WHAT IS "TRADE DISCOUNT" AND WHY DO I CARE?

by Brent Sampson
Brent Sampson is the President & CEO of Outskirts Press Publishing at http://www.outskirtspress.com and author of Publishing Gems: Insider Information for the Self-Publishing Writer at http://outskirtspress.com/publishinggems

The "trade discount" is the percentage of your retail price that you offer to the publishing trade for distributing your book to retailers. The "publishing trade" consists of wholesalers, distributors, and retailers. Everyone involved with your book after the publisher all the way to the reader falls into the "publishing trade" circle, and they all take a piece of the trade discount.

Obviously, the larger the trade discount, the more money there is to split up among the parties involved. Standard trade discounts range from 50% - 70%.

Most other publishing companies do not offer any information about their trade discounting policies up-front, nor do they give the author any say in the matter.

Outskirts Press offers authors the flexibility of setting their trade discount from 0% - 55%. A 55% trade discount will result in an industry standard 40% retail margin, which is what a typical book retailer seeks when considering whether or not to order a book. So in addition to availability on Amazon.com, Barnes & Noble's website, Borders.com, and the many other sales channels supported by Outskirts Press, your book can have the retail margin that bookstores and chains are looking for.

WHO DETERMINES MY BOOK'S TRADE DISCOUNT?

The flexibility of Outskirts Press really begins to shine when it comes to pricing your book. As with the retail price, the trade discount is up to you. It depends upon what type of distribution you are seeking and how high or low you want your retail price. The Outskirts Press pricing calculator automatically estimates your book's pricing before you submit it for publication. That way, you are never surprised.

With most other publishers, including PODs, the publisher sets your trade discount and retail price for you. You only discover what it is after publication (if they tell you at all).

WHAT TRADE DISCOUNT SHOULD I SET?

Since the trade discount is directly related to both your profit and your retail price, special consideration should be given to picking the right percentage. The higher your trade discount, the higher your retail price and/or the lower your book profits. The lower your trade discount, the higher your profit margin, but perhaps to the limitation of distribution opportunities.

Remember that a trade discount is different from a retail margin. Ingram is a wholesaler. They get the trade discounted price. Then, they turn around and distribute your book to a retailer for a retail margin they (Ingram) set. If the trade discount and retail margin were the same, Ingram wouldn't make any money and would go out of business. For this reason, the retail margin is always lower than the trade discount.

Good news! Books with at least a 20% trade discount are automatically distributed via the Outskirts Press WHOLESALE DISCOUNTED BOOKSTORE at http://outskirtspress.com/buybooks, where anyone can buy copies of your book (in quantities of 10 or more) for the full trade discounted price and you still receive FULL royalties for those sales. We cut out the wholesale middle man and pass the full discount directly to the retailer without penalizing the author. No other publisher does this.

If you set a trade discount for your book, the minimum is 20%. You can set your trade discount for any amount between 0% and 55%, although there are 6 "main" levels to consider.