These days, books are too expensive, and pricing is one of the publishing industry's most perversely quirky aspects. To compete, small and self-publishers need to be more aggressive with pricing than the major houses. I learned the hard way how difficult that can be.
Traditionally, publishers set a retail price (high), and then offer wholesalers a whopping discount, usually 55%. The small publisher for my upcoming novel had used Ingram's Lightning Source as distributor, providing wholesalers with the large discount with the intent that readers would pay around $10.
When Barnes and Noble first listed the book pre-release, the plan worked beautifully. It carried a sales price under $10. I thought I was in clover. Then, one week later, the price jumped dramatically -- no more discount. I freaked. I called B&N to ask why the discount was no longer being applied and was told that they discounted their books randomly! Of course, the small publisher liaison with whom I spoke could have been bullshitting to get me off the phone, but the fact that she was willing to state this publicly suggests that B&N may soon be going the way of Borders. How's that business model based on random pricing working for ya'!?
Soon, the book appeared pre-release at Amazon -- again at full list retail price. I was screwed. My very helpful Lightning Source rep suggested I lower the price and offer a smaller discount. For some reason, it seems that even for online sellers, the discount has significance; wholesalers like to see it.
Another wrinkle presented itself when I factored in the competition between Lightning Source and Amazon's own distribution/print-on-demand service called CreateSpace. Amazon had been accused of ahem... disfavoring Lightning Source titles because of its interest in CreateSpace. A little more research suggested that Amazon does seem to order fewer of any Lightning Source source title, which could keep a book on the verge of unavailability. Not good.
The book was already set up and ready to go through Lightning Source, but without the discount being applied, it would sell at too high a price, and I had no control over whether or not a venue applied the discount. So despite the fact that the book was already in pre-release with one distributor, I had decisions to make regarding how to secure the appropriate pricing on the book, maximize the distribution opportunities, and make sure that corporate competition didn't leave the book out in the cold.
Lightning Source guarantees expansive distribution opportunities for even its print-on-demand titles. Createspace offers the possibility of more expansive distribution, but its distribution channels are certainly less established. For now, Lightning Source wins on that front. But Amazon is the major source for online sales, and I did not want my title getting short shrift there. What's a small publisher to do?
The answer was a two-tiered strategy through which I could tackle both the pricing dilemma and eliminate the potential of becoming a victim to corporate self-interest. I continue to offer the book via Lightning Source everywhere except Amazon. For Amazon, the entire book submission, review, proof process was repeated via Amazon's own CreateSpace, where I limited the sales channels to Amazon.com only. I set the Createspace/Amazon.com price to 10.99 (Createspace imposes a mandatory 40% discount for Amazon, so Amazon is buying the book for under $7).
Since Barnes and Noble purchases the book from Lightning Source at a half retail price discount, when Amazon begins selling it much more cheaply, B&N's machines should recognize that and apply the discount in order to compete. If they have any business sense left, they will try to undersell Amazon. With its own 40% discount, Amazon would then be able to adjust the price downward to compete with a more aggressive B&N.
That's the theory anyway. Hopefully, by the book's release date, all of these various parts will be churning in unison and the book will be selling at the intended price, via all channels.
This is a new publishing landscape, but it's still dominated by huge, self-interested entities. No, Virginia, the artiste's best interest and the dissemination of the written word are not Amazon's, Ingram's, or B&N's first priority (and no, you wont get that pony this Christmas, either). It takes a lot of watching and working to ensure that your small entity isn't crushed between their gears. If that means setting up your book with 4 different distributors (between print and e-versions), so be it. This is a new landscape; no one said it would be an easy one.
Level up. Read THIS and be the most interesting person at your dinner party. Learn more