I thought it might be instructive to give you a peek inside the economics of a bestseller. Most ‘civilians’ have no idea how discounts work and how they affect booksellers, both large and small.
The general rule of thumb in the book world is that the retailer (us) gets a 40% discount from the supplier (publisher or wholesaler). Usually, a retailer gets a much higher discount from the publisher and they do their initial orders with them. Then, to restock – get more copies to have on the shelves – they order copies from one of the regional or national wholesalers. The usual there is 40% on 1-4 copies, 41% on 2-9 and 43% on 10 or more copies of a single copy. So, for instance, we pay 60 cents and make 40 cents when a $1 book sells.
Out of that 40 cents, we pay the rent, employees, supplies and buy more books - all the normal and abnormal expenses of running a business. Obviously, the higher the discount, the more money we make and the easier it is to pay all of those bills. And, equally obvious, no one in the book business gets rich. We’re doing well to be able to pay our bills. How many independent booksellers have folded in the last decade? It isn’t difficult or enigmatic. It is pure in flow vs. out flow.
We got our initial shipments of Harry Potter and the Deathly Hollows from the publisher. We got their normal discount of 46%, so each copy cost us $18.89. While that might sound like a good deal, consider this: Amazon is selling the new Harry Potter for $17.99. That comes out to roughly 48.75% discount! We could buy our copies from a competitor and make more money than buying them from the bloody publisher!
According to their websites, Costco is selling the book for $18.19, and Sam’s price is $18.48. We could make more money selling each copy if we bought our copies from any of those three and cut out the publisher. Madness!
How can those three sell the books for so much lower than us? Well, they clearly are getting a better deal than are we, but it is impossible to know what. It is also possible that they’re getting the same discount that is given to us, and they’re selling their copies at a steep loss (called a loss leader, a way to get you into the place so that you’ll buying something else- a lure, a gambit), but I doubt it.
And why don’t more small, independents give discounts? How do you pay the bills on 30 cents, 25 cents, or less? You can’t. It is uneconomical and a losing game, so we don’t play it. We can’t. If this shop was to give 20% discount on the new Potter, the publisher is not going to charge us less or give us a higher discount to make that up. What it would mean is that we'd be making less money on each book and have less with which to pay our bills. We'd be losing $9.10 a sale. It would be as if the publisher gave us just a 26% discount, or each book would cost us $25.90 and we'd be selling them at $27.99!!! Fugidaboudit!
This past week, the news has been full of stories about sales of the book ahead of the on-sale date and the leaks on the internet with copied pages. The strict one-day lay-down is supposed to ensure fairness so that everyone has it to sell on the same day. Nothing, however, is ever mentioned about what have to be special deals that some sellers get that are not offered to all. A few years ago, there was a big court case that was won by the side who claimed not all accounts were being given the same discounts. That was found to be illegal. Doesn’t seem to apply in this case.
What you, as a buyer and reader, have to decide is where to put your money and who you are going to support. Endless thanks to those who continue to support independent businesses and bought your Harry Potter books – and others – from shops like this one.
- JB
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