The other day, a lady came into my bookshop and asked about Jamie Oliver’s new cookbook, 5 Ingredients Mediterranean. She’d already purchased a copy but wanted a second copy for a friend. ‘How much is it?’ she asked.
‘It’s on sale,’ I said. ‘$39 down from the RRP of $55.’
She frowned. ‘But I only paid $29 at Big W’. She put the book down. ‘I’m not paying that,’ and she walked out.
I get it, books are expensive. Logic dictates that if you can buy a book for $39 at one place and $29 at another, you’d get it at the cheaper place and save yourself $10 (or around 25%).
But let’s talk for a moment about why bookshops can be more expensive and who misses out on the money that was saved by the customer.
Authors and Illustrators
Most authors get 10% of their book’s RRP. If it’s a picture book like mine, the author gets 5% and the illustrator gets 5%. If you’re established or a best-selling author that rate might go up to 12.5% or more, but 10% is pretty standard. This is their royalty.
While there will always be exceptions, book distributors sell stock to brick-and-mortar bookshops and some of the online bookshops at a ‘normal’ discount, around 50%. That bookshop then sells the book at, or close to, the full Recommended Retail Price and you can feel all warm and fuzzy knowing the author is getting their royalty.
But… this doesn’t actually apply to every book sold.
The royalty rate the author receives is wholly dependent on the price the book distributor/publisher sold the book to the retailer.
Real-life example
Every author’s contract will be different so I’m sharing an excerpt of mine.
Brilliant Minds: 30 Dyslexic Heroes Who Changed Our World has a RRP of $35. It’s sold to most bookshops at a discount of 52.5%, so for every copy sold at a bookshop like Dymocks, I receive 5%.
You might assume this means $1.75 per book (I did) but I forgot about GST, so it’s 5% of $31.82 or $1.59 per book.
High Discount sales
A high-discount book is one where the distributor sells the book – you guessed it – at a greater discount to the retailer – typically the big department stores (Kmart, Big W, Target), bookclubs and certain online retailers. What is classified as ‘high’ will vary from publisher to publisher, but can be anything from 55% to 75% off the RRP.
When books are sold at high discount to department stores, there is a knock-on effect that reduces authors’ royalties.
This can happen in two ways:
For some authors, royalties will switch from % of RRP to % of net receipts.
For a time, Brilliant Minds was available at Big W for $24 – a saving of $11 on the RRP. For Big W to be able to afford to sell it at a big discount, means they have to buy it at a big discount. By my calculations, it would be a discount of 60% (so they paid around $14.30 per book).
For me, instead of receiving 5% of the RRP (0.05 x $31.82 = $1.59) the royalty switched to 5% of net receipts (0.05 x $14.30 = $0.71).
For other authors, they might still get a % of RRP, but for example, it might drop from 10% to 5% or from 12.5% to 8%.
Regardless, it’s safe to assume that for most authors, books sold at high discount to retail chains and department stores and heavily discounted online stores means their royalty rate will drop, often by 50%.
There’s a reason why distributors/publishers sell to the big department stores at high discount, and it’s not because they hate creatives. Don’t forget they’re reducing their margin as well. Simply put, big department stores can sell high volumes of books because customers like a bargain.
1/3 of all my book sales during my first 6-month royalty period came from high-discount sales.
As far as I can tell, Brilliant Minds was only sold at Big W for a limited time, and was never available at either Kmart or Target. Even Amazon sells it for $35 and Booktopia offers only a small discount. So give or take a few books, it’s possible I sold 1/3 of all my books through Big W (of which there are around 180 stores nationwide, compared to around 1,500 bookshops).
Still, I received only 71c of each sale, for a project that took me two years to research and write compared to $1.59 for the sales through bookshops.
Bookshops
Book distributors sell books to brick-and-mortar bookstores for a discount that often ranges between 45% and 55%. This would vary between distributors and booksellers, and whether it’s bulk stock for catalogues or a million other factors.
But let’s say on average, a bookshop has paid approximately half of the RRP for that book to be sitting on the shelf, ready for you to buy.
When they sell the book at RRP, they get to keep half. This might seem like a lot but they need to pay:
- Rent or mortgage
- Utilities such as electricity, water, telephone, internet etc
- Insurance, rates
- GST, tax
- Advertising, office supplies, bank fees, franchise fees, shrinkage (ie stolen and damaged books), loyalty discounts, discounts for schools/libraries, returns costs and probably a bunch of other things I haven’t even considered
- Salaries and wages for their fabulous booksellers
- Finally (if they’re lucky)… profit!
- Remember, bookshops can only pay those bills when the books have been sold to a customer. The thousands of books sitting on the shelves have been paid for (or money is owed on them) but aren’t helping to pay bills, yet.
A finishing thought
If that lady had stuck around and purchased Jamie Oliver’s new cookbook, she would have received a free book as a promotion. Two Jamie Oliver cookbooks for $39. I could also have offered some suggestions on a range of other Mediterranean cookbooks we currently have in store.
Bookshops often have promotions that see customers leave with free canvas tote bags, pins, lanyards, notebooks and recently – cute little Hairy Maclary toys.
When someone comes in and says ‘my husband bought me an airfryer for my birthday’ with a look of absolute horror on their face, we can do a quick search and find seven different recipe books for airfryers.
When an elderly gent comes in to ask for a book on an obscure subject he heard about on the radio a few days ago (with no idea of the title or author), we will take the time to figure out which book it is.
When a mum comes in asking for help finding a book for her advanced eight-year-old daughter who has read all the Harry Potters and everything in the kids section and she’s moving onto YA but we need to avoid sex, drugs, murder and all the fun stuff, we make sure we find her an appropriate book.
When a grandma comes in and says she wants to send some illustrated picture books with Aussie animals to her new grandchild in the US, we can provide a large range of titles (focussing on the paperbacks because they’re so much cheaper to post than hardcovers).
When a dad comes in and asks if there’s a book to explain to a small child about divorcing families, we’ve got titles for that.
When a sixty-year-old woman asks if there is a book that will teach her about starting a blog so she can share her decades’ worth of knowledge as a teacher, we can tell her what options are available and then order them in for her.
When the lonely man in the aged care home calls for his favourite author’s latest release, we can pack that up and post it to him the same day (and I know there have been times when my boss has hopped on his bike and personally delivered books to customers in the area who weren’t able to come into the shop).
I could offer a thousand more examples, just as every bookseller in the country could. Bookshops are so much more than books – they’re the booksellers, each with their own unique encyclopaedic knowledge of books.
You might pay a little extra, but look at what you’re getting.
Saturday October 7 is Love Your Bookshop Day. Drop by your favourite brick-and-mortar store and tell the booksellers how much you love them and by doing so, you’re also ensuring Aussie authors and illustrators get their full royalties for the books you love.
shannonmeyerkort.com 