How much money do you actually earn selling through Amazon and LSI?
“Is it worthwhile selling your book through Amazon or Lightning Source?” has to be an early question that a niche publisher must ask. “And how much worthwhile?”
That’s important because my niche publishing firm already sells 85% of our products directly to our target niche, much of that through its associations.
A pinch of background: Our authors are experts in that niche field. They receive a royalty of 10% of the net price of the book (or product) when it is sold. (If they are co-authors, it is 10% divided by the number of authors.) The cost of five of our niche books is $24.95 a book, another of our books sells for $19.95, and a third, $17.95. If the books sell at less than 50% of list, the authors get a 5% royalty of those books.
We also have digital versions of each book, priced at $20, $16, and $14. We directly sell the digital books (ebooks) in pdf format; “open” publishers like Kindle, Nook, Smashwords, and so on sell it in .epub or the equivalent. (We sell only about 7% of our books in digital format.)
More often I’m asked about the sale of our niche paperbacks through Amazon and LSI (Lightning Source), which is also Ingram. The volume of sales is very modest for both because our niche books are written to professionals who don’t expect to find their books in libraries and through general book outlets.
Also, selling through other publishers and booksellers means that our payment will be modest, and the authors’ reward at royalty time, even moreso.
Let me share a couple of (almost) current examples to help answer that question:
At Amazon we sell through Amazon Advantage or Create Space.
Of the two, Create Space is a far better earner for us. We post the paperback version free, add a cover, and provide the descriptive selling copy. If a person buys from CS, they print a POD (pay-on-demand) copy from the master book text and cover that we sent them and they mail it to the buyer. It’s hands-free to us. We don’t print, stock books, or ship Create Space sales. They tell us how many copies of which book they sold (they pay 45-60 days later) and how much they will put in our bank account near the end of that month.
For example, in January, 2015, they sold 21 copies of a $24.95 book and one of a $9.95 book, paying us $12.13 (48.6%) and $3.54 (36%) respectively, for a total of $258.27. Because the price they charge is less than 50% of the net price, the authors will receive, total, $25.82.
Amazon Advantage, for us, is scarcely worth pursuing. We always lose money on single sale orders because we must print the paperback, shrinkwrap it, pay the mailing, and then wait at least 60 days for the money to reach our account. When they order about six books, despite the 55% discount and shipping, it gets profitable. In addition, the orders have become hard to understand—and, typically Amazon, if you have questions there is nobody to ask beyond what must be an email robot that always seems to respond to the wrong question!
An example. Today we sent an order for six $17.95 books. We will be paid $48.48, or $8.08 each—(45%). But a single order for a $17.95 book, which is very common, earns us the same $8.08—for a book that costs us about $5.80 to produce, shrinkwrapped; 15 cents for a mailing container, and $2.69 to ship media mail, their least preferred mailing means. That puts us 56 cents in the hole and doesn’t include the time to decipher the order, print out the mailing label and order info, wrap, and mail.
Why stay at Advantage? Inertia, I guess. I also stay there because folks see that our products exist at their webpage. And the hope that the ordering quantities of yesteryear might return, although even then it was cryptic and slow. We give everything a hard look in June and it may be eliminated at that time. But we will remain at Kindle and Create Space.
The other paperback giant is Lightning Source. It too starts with a 55% discount. You can offer to discount less but your books probably won’t reach many retailers, which is the LSI selling target. I think of it as 5% for listing, 10% for LSI, and 40% for the bookstore or selling intermediary. In addition, a $12/book annual fee is charged. But there is a big advantage here with paperbacks: I needn’t ship printed books. LSI will print the ordered books POD. (And I can order them to print books in quantity and ship them to me! That’s great if you are only stocking small in-house quantities.) Plus, there are human contacts who will guide you through the labyrinthine website and ordering/listing process.
Here are some fresh numbers from LSI, where one $24.95 book was listed for commercial sale two months back and another, at the same price, is a few days old. Here are some facts for the first book’s sales (in January, 2015): list price $24.95; discount 55%; wholesale price (what LSI charges the retail seller) $11.23; and the print charge, $4.46 a book. What is left is the publisher’s net comp: $6.77. That is, for every $24.95 book sold POD through LSI I receive $6.77. (Here’s how that is calculated: $24.95 minus 55%=$11.23 times quantity (13) times the book POD print charge ($4.46) equals $6.77 a book ($88.01 total net pub comp for January).
It’s worse for the author: My LSI net is $6.77, their royalty is 5% (since our return is under 50%) of $6.77, or 35 cents each (times 13= $1.69). Which is why we encourage niche sales to go through us so the author earns at least 10% of the net, but also can keep or use a 40% deduction ($9.98) per book that they sell.
I’m trying to answer the questions most frequently asked at my publishing seminars. I hope this is helpful. There is much more about niche publishing at Niche Publishing: Publish Profitably Every Time!