Often, I talk to would-be and new self-publishers who get riled about the fact that a discount is expected on our books. Many think that’s unfair. Having worked in retail a big chunk of my life, I am a bit mystified by this. You can’t expect to get anywhere near the list price if you are offering manufactured goods for sale along a chain that contains wholesalers and other middlepersons. That’s so in books or any other material.
Let’s look at how the numbers work in another manufactured item business.
There used to be a great show on Food TV called ”Recipe for Success.” Mostly what they showed were folks trying to operate a restaurant and all the troubles thereto (I used to have “open a restaurant” on my Life To-Do List, but after I watched a few episodes, I scratched it off). Occasionally, they featured someone with a food product.
Once, they had some people who decided they wanted to market their frozen marinara sauce. Instead of investing money in a physical plant before they were established, they went with a commercial kitchen, a packager and a grocery wholesaler (any resemblance to a subsidy press, a printer and a distributor in the book world should be noted).
This group (all women. I think it was Grandma and a couple of daughters), spent $20,000 for the packaging alone. They showed it to their target grocery store buyer, who told them about fifteen things they thought were *terrible* about the cover—oops, I meant package—and would prevent consumers from buying it. (I couldn’t help but think of Barnes & Noble’s Small Press Department.) They spent another $15,000 creating a new package design.
Their product sold for $6.95 (It was a fair amount of sauce). Their actual ingredient cost was $.60. After they paid the kitchen, packager and wholesaler, they got $.20 profit per unit. They thuoght that was pretty good. And it was. Why? They expected to sell *volume*. That’s the key to most manufactured goods.
The way you get volume is marketing. That's so for marinara sauce just as much for books.
”With the new packaging they showed it to a major gricery store buyer He told them he rejects 80% of the products he’s shown every year. But he signed up their sauce! He said it tasted just like his Granny used to make. (Never underestimate the power of the personal in business.). They hoped to ship 50,000 units the next year. But first they had to find a loan to build up the physical plant they skipped over in the initial stage, so that they could lower their per unit cost (did anyone hear an echo of “change from POD or subsidy to offset printing” there?).
The book business is like any other manufactured-goods business. If you can sell directly to the customer at full—or near full—list price, glory halleluiah! Otherwise, there are discounts that apply and the way you sustain the company is volume. The way you get volume is marketing – that is, getting the word out to the customer (not the store). That’s so for marinara sauce just as much for books.
