Short Discount vs Trade Discount

Small publishers, academic presses and self publishers often get the majority of their sales outside of traditional bookstore channels. It's not some bias on the part of bookstores or chains that leads them to stock their shelves primarily with titles from the large trade publishers, it's a whole combination of factors that smaller publishers frequently choose to ignore. New titles from large trade publishers are a sensible risk for a bookstore to take, since these publishers have proven commercial titles, marketing, offer the trade discount and accept returns. They aren't trying to prove something with their lists, they are trying to make a profit, as are most bookstore buyers. Some small publishers do their best to imitate the the large trades, especially when it comes to the trade discount and accepting returns, but self publishers and academic presses who aren't counting on bestsellers often look at the discount math from a different perspective.

When publishers talk about the "trade discount", they mean the standard discount off the cover price at which the publisher sells books to resellers. It would be better to call this the wholesale discount, because bookstores call the "trade discount" the percentage off the cover price they buy books at. When the buyer is a bookstore or chain purchasing direct from the publisher, the wholesale discount and the trade discount may meet at the same percentage:-) Normally the wholesale discount is between 50% and 57%, 55% is probably the most quoted number by small publishers since it was the standard Ingram figure for years. Specialty distributors may demand a discount between 60% and 70%, in return for pushing the book (maybe) and financially failing (frequently). The wholesale discount does not lock-in how much the bookstores buying through distribution will pay for the book, you can generally assume that somewhere between 10% to 30% of the cover price will remain with the distributor or wholesaler. If a middleman anywhere between the publisher and the individual book buyer doesn't feel they are earning enough profit by handling the book, they may resticker the book to a higher price than the original cover price, or charge a sourcing fee.

Publishers who conclude that their books will never be stocked in brick-and-mortar bookstores and look to Amazon, direct sales and special sales for their earnings, are better off selling at a short discount if they can. In some cases, publishers will fool around with assigning titles a higher cover price than they really want to sell it for and count on Amazon to discount the book when it's sold to them at 55% off the cover. This discounting to target retail pricing is neither automatic nor a cure-all, since buyers who try to special order the title through bookstores will almost certainly be quoted the cover price. Publishers who use Lightning Source for on-demand printing and access to distribution can choose any number between a very short discount 20% and the wholesale discount of 55%. The discount chosen affects both the price at which the title will be sold to brick-and-mortar bookstores and the price to Amazon, BN.com, and other e-tailers and middlemen.

Currently, a publisher who sells primarily through Amazon can more than double their profit by assigning the short discount of 20% rather than the default 55% as long as the cover price is set sufficiently higher than the on-demand printing cost. I don't have any titles at 20% myself, I just don't see the extra $0.75 per book it would earn me over a 25% discount being worth skating that close to the hole in the ice. I also doubt if the one title of mine getting stocked in a number of Barnes&Noble stores, thanks to demand and the fact I accept returns, would survive on the shelves if I went to the ultimate short discount. The trade-off between setting different discounts is one that publishers who don't get the majority of their sales through bookstores shelf presence should carefully consider. If your marketing allows you to steer customers to the retail outlet you choose, that gives you even more flexibility in determining the ultimate discount and cover price.