DEFINITIONSRetail margin is basically
difference between your book’s wholesale price and your book’s retail price. For example, a book with a cover price of $10 and a wholesale price of $5 has a 50% retail margin.
Wholesale price is
cost of your book to a retailer. To use
same rudimentary example, a book with a cover price of $10 and a retail margin of 50% will be sold to a retailer for $5.
Retail price is
same as cover price or selling price. This is
cost of
book to
end consumer (the reader). The retail price is typically printed on
cover of
book and also “embedded” within
barcode on
back. For example, a book with a wholesale price of $5 and a retail margin of 50% will have a retail price of $10.
As you can see, retail margin, wholesale price, and retail price are interconnected. By having two figures,
third can be calculated.
The fourth definition to be aware of is
trade discount, which is
percentage off
retail price that a wholesaler or distributor pays for your book. Since
retail margin is a portion of
trade discount,
trade discount always exceeds
retail margin. Distributors typically expect between 50% - 70% in order to provide an acceptable margin to
retailer.
MAKING DISTRIBUTION WORK FOR YOU
It should come as no surprise that
amount of distribution your book enjoys rests largely upon its trade discount. Generally,
higher
discount,
greater
distribution.
Think about it - distributors want to make money, too. So do retailers.
While your book's trade discount is but a piece of your pie (albeit a big piece), it is
entire cake for distributors and retailers, who together must split
take. The greater
number,
greater incentive they have to distribute your book, sell your book, and market your book, etc.
The proper trade discount depends upon each author's intentions, and can vary from author to author just as readily as from book to book. Obviously,
higher
retail margin,
higher
cover price, so authors interested in maintaining
lowest cover price possible will often opt for a lower retail margin.