I’ve been reading a couple of different things about sales and returns and discounting recently.  We’re all familiar with the 3 for 2 tables in Waterstones, but do any of us ever stop to think about what that actually costs the publisher and the author?

I don’t pretend to know the ins and outs of the actual figures and percentages of it, but I understand the general gist.  When a publisher sells a bookseller a load of books, it is on a sale-or-return basis; if the bookseller is unable to sell those books to the general public, the publisher has to buy them back, thus loosing the profit they made from selling them in the first place.  The principle of this is to prevent the booksellers from having unmanageable piles of unsellable stock, but it is not ideal for the publisher.  It makes it much harder for them to predict their profit margins and therefore to plan for the future, especially in smaller publishers where returns could end up wiping out their whole years profit and destroying them.

This is all tied in with the complicated issue of discounts.  Publishers apparently sell their books to booksellers at incredibly high discounts (compared to the cost of production) which obviously, again, eats into their profit.  This seems to be the only way booksellers are able to make it worth their while buying in bulk.  Without the safety net of being able to return unsold stock, they won’t want to buy books from a publisher unless they are even more heavily discounted.  So there seems to be no way out of the vicious circle: Publishers can’t sell books at even more heavily discounted rates on a no-return basis because then there will be very little profit left.

Drastic new ways of thinking are clearly needed, so HarperStudio’s new innovative deal with Border’s to sell them books on a heavily discounted, non-returnable basis, splitting the profit 50-50 between the author and publisher rather than paying the author on a percentage-royalty, seems extremely interesting to me; hopefully it will work out and more publishers will be able to follow suit!

Here are all the places I’ve been reading about this, with more detail in most cases!

e-Reads blog: Borders to try non-returnable – possibility world will not end.

e-Reads blog: Is there a better way to compensate authors?

e-Reads blog: HarperStudio President responds to Author Compensation post

Newsstand Forum: No Returns? Economics, Digital Media spurring new Book Publishing models

Snowblog: Returns

Galleycat: Indie Publisher Suing Borders for $1million for excessive returns

(ie it has been claimed that Borders overordered with the intention of returning most of the books in order to recoup cash, or something along those lines…)

Bookseller: Border’s Inc to defend Law Suit

Sowblog: Crimbophobia – the impact of promotional discounts on independent publishers

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