How Bookstores Negotiate Discounts with Publishing Houses and Costs Involved

Introduction

Bookstores are a crucial link in the chain that connects publishing houses to readers. They play a significant role in the distribution and sales of books, making it essential for them to negotiate favourable terms with publishing houses to ensure profitability, but the reverse is also true in a landscape where costs of publishing a book have become so prohibitive. Let's take a closer look at how bookstores negotiate discounts with us publishing houses and the positives and negatives in this relationship. Oh, and let's look at that thorny issue of costs. At the time of writing this blog at the end of April 2024, our publishing costs are up approximately 40% since the outbreak of the Covid pandemic. 

The Costs in Publishing a Book 

So, a few paragraphs on costs because, ultimately, it's all about the dollars and euros, for both the bookstore and the publisher. Bookstores negotiate discounts with publishing houses to secure better profit margins on the books they sell. These discounts allow them to price books competitively while still making a profit, ultimately benefiting both the bookstore and the publishing house. But, how much is too much? How much of a required discount is fair? How can the ground be levelled? 

Our indie publishing house, ShadowScript publications, pays a low of 33% and a high of 60% discount to bookstores around Ireland for stocking our titles. Obviously, we try to get to the lower end as much as possible, but it's all too rare now and we usually end up giving between 40% and 50% discount. The reader rarely gives much time to thinking deeply about production, stocking and marketing costs of a book, rather they think about the price in a bookstore on the day they browse and choose a title. A 200-page book that costs, say, €12 in a bookstore has quite a few costs on its journey.  

As an example, the proofreading costs (and only proofreading) for a 60,000-word novel average at about €500. In the United States, according to a recent Editorial Freelancers Association’s survey, the median rates for developmental editing for fiction is $.03–$.039 per word (or $46–$50 per hour). Of course, these rates vary based on several factors, including the editor’s experience level and the complexity of the project. A publisher has to pay each of its in-house editors or outsource this work (literary agent’s commission is typically 15% of the author’s royalties. For that 15%, the authors are getting support and editorial feedback, publisher connections and access, and negotiation support).

Typically, indie authors rely on print-on-demand (POD) services, whereas traditional publishers tend to go for large(r) runs with what are called 'offset printers', significantly reducing the cost per book. But, there's still a significant cost if one wishes to print using sustainable forestry certification as we do at ShadowScript Publications. 

The Beauty of being Small

Most small independent presses offer lower advance payments and royalty rates, but they may also provide more personalised attention for the author. Many of these small publishers accept unsolicited manuscripts from authors without representation, as we do all the time! My experience is that authors who choose to work with the smaller presses often have a greater degree of creative control over the book in terms of cover design, text layout, overall production and marketing initiatives.

I've also noticed that the small independent presses have a willingness to take a punt on first-time authors or books that may often fit into a traditional publishing mold, which can provide opportunities for new and diverse voices to be heard. I've lost track of the number of poetry pamphlets and chapbooks we've published where we loved the content, but sales have been, well, sparse.  

Of course, authors with big publishing houses typically earn about 5-15% of the list price on print books and about 25% on ebooks. Those published by small presses earn quite a bit more - 15-30% royalties on print books and 25-50% on ebooks. In fact, we pay a standard 50% royalties on all our ebooks.  

Factors Influencing Discount Negotiations

Considering all the above, several factors influence the discount negotiations between bookstores and publishing houses. These include the volume of books held or purchased, the reputation, size and location of the bookstore, the anticipated sales potential of the books, and the overall relationship between the two parties. And this last point is key. Relationships. 

Volume Purchases

Bookstores that purchase books in large quantities often have more leverage when negotiating discounts with publishing houses. The promise of substantial sales volume can incentivise publishing houses to offer more favourable terms to the bookstore. And this is entirely acceptable. 

Reputation and Size

Larger, well-established bookstores may have more negotiating power because of their ability to reach a broader audience and generate higher sales. Publishing houses may be more inclined to offer competitive discounts to these bookstores to ensure their books receive prominent placement and promotion. There's a huge difference in a bookstore on a high street with a very large turnover of walk-ins versus a little bookstore tucked away on a backstreet. But, very often those are the very bookstores with a loyal clientele. 

Sales Potential

Bookstores can leverage their understanding of their customer base and market trends to demonstrate the sales potential of specific books. This insight can be used to negotiate discounts that align with the expected demand for the titles.

Building Relationships

I touched on this above. Strong, collaborative relationships between bookstores and publishing houses can lead to more favourable discount negotiations. Trust and mutual respect can pave the way for open communication and a willingness to find mutually beneficial terms.

Final Thoughts

Ultimately, the negotiation of discounts between bookstores and publishing houses is a delicate balance of business strategy, market knowledge, and relationship building. By understanding the factors that influence these negotiations, bookstores can position themselves to secure discounts that support their profitability and ability to offer diverse and appealing book selections to their customers.

Understanding the dynamics of discount negotiations is essential for bookstores looking to thrive in the competitive world of book retail. By striking the right balance in these negotiations, bookstores can create win-win situations that benefit both their bottom line and the publishing houses they partner with.

*Niall MacGiolla Bhuí is an author, editor, ghostwriter, blogger and indie publisher with over three decades' experience in publishing. He has lectured and presented workshops across Ireland, the UK, Sweden and Canada. His most recent book is 'The Author's Playbook' (ShadowScript Publications, 2024).  

References 

https://publishdrive.com/cost-to-publish-a-book.html