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Disclaimer: This is a nerd post for publishing nerds. There is math.
In the world of self-publishing, booksellers need to buy books at a wholesale discount. The discount gives them the wiggle room to cover their expenses and make a profit. So, if a book has a list price of $10 (I'm going to use $10 as the example for everything, because it makes the math easier), and the wholesale discount is 55% (the industry standard, I'm told), then the bookstore's book-buyer would pay the distributor $4.50 for the book. If they sell the book at $10, they have a gross-income of $5.50. When it comes to print-on-demand (what almost all self-publishers do), the distributor would then pay the publisher the $4.50 that the bookstore paid, but it first must subtract the costs for printing it. A trade paperback with 188-pages would cost about $3.50 to print. That turns the publisher's $4.50 gross into $1 net.
Wholesale Discounts
Where it gets interesting is that the publisher can control the wholesale discount, if they use a service like Ingramspark. It can be set as low as 35% in the USA. I set the discount at the 55% standard, because if I didn't there would be no way any bookstores would ever stock their shelves with it. It's important to me to have my book available at some bookstores so I can visit them to promote the book. It also doesn't hurt to have a good relationship with businesses that literally recommend to customers what books they should read. Anyway, if the discount is any less than 55% off, the bookstores won't order it or take you seriously. If you only want to sell books online and never have anything to do with bookstores, go ahead and set the discount to 35%. $10 list - $3.50 discount - $3.50 printing = $3 net payment. That's 3x the profit for the publisher by choosing to reduce the bookseller's profit. It's obvious to see why you won't make any bookseller friends this way.
Markets
But what about the different markets? Am I honestly trying to get my book on the shelf at bookstores in countries where I won't likely travel to? Sure, I want to sell books online around the world, but do I need to offer the 55% discount outside of the US? Regardless, I have the option to set the list price and the wholesale discount between 35% and 55% for each of these markets:
If I set the price everywhere the same as the US, I make more profit the lower the discount. But what if I wasn't obsessed with profits? What if my goal was selling more units at a lower price instead of less units at a higher price? The "fair" thing to do is adjust the list price in each market so that I make about the same profit no matter where it's sold.
So when I say I'm discriminating against almost everyone, what i'm doing is making my books "cheaper" in Europe, Australia, and Canada, while being priced "normal" everywhere else. Not necessarily for NO reason, but because I'd rather sell more copies and make the same amount of profit as selling less copies and making more profit. Also, it's not like I'm going on a book tour in Europe or Australia, so hopefully the lower price in those markets makes up for my complete lack of in-person marketing there.
Returns
There is some good news that is also bad news if you are a self-publisher: No bookstore is going to order your book unless you convince them to stock it. That's bad news to anyone who thought their books would show up in stores almost automatically the way Michelle Obama's biography did. Let me explain why that's actually good news.
But first, more bad news: Besides the 55% wholesale discount, it's also very unlikely that a bookstore is going to stock their shelves with your book unless it is returnable to the distributor. That way the store doesn't take on the risk of unsold copies. The bad news is, if you want the book returned to you, you're billed what the retailer paid, plus $2/book for shipping. If you choose to have the returned books destroyed instead of returned, then you are only billed what the retailer paid. In our first example, the retailer paid $4.50 for the book and the publisher made $1. After this book is returned and destroyed, the publisher is negative $3.50. Of course, bookstores rarely order a single book. If they ordered 8 copies and returned all of them, the publisher would earn $8, be billed $36, and net a loss of -$28. The natural fear would be that if 1000 bookstores all decided to order 10 copies and returned all of them, the publisher would end up in the red -$35,000. And that's why it's good news that no book store is going to order your book without you convincing them to. It puts you a little more in control of your risk. You'll only try to convince a bookstore to order your book if you believe they'll be able to sell them... be it because you already have a base of readers in that area or because you plan to go there and promote it with an event. Win-Win-Win
This all sounds pretty pessimistic. It seems almost impossible for a self-publisher to make booksellers happy while also minimizing their own risk or making any profits. It is possible, however. That's my gameplan with the release of my new book UNCREDIBLE THOUGHTS: Essays, Spiels, and Poppycock.
What i'm doing is encouraging pre-orders with local independent bookstores. It eliminates the risk of bookstores overstocking their shelves and returning unsold copies. The best thing you can do for an author and the bookstore is to pre-order your copy before it's release date. Plus you get the book as soon as it's available. Print-on-demand books can take awhile to print and ship, but when you preorder it, it prints and ships prior so that you get it on the release date. It's also good for the environment. If most customers pick up their copy at their local store, that's less packaging and shipping than boxing up each copy individually and shipping each one to a different address. 
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Author: John MarszalkowskiI write stuff sometimes. Archives
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