I have a question about your blog post "Sales figures"
I just learned a little about bookstore/library returns when I switched to a different company to print and distribute all of my books sold outside of Amazon. I don't know how much you know about the indie options out there, but it makes financial sense to go where the money is and stay with the Amazon-run distributor for Amazon sales, but for bookstores and libraries, it's cost-effective to go directly with Company B, who has a direct relationship with bookstores and Baker and Taylor).
When I was setting up my title with Company B, there was the option to include a discount for bookstores and libraries. As the indie publisher, you could choose the percentage, which ranged from 30-55%. This significantly cuts into the royalty payout, but my research has told me that brick-and-mortar bookstores won't order books without some kind of discount. Makes sense.
There was also the option to have the books that are returned from bookstores/libraries sent to you, the publisher, or to have them destroyed (which the thought of destroying books didn't sit well with this bibliophile, not gonna lie).
So, knowing this information, my question is how do traditional publishers handle this? Since publishers deal directly with bookstores and libraries as part of the business, are these discounts and returns already embedded in the traditional publishing model? Am I right to assume that publishers set the price of the book taking this discount into account (and that it therefore won't affect the author's royalties as dramatically)?
Publishers set the suggested retail price of a book based on selling to stores at a discount. Generally indies get 40-50% discount; big box stores and big retailers (B&N, Walmart) get a higher discount.
This can lead to problems of course. If Walmart is selling a book for less than what an indie has to pay for it, indies can't compete.
If Felix Buttonweezer's red hot novel Kale Kreatures of Carkoon (co-authored by our own Donnaeve I heard) has a suggested retail price of $25, the local indie will pay 60% of that to the publisher, and keep the rest. $15 to the publisher, $10 to keep
If Walmart is buying vast loads of Kale Kreatures of Carkoon, and getting a 60% discount (not the 40% that indie stores get) they pay $10 to the publisher and keep $15. Only they don't keep $15, they discount the price dramatically, as in $17.95 (keeping only $7.95) and plan to sell a boatload and make their money on volume.
An indie store can't make any money trying to match the $17.95 Walmart price: it would leave them with $2.95 and they don't have a hope in hell of selling anywhere near the volume to make that a good pricing choice.
There are reasons indie stores have a hard time these days and that's one of the big ones.
And yes, publishers do allow retailers to discard unsold books. It's generally mass market editions. The covers are stripped off and returned to the publisher rather than sending the whole book. The reason is freight cost.
And yes, authors make different royalty rates at the different discount levels. Yes we spend a lot of time looking at royalty statements to make sure the sales are correctly accounted.
Generally libraries pay close to full price but the copies they buy are non-returnable. Libraries are not re-sellers, they are the end user (of sorts) so it makes sense they pay closer to full price.
One of the big benefits of self-publishing is being able to control the price your book sells for, and the flexibility to change it more frequently than never.