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Conversely, those authors who long for
best distribution possible will elect a higher trade discount, even though their cover price will increase accordingly (or their profit will decrease accordingly). Non-fiction or niche-markets are less affected by higher retail prices and greater distribution is often advantageous in finding those markets.
Often,
author will have little to no say in what trade discount to offer for their books -- its whatever
distributor mandates.
Trade discounts can be as low as 20% to successfully get listed on Internet retailers like Amazon.com, who manage to make a profit with such low margins through EDI (electronic data interface) with distributors like Ingram and on-demand publishers like iUniverse and Outskirts Press.
By comparison, trade discounts can be as high as 75% - 80% when dealing with a niche wholesaler, or when attempting distribution for a book that does not have a proven market. In these cases,
distributor may be padding
coffers a bit in anticipation for a "harder sell" and perhaps, also, in preparation for offering an increased retail margin to close
deal.
INDUSTRY STANDARDS
Industry standards for retail margins are difficult to define because, ultimately, it comes down to negotiation between all parties involved. Publishers have
power to negotiate with distributors, who have
power to negotiate with retailers, who have
ability to negotiate with
reader, but
typical trade discount is around 55%, which allows for a typical retail margin of 40%.
Publishing-on-demand is removing some of
participants in this little dance, and as a result,
same piece of pie is being divided among fewer people, resulting in more money for
remaining players (especially
author).

Brent Sampson is the President & CEO of Outskirts Press Publishing at http://www.outskirtspress.com and author of Publishing Gems: Insider Information for the Self-Publishing Writer. Information at http://outskirtspress.com/publishinggems