Out of curiosity, what's the deal for Amazon to list a book?
This varies, based on how many books you are going to list and how popular the book & author are known to be. Generally speaking, Amazon charges 55% of the sale price, but this varies from 30% to 55% depending on the book and the publisher. Note also that Amazon tracks each user, and charges differently based on how many books you have bought, and how much those books cost. For example, if you have never bought a book from Amazon before, you might pay $23.99 for the hardback of the latest Stephen King novel. The web-page will tell you that the "list price" is $28.99 for the hard-back, so you're saving $5. However, if you are a regular Amazon customer and consistently spend $25 to $50 a month there, they might charge you $25.99, in essence "price-gouging" you for an extra $2 - but, when you look on their web-page to see the price and how much you're saving, it will tell you that you're still saving $5 over the "list price," and cite that price as being $2 higher. This practice has been hotly debated both online and off, because it is technically permissible under the law, but many people (including myself) feel it should not be, because it's a hidden cost that you're paying while being told you're saving money. "List Price" is an entirely relative number - it is not regulated by law, and can be anything the seller wants to say it is. "List price," legally speaking, simply means "the price we choose to list it for." That's all - and that means they can (and do) raise it or lower it at whim to give the illusion of saving money.
Well, yes and no. Let's take "The Ship's Cat" as an example. Currently, it's being printed through CafePress because this is the cheapest way to print it using POD. Currently, each copy costs $23.26 to print, and is priced at $24.99, allowing a profit of $1.73. If we were to list it on Amazon, they would require a minimum of 33% profit, which means that the price would have to be increased to a base of $30.93 with zero profit for DiskUs or myself. Adding in the original profit margin of $1.73 means the final cost through Amazon would be $32.66. Have you wondered why most Amazon.com prices don't end in 99 cents like everywhere else? This is why.
Now, we get into the vagueries of Amazon. People who've never bought the book before would be charged $32.66, but the "Amazon savings price" you see on the web-page would show you at least had saved around $5, so the price would be shown as actually being $37.99. However, if you're a regular customer of Amazon and spend a decent amount on books every month, you would see the price as $34.99, still showing that you saved money from the $37.99 price.
Then, as the book gets more popular (if it even could at that price), the Amazon contract allows them to bump the profit margin for themselves. So, if by some miracle people are buying the book at $34.99 consistently, they'd bump the price to the full $37.99 they were quoting before, and then tell you that the actual price was $39.99, and tell you you're saving $2. If it sells at that price, they bump it higher, and higher still, up to about a 50% profit margin and a final price to you, the consumer, of around $40. DiskUs' share of that would still only be $1.73, regardless of what Amazon charged you.
Meanwhile, the price through CafePress would remain $24.99, so you really aren't saving anything - you're paying for the convenience of using Amazon.
Now, the next question becomes "is there any way to make the base price cheaper?" Well, yes, there is - use traditional publishing rather than POD. However, this has a hidden cost - hidden, in that YOU, the CONSUMER, do not see it. It's a cost the publisher has to absorb. And here it is: The price of books from traditional printing presses is based on the amount of books you have printed - the more you print, the less it costs.
Let's say, for example, we wanted the final price of "The Ship's Cat" to be $12. Well, to do that, we would need to go with a standard printer and order about 25,000 copies. Each copy would cost about $10, allowing a $2 profit. Sounds good, right? Well, now we get into the problem: The total print run would cost $250,000, and we'd now be looking at a stack of books weighing about a ton. That stack of books has to be stored somewhere ($$$ for space in a warehouse), and when they're ordered, the order is going to have to be processed - more money spent on hiring people to process the orders, package the books and ship them off, plus the cost of shipping. So, our $2 profit from each book isn't looking like much of a profit after you pay all that overhead. And bear in mind this is only ONE of my books - multiply these numbers by the actual number of titles I have at DiskUs, and you can see we're talking about an investment of about five million dollars with an annual overhead running about half a million dollars a year.
Now, for the Titans in New York, this isn't a problem. They literally print millions upon millions of books a year, they have vast warehouses full of them, and literally tens of thousands of people who do nothing but work the various printing and warehouse and shipping operations. For a small independent publisher like DiskUs, this simply is not economically feasable.
The advantage of the POD system, as I've mentioned before, is that there is no overhead. There is no cost to store the books, or even to ship the books (note on CafePress that standard shipping is free, you pay for shipping when you want it to get to you by next-day air or some other method). The base shipping and all "overhead" costs are part of the base price - for "The Ship's Cat", that's why the base price is $23.26, with a final price of $24.99 allowing a profit for DiskUs of $1.73 before my royalties are taken out. Each time you order a book, it's printed up and shipped off to you, so you pay the least amount for the book.
Well, that's the thing - Amazon doesn't give you any noteriety at all unless you are one of the Big Six (now arguably the Big Seven, the list being J.K. Rowling, Tom Clancy, John Grisham, Stephen King, Dean Koontz, Michael Crichton and Danielle Steele). When you see a book noted on Amazon's front page, it didn't get there because it was popular, it got there because the publisher paid for it to be there. And, of course, that means YOU, the consumer, are paying for it to be there by paying a higher price for the book.
Please note: This is not to say that it's impossible for a publisher or an author to make money with their books on Amazon. There have been several success stories, notably with mid-size publishers who own their own printing presses and warehouse space. See here for an example:
www.cnn.com/2005/TECH/internet/08/15/books.amazon.com.ap/index.html In reading that story, one would get the impression that Amazon is a really fabulous market. However, for small publishers, this isn't a market they can break into. And you, the consumer, still aren't saving very much.
In the above web-link, you can read the marvellous success story of Dr. Lipton and his book. But, you have to bear in mind that his success story came at the cost of your wallet - 55% of the cover price went straight to Amazon.com, and all they did was list the book - his publisher did everything else, including printing, storage, handling, shipping, advertising, etc. This means the net profit for him and his publisher was very slim.
How slim? Well, notice the prices listed: At the time of this writing (Monday, August 15th, 2005), the "list price" is $25.00, and Amazon is selling it for $16.50 and telling you that you save $8.50. Sounds great, until you realize that the CNN article above is already telling you 55% of that goes to Amazon. This means that $9.07 goes to Amazon, and $7.43 goes to the publisher. The publisher's cost to produce, store and ship that book are about $5, leaving a profit of $1.43. With a standard 3% royalty contract (which is what his publisher offers), this means he's making about $0.45 per book, while his publisher makes a profit of $0.98. 42,000 copies of the book have been sold, so Dr. Lipton has made $18,900 before taxes. And note that this is only the price that *I* saw looking at the book. Other people who buy more or less books through amazon may see lower or higher prices - with the additional profit from higher prices going straight to Amazon, not the author or the publisher.
So, this then begs the question "If this is the real profit margin and he's really not making that much, then why is this such a big deal? $18,900 is well below the poverty level everywhere in the US, so where is he really making his money?" Well, the answer to that is two-fold: First, he's a tenured biology professor - that's where his main income comes from. Second, if you actually buy and read the book, the whole point of it is to promote the theory of a new biological energy source he calls PSYCH-K™, developed by Rob Williams, M.A. And yes, that's M.A., Williams has a BA in Philosophy and a masters in Counseling and Personnel Services. And yes, the (™) is intentional, it's a trademark. At the end of the book, Lipton links to a website. There, you can sign up for a class that costs about $350, so you can learn how to apply the magic of PSYCH-K™ to improve yourself and your quality of life.
And no, I am not kidding, the book is promoting a "self improvement" course. Dr. Lipton is one of the originators of this notion, and is a co-founder of the organization which promotes and sells the PSYCH-K™ self-help course. That's why it ended up a news article on CNN, and that's also why the book was rejected by all the major publishers he submitted it to - it's not like "self-help" courses are something new, there's thousands of them. But, now you know how Lipton can make any kind of money on just a 3% royalty from a book that's only sold 42,000 copies. The CNN article attempts to give you the impression that he's getting rich through Amazon - but that's not what's happening.
The bottom line is that Amazon is not the "pot of gold at the end of the rainbow" for authors. It's just another distribution outlet, and it's one that really isn't very profitable for authors.
Again, this hearkens back to what I said before - you are paying for the convenience of using Amazon.com. The "Wish List" is part of that convenience.
1) This is why I am published through DiskUs - it's an independent publisher, and they can afford to be more focused on the consumer.
2) You should send that comment to Marilyn at DiskUs - you'll make her quite happy.
I agree - and, now that you've all seen the real numbers for what it takes to produce a book, hopefully you'll all see WHY I agree.