors. In the example below, we’ll assume you’re working with a wholesaler, not a distributor, which means you’re mainly focused on online sales.
Of course, books don’t fall out of the sky. They cost money to print. Let’s assume you’re using Lightning Source and that your book has a trim size of 5.5″ x 8.5″ and 250 pages.
The current pricing formula for that trim size is:
$0.90 per unit (to print the cover) + $0.013 per page
So our 250 page book will cost us:
$0.90 + (250 * 0.013) = $4.15 to print.
Cover price: $10
Sell to distributor for: $4.50 (which, in turn, will sell to bookstores for $6.00)
Print costs: $4.15
You’ll make: $0.35 per sale.
Not much, is it?
Obviously you can set a higher cover price, but you want your cover price to be competitive.
Can you do better? Yes, if you’re willing to focus on online bookstores and other channels (like your own website).
When you print through Lightning Source, you set the discount for the book. If you’re willing to focus on online bookstores and accept that your book probably won’t be carried in brick and mortar bookstores (though customers will still be able to order it), then you can set the discount to 20%, rather than 55%. How does that change things?
Cover price: $10
Sell directly to online bookstores and others through Lightning Source for: $8
Print costs: $4.15
You’ll make: $3.85 per sale.
That’s better. And if you sell books from your website, you’ll make more, since you’ll sell the book at the full $10 cover price. Of course, selling from your website means you have to do fulfillment, provide customer service, and collect sales tax, so you might decide it’s not worth the hassle to make an extra buck or two on each sale.
Note that this is how it looks if you self-published. If you didn’t self-publish, the publisher would also need a piece of the pie, meaning that the $10 cover price on our hypothetical book probably wouldn’t work. Here you can see how a self-publisher can potentially sell a book at a lower cover price and still make more money per sale than a traditionally published author. But bear in mind that the self-publisher has to pay the editor and potentially a book designer, and therefore has to recoup these up-front costs before she starts making money.
Another consideration is that Amazon tends to offer a lower discount for books it buys at a 20% discount, so that could mean that your book won’t be discounted on Amazon as much as other books. However, you might be able to offer a lower cover price in the first place. Again, it depends, and you need to decide what’s best for your book.
Since you’re the publisher and in control, you have the freedom to try different things. Your cover price and discount aren’t cast in stone; you can change them if necessary. For example, if you don’t want to hamper potential sales to brick and mortar bookstores, you could initially try a 55% discount and monitor sales. If you’re mainly selling to online bookstores, then you’ll probably want to drop that to 20%. If you’re managing to get your book into brick and mortar bookstores (which will take a lot of hard work), then you’ll want to leave it at 55%.
So…this has been a simplified discussion of how things break down to illustrate how the discount you offer on the cover price can affect the amount you earn per sale. You’ll have to crunch the actual numbers for your book.
Shepard’s book focuses on how to best sell on Amazon, so the majority of his book addresses the many tools Amazon makes available to publishers. But the underlying assumption is that you’ve published using the 20% model.
As far as Amazon goes, Shepard discusses how to set up an account, improve your book’s Amazon page, monitor sales, and use Amazon features that help you connect with readers. I’m not going to enumerate these features since Amazon regularly fiddles with them. The information in my version of Aiming at Amazon might be out of date. Buy the newest version (from Amazon!) to get the latest information. Shepard also offers advice about the cover image you should upload to Amazon. Out in publishing land, some agree with him and some don’t. You’re the publisher; you can read everything out there and make up your own mind.
For Canadians (and perhaps others who aren’t in the US), Amazon.ca is sort of a neutered version of Amazon.com. We were only able to buy the Kindle as of last week, and Canadian publishers haven’t been able to directly publish to the Kindle until now. They had to go through a backdoor method like Mobipocket. If you aren’t in the US, some of the features Shepard discusses might not be available to you, but the book is still worth getting.
I’m using the 20% model for my first book. It’s available to read on the web, so I’m not expecting many sales. My goals for publishing this first book are to learn how to publish a book, to make the material available in print for those who prefer it that way, and to ultimately use the book as a promotional tool. So for this book, I’m not aiming at brick and mortar bookstores. I might do things differently for my next book.
You have to decide what the goals are for your book. If brick and mortar bookstores are important, then obviously you don’t want to set a 20% discount because you’ll be shooting yourself in the foot. If you’re mainly interested in online bookstores, then this could be the way to go, and since Amazon is the leader in that space, you’ll want to pick up Shepard’s book.
Of course, there are also eBooks, but that’s a different discussion.