An element of the publishing process that you need to figure out early on is discounting. Discounting should not be mistaken with sales prices, although it does affect a retailer’s ability to offer such prices. Discounting is, instead, the amount off the retail price that you as the publisher are willing to give to a wholesaler or a retailer who carries your book.
Depending on your business model it will most likely be counterproductive for a small publisher to be the only source for new consumers to buy your product.
That's why distribution systems are set up. Publishers set the price they want the book to sell for, then offer it to the wholesalers and retailers at a discount. They then sell it to their customer base.
Successful publishers do this with multiple partners in multiple markets to ensure that their books are available for purchase wherever a potential reader may be.
As an author what you need to take from this complex process is that to get your book on store shelves, or anywhere else for that matter, you're going to have to share your pie.
If you're self-publishing, then you'll have to determine the level at which you're willing to discount before any distribution takes place.
What is the typical discount?
You can choose a wholesale discount anywhere from 20% on up. Even though ranges can vary, typical book wholesale discounts fall into one of four percentages: 20%, 40%, 50% and 55%.1
The breakdown for these percentages is as follows:
55% everybody can afford to carry your book.50% is the standard 'trade discount'.40% the popular chain store are happy to carry the book but independents might not have enough profit left to make it worth it.20% no stores will likely carry the physical book and your main focus will have to be strictly online sales.
Your discount price allows those retailers who have agreed to carry your book the ability to offer sales prices when needed. Even though you may not want to see your work discounted, it is a sale enticing technique that is regularly applied. For this reason most retailers require the ability to discount.
But, don't worry the sales price won't impact your profits as the discount comes out of the margin left in the retailer's profits. This is why allowing discounting is smart business. Only if you have a publishing agreement with a publisher who makes a special “discounted” sale beyond their normal range will the author’s royalties be reduced. But again that's only if you have a contract.
So what happens when you refuse to discount?
That's simple, no one will carry your book because there’s no profit in it. So think about those that you want to work with and make sure they’re taken care of and they'll in turn take care of you.