How Circumventing Book Distributors and Wholesalers Can Be Your Most Lucrative Distribution Plan

This article provides a realistic look into what bookThis would leave the publisher with a net of $6.00
distributors do, how they profit, and betterof the $20 retail price.
options for the author who is publishing a book.However, this $6.00 does not yet include the
Congratulations! After a long journey of bookAuthor's Royalty, if the publisher was not himself
edits and re-edits, you have perfected a newthe author. If we allow the Author's Royalty to be
book ready to print. Now, as its publisher and10% of the wholesale price, this will be cutting
number one proprietor, you have two primaryanother piece of the pie at $0.80 per copy (Retail
concerns for your efforts: get the book read byprice $20 - discounts $12 = $8 Wholesale price.
others, and see a return on your investment.10% of $8 Wholesale = $0.80).
Misconceptions in publishing abound, there areThus, the publisher's actual net ($6.00 - Author's
certain realities many people don't understandRoyalty $0.80) = $5.20 per book.
about the book distribution system.If 10,000 books are sold into distribution, that
In a step towards clearing some of the confusion,means $52,000 goes to you, the publisher. Now
let's clarify the difference between a distributoryou must deduct the original publishing services
and a wholesaler:and costs of producing the book (editing,
A book distributor makes its income throughdesigning, illustrations, etc.). The cost of publishing
marketing and merchandising the books theirservices can easily be around $25,000, or even
publishers create, and takes an overall percentagemore, but let's say that 50% ($26,000) of your
of the retail selling price. Distributors rarely work$52,000 went to production costs. This leaves
with individuals (self-publishers) because they need$26,000.
a steady volume of new titles regularly publishedIn Case 1 using a major distributor, from a
every season to make a profit.possible $200,000 in retail sales, the self-publisher
A wholesaler is a large warehouse that holds andnets $26,000, or 13% of total retail value.
sells books when retailers or other sellers ask forNow, let's take a look at an alternative business
them. The will have a list of books they sell, andmodel for a self-publisher:
make their income off the difference betweenCase 2. Let's allow this author to be a public
the price they buy the book from the publisherspeaker with an active mailing list of 2,000 people.
and the price they sell it for to the retailer.Allow 50% of his mailing list to purchase his book
In most cases of publishing, book wholesalers anddirectly from him for $20, resulting in $20,000 in
distributors are not the best choice for authorssales. Over the next 12 months, this author sells
who are personally financing their books' publishingan additional 1,000 copies at seminars and
services. It is not unusual for distributors andlectures, for a total net potential of $40,000 in
wholesalers in the United States to take 90 dayssales.
or more to pay an author after receiving theCosts for printing books will be slightly higher in
books after book printing. Additionally, aCase 2 because a smaller quantity of books is
percentage of the author's profit will be held backbeing ordered. Book printing costs him $3 a copy
for returns. This means if your book does not sellfor 2,000 copies, for a total printing cost of
in the stores, copies will be returned to the$6,000. The more modest costs of publishing
distributor and ultimately to you, the publisher,services to package his book (book editing,
where you must absorb that loss in profit. Thesedesigning, illustrations, etc.) amount to $8,000.
returned copies may be damaged after spendingTotal production costs (book printing costs at
time on the shelves of a bookstore, making them$6,000 + packaging services costs at $8,000) =
difficult to sell later on. It is an unfortunate reality$14,000.
that an author may find himself with a garage fullBreakdown for 2,000 copies:
of damaged copies of returned books, after onlyTotal sales $40,000
being stocked on the shelves of a major bookTotal production costs $14,000.
retailer for a month or two.The author's net proceeds ($40,000 - $14,000) =
Alternatively, there are lucrative distribution plans$26,000, or 65% of total retail value.
that circumvent the major bookstores, theCompare this to the high-volume distributor
distributors and the wholesale warehouses, all ofscenario in Case 1, where 10,000 copies were
which take a major cut of a book's retail price.needed to return $26,000 to the author, which
Such alternative methods of book distributionwas only 13% of the total retail value ($200,000).
employ the author's strengths and preexistingIn Case 2, the author distributed and sold copies
customer bases (such as active mailing lists,directly to an already existing market, allowing him
attendees to an author's lecture, etc.) to distributeto see the same $26,000 profit of a volume of
more directly and efficiently. A strategiconly 2,000 copies, and at 65% of total retail value.
self-marketing plan can generate a profit equal orFurther, after this publisher in Case 2 sells his first
greater to what a major book distributor offers2,000 copies during his first year, he may print
its clients, for much less of the cost.another 1,000 book copies to sell. Because
To illustrate, here are two cases of differentpackaging costs to produce the book have
book distribution plans, each netting itsalready been paid, he would only subtract the
self-publisher a profit of $26,000 at the end ofcost of book printing from the retail price.
the year:So, in the following year, he prints 1,000 copies to
Case 1. Let's say as the publisher of your booksell at a $20 retail price. This publisher generates
you send 10,000 copies of your book at a unit$20,000 in total revenue. $20,000 in sales -
price of $2.00 each from a book printer. You alsoprinting cost $3,000 = a net profit of $17,000 in
set the book's retail price at $20 per copy. Youthis publisher's subsequent year (85% of the
have so far spent $20,000 on printing costs, andbook's retail value).
if all books sell at retail, you have the potential forThe Bottom Line:
$200,000 in total sales.Choose a distribution and marketing plan that
Now let's suppose you employ a distributor tomakes the most sense for your unique book, and
manage your marketing and distribution. Theythe plan that allows for the most profits off the
may charge you 62-65% of the retail price of thebook's retail value. Printing fewer books can
book in order for them to pass it throughactually produce more of a profit if it is done
different distribution channels and still make aunder a strategic business plan. In reality, major
profit.distributors and book stores hold little invested in
The book stores, depending who they are andthe individual publisher's success, and will take
how many they buy, get a 45%-55% discount onsubstantial cuts from every book sold off their
the book, and also have the option to return. Ifshelves. As a general rule, carefully targeting a
your book sits on their shelves for too long, theyspecific customer pocket to directly distribute
will send it back down the distribution channel andyour books will be more profitable than diluting
these copies will eventually come back to you.copies all over the book market.
Let's review that $20 retail price:This is something I especially like to discuss with
Printer was paid up front $2.00 per unit.new publishers, and invite you to contact Sea Hill
Book store takes $10.00 per unit.Press if you have any questions forming your
Distributor takes $2.00 per unit.unique book publishing and distribution plan.