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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 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