Last month, I did a series on the most popular questions self-publishing authors ask. The posts were such a hit, I’ve decided to do another series this month. Each week in August, I will discuss one of the top four reasons why you should self-publish your book.

This week, I’ll discuss trade discounts and distribution. Unlike traditional publishing, self-publishing allows authors to choose the type of distribution that is appropriate for their material and marketing goals.

When thinking about distribution, it is important for authors to understand how the process works. For starters, “trade discount” is an industry term for profit margin. This rate impacts who buys and sells your books as well as the profits you will make off of your book.

For instance, shelf space in a brick and mortar chain bookstore has very specific requirements: the books must have a very high trade discount (50% to 55%). Therefore, if you buy a book at one of these bookstores  for $14.95, 55% of the retail price ($8.22) is divided between the store and the wholesale distributor for their profit. When you subtract the $8.22 from the $14.95, you are left with $6.73. This remainder covers the cost of the actual book. The balance that is left after the price of the book is the author royalty. Typically, authors receive very low royalties in these scenarios.

In addition to needing a high trade discount, authors also need to provide the bookstore with a “Retail Returns Program.” This program allows the bookstores to return books to the wholesaler and get their money back if the books do not sell. You must provide this program to the retailers, but having it is no guarantee that they will agree to stock your book.

Conversely, authors that elect to focus on internet sales may select a much lower trade discount as the internet book sites do not require as large of a profit margin. So that same $14.95 retail priced book under a 25% trade discount would look like this mathematically: $14.95 – $3.74 (25% of the retail price) = $11.21 – the actual cost of your book = your royalty. Obviously, $11.21 is a larger number than $6.73. Therefore, your royalty will be greater if sold by an online distributor, assuming the cost of your book remains the same in each equation.

Freedom to choose your trade discount and distribution center is just one of the many perks of self-publishing. To learn more about trade discounts, check out Cheri’s post titled Trade Discounts 101. It provides a great overview of industry standards and questions to ask yourself before setting your discount.

ABOUT JODEE THAYER: With over 20 years of experience in sales and management, Jodee Thayer works as the Manager of Author Services for Outskirts Press. The Author Services Department is composed of knowledgeable customer service reps and publishing consultants; together, they all focus on educating authors on the self-publishing process in order to help them publish the book of their dreams. Whether you are a professional looking to take your career to the next level with platform-driven non-fiction or a novelist seeking fame, fortune, and/or personal fulfillment, Jodee Thayer can put you on the right path.