Trade Discounts–What are they, and why do they matter?
Welcome to the wonderful world of trade discounts. This may not be the most interesting subject but an important one for any self publishing author.
What are trade discounts?
“Trade Discount” is the amount of discount the wholesalers or retailers get when purchasing your book. The wholesalers / retailer will expect to take the trade discount off from the book’s Recommended Retail Price and they would be left with the wholesale price – the price they can purchase your book at.
For example, if you have a book set at a recommended selling price of £10 and if you then allow the wholesaler a 50% trade discount, then the wholesaler will purchase your book at £5 (the wholesale price).
Whey are trade discounts important?
The amount of trade discount that you offer wholesalers will determine the chances of how widely distributed your book has. Basically, the more trade discount you offer, the higher the chances of wholesalers / retailers accepting your book to buy/list/distribute.
Okay, what trade discount should I give wholesalers?
Good question-and I wish it could be an easy one to answer. The answer depends on how much availability you want to give your book. If you want to have your book only available for online retail websites then a small trade discount of 25% should work fine. I have used 25% before and have not had a problem with online retail sites accepting this. See some advice below for choosing the discount:
- 60% – 55% trade discount: 60% to 55% trade discount will make sure your book has the widest availability-available on most Internet bookstores and allowing for the smaller brick and mortar bookstores to order in your book if requested by a customer. But this does make your RRP (Recommended Retail Price) higher. This gives you the widest availability for your book (online and offline). There is a good chance that some online retail stores will offer small discounts off the retail price to their customers.
- 40% trade discount: 40% can help you keep your recommend retail price down, and your book will be available on most Internet bookshops. Your book may also be ordered by physical brick and motor stores (when they are requested copies) but some smaller physical bookstores might not order your book as they won’t get a high enough discount from their wholesaler. This is my favourite option as it helps to keep your Recommended Retail Price down but at the same time gives you a good amount of availability. (The lower your RRP, the less buyer resistance there will be.)
- 25% trade discount: 25% makes sure your book has the lowest recommended retail price for customers, but it will mean that it will only be available on Internet bookshops as this discount is too small for physical bookstores. This discount is good for you if you don’t mind your book only being for sale online.
P.S. You may be thinking: What! 40% trade discount is not high enough for some smaller brick and mortar bookstores? Remember that in most cases retailers go though wholesalers, and as wholesalers take a percentage of the trade discount, they only pass a smaller percentage of the trade discount to the bookshop. However, if you the author are supplying the books direct to the bookshop, then 40% might indeed be acceptable.
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