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I was visiting two bookstores with a friend last week. One store was Christian, one was secular. He asked me some questions that I once wondered about; they centered around how books are distributed, so I thought I’d spend some time discussing how a book gets from your brain to a big-box retailer (and beyond).
(By the way, it looks like Borders stores will close completely, with an auction slated soon. The chain once had 1,249 stores. As many as 11,000 employees will lose their jobs.)
Usually, when a customer enters a store, he or she has little idea how books are really sold.
With narrow margins and the ailing economy, publishers are less likely to give meaningful advances right now. And traditional publishers (a.k.a., actual paper books) have a fair amount of money tied up in inventory. Normally, publishers do print runs in the neighborhood of 5,000-7,500 copies. Few titles are printed in six figures. That’s one of the reasons book advances now are small or non-existent.
A rough guess is that those copies cost between $2 and $4 per unit to print, for hardcover. Softcover would be half that. Of course, for a Harry Potter run, the publisher is getting a deeper discount because of the printing volume, so this makes a franchise series like this all the more profitable. But, one must remember, a title or series like Harry floats almost the whole boat; it makes it possible for other, marginally marketable titles to appear in print. From there, a publisher hopes those books will sell.
Traditional publishers don’t sell a huge number of copies at retail. That is, if a book has a suggested retail price of $27.95, the publisher doesn’t get that when selling to bookstores. Chains and independents – those still alive – order in case quantities through distributors. A marginal title might be ordered in modest numbers, say, four copies each for 200 stores.
There is also the all-important matter of sell-through. It’s reasonable that almost anyone can get a book into a store. It’s getting the book to move out under the arm of a customer that is the trick.
“Returns” – those copies that don’t sell after a certain amount of time (perhaps two months) … come back to the publisher’s warehouse. Returns is a filthy word in publishing.
So, let’s use the round figure of $20 retail for a title. The publisher is selling to a store for roughly a 50 percent discount (retail prices are fairly arbitrary; more on that in a minute). So if a publisher sells 10 books to a single store and they actually sell, the store manager will send a check for $100 within 30 days or so.
An author’s “cut” is perhaps 15 percent of the net sales. That means that of the 10 books sold, said author makes about $15.
Hard to get rich that way. Getting published is often not quite as glamorous as people think.
Retail prices. It’s sort of unfortunate that a book that costs $3 to produce costs the consumer $25. But you have to remember, it isn’t accurate to say that a publisher keeps 80 percent of that price. There is overhead, marketing, salaries for editors, graphic artists, etc. Even if many of those duties are outsourced (more publishers are going with freelancers), things cost money. Factor in shipping costs, and at the end of the day, a publisher is making about as much as the author.
Now, let’s think about the bookstore. The store’s purchaser acquires the $20 title for maybe $10. The store policy is to discount at 20, 30, 40 percent. The store might net $5 per unit sold.
Publishers routinely troll through the old rolodex to find printers with cheaper prices. That’s why so many print overseas. Keep in mind, though, the slashed print costs from a foreign printer is somewhat balanced by shipping costs. It takes a while for the boat to arrive, as well.
You can see that no one in this supply chain is getting the lion’s share. Everyone makes some money, but as I regularly preach, the publishing business is hurt by the presence of huge amounts of mediocre titles. These books make shelf-space and display space tight. Customers’ eyes glaze-over at the sheer presence of so many titles, spine-out on a shelf.
The book publishing game today is Darwinian, in that it really is survival of the fittest. I hope now that when you enter a bookstore and see the blood spatter everywhere, you have a bit better understanding of how it got there.