Trade Discounts 101

The price of your book is an important detail. It impacts which readers will purchase your book as well as how much money you will make on royalties. The price of your book is based on a variety of factors; one of the most essential elements is the trade discount. This is also referred to as  the distributor discount. To new authors, this concept can seem confusing, but it is as simple as the 5Ws.

What is the trade discount?

The trade discount is the discount you offer to the distributor of your book. This includes retailers, wholesalers, and online distributors. This discount can range from 0% (no distribution) to 100% (highly unlikely).

Who sets the trade discount?

Sometimes the discount is set by the publisher; other times it is set by the author. This usually depends on the publishing company, and your agreement with the company. Self-published authors usually have more freedom in this decision. For instance, Outskirts Press allows authors to set their trade discount based on their goals and needs.

When do I select a trade discount, and can I change it later?

The trade discount is typically determined prior to publication. While it can be changed at anytime, it is not recommended. This can disrupt the author/distributor relationship and may result in additional expenses for the author.

Where will your book be available when choosing certain discounts?

Different distributors expect different discounts. For instance, the minimum trade discount for online distribution is 20%. Retail stores, however, expect a 40-55% discount. They also expect the book to be fully returnable. Wholesale Clubs, such as BJ’s and Sam’s Club, expect a 60-75% discount. It is important to consider your goals as an author. Where do you want your book sold? Where do your readers purchase books? Understanding your target audience will help you determine the best strategy for your book.

Why do I offer a trade discount?

This discount determines the price the distributor pays for your book. It is typically referred to as the wholesale price. The distributor then sells your book at a higher price and keeps the profit. Distributors must be able to make a profit on your book or they won’t carry it. The trade discount also impacts your royalties. The higher your discount, the lower your royalties. Therefore, it is important to set a discount that is beneficial to both you (the author) and the distributor. The goal is for both parties to sell books and make a profit.

When setting your trade discount, be sure to consider your goals as an author, and don’t forget to analyze your target audience. For instance, if your readers buy the majority of their books online, you may not want to focus on retail stores. Also, make sure you do plenty of research before setting a trade discount. Find out what other authors are offering and what your target distributors expect. Also, factor in the number of potential sales and your royalty rate. And always remember, the publishing industry is about both the author and the retailer. Don’t be afraid to negotiate and compromise.

Cheri Breeding ABOUT CHERI BREEDING:
Since 2005 Cheri Breeding has been working as the Director of Production for Outskirts Press. In that time, she has been an instrumental component of every aspect of the Production Department, performing the roles of an Author Representative, Book Designer, Customer Service Representative, Title Production Supervisor, Production Manager and, Director of Production. She brings all that experience and knowledge, along with an unparalleled customer-service focus, to help self-publishing authors reach high-quality book publication more efficiently, professionally, and affordably.

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