When deciding whether or not to meet these deep discounts, one of the questions you must ask yourself is ‘will I sell enough extra units, to make up the shortfall in net receipts?'. A later question, of course, is ‘do I care?'. If your primary aim is to make your book as widely available as possibly and as quickly as possible, you may not mind taking a smaller cut of the profits and a smaller check at the end of the quarter. Either way, you should look at the economic details, so that you know exactly what are the implication. If offering a discount means you will lose half your profits, you should be aware of that fact before you make any other decision.

The Case Study:

Introducing Sally Author & The Discount Dilemma

Sally Author printed 3000 copies of "Acing the Interview – What Not To Do When You Really Want The Job". The unit cost came out to $1.95 per book. Marking this up by a factor of, roughly, 8 Sally decided to sell the book at $14.95.

Selling the book directly from her website, Sally charges the reader for shipping and handling, something she will not be able to do if she supplies the book to booksellers. (She also runs the risk of picking up the bill for shipments of returns, but that's another issue).

Here is what Sally can expect to earn from her sales, once the cost of printing is deducted. (Of course, none of this takes into account her upfront costs for book design and research, or her marketing costs).

Receipts:

To sell through any bookseller, including the online stores, Sally  will have to resign herself to the standard bookseller 40% discount.

Looking at this another way, Sally figures out how many copies she would have to sell at each discount to make the same money as she could on one direct sale. Then she looks at that as a percentage of sales:

Sales:

She will have to sell roughly17 copies at the 40% discount price, to match the money she could have made selling 10 direct.

Will this new channel bring her those extra sales? Sally doesn't accept credit cards at her site – readers must print and mail a form – and she feels that some readers are unwilling to buy from a stranger, online.

Since so many people have complained to her about this, Sally decides the answer is ‘yes', she will see a 75% increase in sales, and starts to supply books to Amazon at a 40% discount, whenever they ask for them.

Sally also decided that, for now, the Amazon Advantage program, with its 55% discount, is a little too aggressive for her. In this program she would

She's not that confident yet.

How Low Can You Go?

After a few months (and a killer marketing campaign), Sally's sales are going well. Since she is already resigned to selling books at the 40% retail discount, she wonders if it is worth giving a further 15% to put "Acing the Interview" into the Advantage program.

To make the same money, she will have to sell three books at this price, for every two she used to sell at the 40% discount. (Remember, one book sold direct, would make as much as three at this discount).

Sally, who keeps in touch with her market, has heard from readers that they would have liked to get the book quickly, because they had an interview on short notice, and wanted to read all Sally's tips before going in. Since Sally's priorities are to sell a lot of books and satisfy her readers, not simply make a lot of money, she decides she can live with the reduced profits if it means more people will be able to get her book when they need it most.

She signs up for Amazon Advantage and gets ready to ship off the first few copies.

Conclusions

As with everything in publishing, deciding how deeply to discount depends a lot on your aims for your particular book. How much did your book cost to produce? How much profit do you need to make? How much marketing are you doing? How likely is delivery time to affect a purchase decision?

Using the reasoning in the above example, you should at least be able to know what you stand to gain or lose, and make an informed decision.

Good luck, and be sure to let me know how you get on, what you think of the discount programs and this article.