Retail Pricing Example (Distribution)

by David_Woodward on ‎02-11-2010 10:12 - edited on ‎08-07-2014 03:45 by Community Moderator Community Moderator (20,423 Views)

Print Books

The wholesale price you set for your book is the price retailers pay to purchase your book for resell from their sites, stores, or shops. The suggested retail price includes a price mark up sufficient to cover the retailer's labor, marketing, rent, utilities, and other fixed costs associated with owning and running a business. The retailer may choose to sell your work at the full retail price ($21.00 from our example below), they may offer a standard discount (such as free shipping), or they may run a special for a defined period of time (such as 25% off all books purchased that month).

 

The selling price set by the retailer has no effect on royalties you earn from selling your book at the wholesale price – in other words, if your Retail Royalty is set at $4, you will make $4 for every book sold in that retail channel, even if the retailer offers a discount.

 

 

Lulu Price Retail Price Description
$
4.00
    $
4.00
-     Page cost (2¢/page x 200 pages)
+
4.50
    +
1.50
-     Binding Fee
________     ________        
$
8.50
    $
5.50*
-     Production Cost
+
10.00
    +
4.00
-     Creator royalty
+
2.50
    +
1.00
-     Lulu commission (20% of profit or 25% of revenue / royalty)
________     ________        
$
21.00
    $
10.50
-     Lulu Marketplace price ($21.00) and Minimum wholesale ($10.50)
      x
2
       
             
    $
21.00
-     Distribution Suggested Retail Price

 * The above example takes into consideration that some retailers, such as Amazon.com, own the presses on which your book is printed and can therefore print and assemble books at a lower cost.

 

eBooks

E-Books, by their very nature, do not include a production cost, but there are distribution fees and retailer commissions to consider when setting your retail price. There are also pricing restrictions you must follow when applying your retail price. For example, the retail pricing step in the eBook creation wizard allows you to offer your eBook for free or any price above $0.99.

 

Some retailers, such as the Apple iBookstore, also require prices to end in 0.99. If you choose the iBookstore as a retail distribution option, we will automatically adjust your price to the nearest acceptable price based on Apple's pricing tiers for each currency. To view these pricing tiers, see our Apple iBookstore retail price calculator.

 

Once you enter your eBook's retail price and choose the retail sites on which you would like to sell your book, we will display the retail price, distribution fees, Lulu commission, and your net revenue for each selected site. 

 

Agency Pricing
(Apple iBookstore, Barnes & Noble)

  Reseller Pricing
(Amazon Kindle, Kobo)
eBook Retail Price »   5.99   eBook Retail Price »   5.99
Distribution Fee »  -1.80   Distribution Fee » -3.14
Net Profit »   4.19   Net Profit »   2.85
Lulu Share (10%) » -0.42   Lulu Share (10%) » -0.29
Creator Revenue 80% »   3.77   Creator Revenue 80%
»   2.56

 

You may notice that your eBook revenue amounts change based on the retail sites you select to distribute your eBook. That is because some retailers (Lulu, Apple, and Barnes & Noble) act as sales agents meaning they sell your eBook at the price you set then take a set commission based on that price. Other retailers (Amazon, Kobo) operate as resellers. This means they pay a wholesale price to a distributor when your eBook sells. Since these retailers are buying your book from a middleman at a set price, they can resell your eBook at any price they like, including a discounted price. Under the reseller model you will always make the same revenue as displayed in the retail pricing step for each book sold by that retailer, regardless of the sale price.

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