Friday, January 16, 2009

Intro to Direct Selling

Every author should offer the ability for the readers to buy directly from them (unless your publisher strictly forbids it). If not self published make sure this is fine with your publisher but I've yet to hear of one that does not allow and all encourage this practice. Most publishers sell books to the authors at a discount with the expectation that they will sell them direct.

  • A good supply of your books (100 - 300)
  • A way to accept credit cards (PayPal or Google Payments)
  • A "buy now button"
  • A promotional offer
  • Shipping material (see post)
  • Sales Tax
If you are published through someone else. The "author discount" varies greatly from publisher to publisher. I think iUniverse has a 35% discount, Michael's publisher offers 50% discount and pays for the shipping. When signing a contract you should consider carefully what "your cost" to purchase one of your own books should be. Instance, Publish America is well known for high list prices and low author's discounts making it nearly impossible for an author to sell their own books directly (Publish America is a whole topic on itself that I will blog on at some point.

NOTE: if you are published by someone like iUniverse you might still be able to print yourself from what I can see their contract is "non exclusive" so if you can get a print ready .pdf from them no reason you can't have 100 - 300 books printed independent from them - or at least that what it looks like to me - I don't know I would never use one of these firms (we'll discuss that more in the future too).

If you are self-published and using CreateSpace and/or LightningSource to get your books into the distribution chain POD (print on demand) DO NOT buy your "direct sales copies from them. They are setup to do books one at a time and this model by its vary nature leads to a higher cost per book. You already have a digital file - all you need is a bunch of books printed. I highly recommend Apex Book Printing. Let's do a comparison. Let's say you have a 320 page book and you want 100 to sell directly (trust me you can sell this much EASILY). The choices are:
  • LightningSource = .90 + .013(320) = $5.06
  • CreateSpace = .85 + .012(320) = $4.69
  • Apex (from a recent quote) $411.36/100 = $4.11
You will save $0.95 - 0.58 on each book - enough to pay for credit card processing. If you increase the order to 300 (my recommendation) it gets even better:
  • LightningSource = .90 + .013(320) = $5.06
  • CreateSpace = .85 + .012(320) = $4.69
  • Apex (from a recent quote) $1,000.97/300 = $3.33
  • McNaughton & Gunn (from a recent quote ($4,356.33/2,000) = $2.18
A savings of $2.23 to $1.36 per book - that is much more than most royalty payments!!

Many people are intimidated by the complexities of setting up an "online store". There are many choices out there and the fees and costs seem intimidating. If you have investigated an "online store" you are over complicating things. I'll make this real easy on you...You don't need an online store - you need a "buy now button". These are as simple to implement as falling off a log. Don't be intimidated. Both PayPal and Google Payments offer "the little guys" access to credit card processing without all the hassles of setting up a merchant account. I've used both and I'm going to focus on PayPal only because it is what I currently use and am most familiar with.

Again if you had a "on-line store" there are all kinds of monthly fees and fees for getting a merchant account and so on. But if you use PayPal there is $0 setup and $0 monthly fees. This is HUGE! Yes their "per transaction fee" is a bit high - but if is more than worth it to have a way for people to buy right away. They don't need to have a PayPal account - they can use any credit card to buy from you.

Okay so what are the transaction fees? If you sell less than $3,000 a month (a pretty safe bet) the fees are $0.30 + 2.9%. So if you sell your book for $15.00 you need to give PayPal $0.74. Not too bad - and trust me it is worth it - you WILL see the difference if you offer this option.

When you use the PayPaloption they have a really nice "merchant center" - you come in each morning see your orders and can print shipping labels right from there. It makes it easy to address your orders and you will can add tracking for $.018 and it does MEDIA MAIL labels - again worth the price of admission right there.

There is a way to use PayPal and have no transactions - basically both parties need to have a PayPal account and you transfer money between them -but you can't do that automatically like you can with the other method and it means a number of emails going back and forth between you and your buyer you'll waste more time than the $0.74 it is much more convenient to just check your PayPal account in the morning and find 3 - 10 orders just sitting there waiting for you to process.

Again I'll do a full step by step on this in a future post - but it really is very simple. You go into your PayPal account. Specify some simple settings like the price of the book, various options (signed/unsigned) additional fields for users to tell you more - like if you want to have it signed to someone in particular etc. This gives you a piece of .html code - you just copy and paste it into your site - and presto - people can buy from you immediately with any credit card and you'll get an email and have an order waiting for you to process in PayPal. See I told you it was easy!

People always like "getting a deal" and a special offer will bring in more sales then selling list price. The good news is that since you are selling direct you have much more margin to play with and still make a good profit. Plus you have something to offer them that they can't get anywhere else - your signature!

Two choices
Usually I recommend that you offer either free shipping or 20% off the cover price. Either one will work out well for you. If you charge shipping make sure it is not too high. I suggest $3.00 for standard shipping and $5.00 for express. Again see this post for full details on shipping costs.

Signed copies
By default you should "sweeten" your offer with a signed copy. This costs you nothing and adds significant value to the purchase. Some people have asked if they should charge more for a signed copy - I say no. It sends the wrong impression, after all most people here are not household names and they want to create a relationship with their customers. Asking for an extra $1.00 or so just makes you look cheap and "self-important". Take the high road and give it for free.

That being should also offer the ability not to sign. Some people are "funny" about having stuff in their books so give them the option either way. Also add a field (easy with PayPal button) where they can specify "who" to make it out to so they can buy a signed copy for their friends and family - it makes a great gift.

This is covered pretty thoroughly in this post. The bottom line is budget $0.27 for shipping materials.

You only have to pay sales tax when people from your state buy your books - out of state sales do not have sales tax. Again PayPal will do this automatically for you (i.e. add it to the order and charge the customer) you just pass this money directly to your states revenue department so there is no effect on the overall profitability - it is just a "pass through" expense.

Okay let's take some examples. I'll start with Michael's book which has a 50% author discount and sells for $11.99. When a copy is sold Michael receives a royalty of 25% of the net price paid to the publisher. Since most distribution chains have a 40 - 55% discount this means he gets a royalty of $1.80 to $1.34. (Another common royalty model is 10% of list price or $1.20)

20% discount option + $3.00 shipping
In this option the customer pays $9.60 + $3.00 = $12.60 - just a tad higher then getting in the bookstore but it is signed. Michael's costs would be:
  • $6.00 for book (paid to publisher)
  • $0.67 for Credit Card Processing
  • $2.58 for Media Mail
  • $0.18 for Confirmation tracking
  • $0.27 for shipping materials
His profit is $12.60 - $9.70 = $2.90 which is 160% - 220% more than his royalty.

Free shipping option
In this option the customer pays $11.99 - exactly what they would pay if they went to the bookstore and a little less than if they did Amazon and had to pay the $3.99 for shipping. The credit card charges change from $0.67 to $0.65 all else remains the same. His profit is $11.99 - $9.68 = $2.31 which is 128% - 172% more than his royalty.

Self published options
If we would have gone the "self publishing" route the equation gets even better. The price per book goes down from $6.00 to $3.33 so the 20% discount option would have a profit of $5.57 and the free shopping $4.98 which is potentially more than four times the royalty.

Selling direct
When selling direct - for instance to friends, co-workers, people at book clubs, people at book fairs the equation gets even better because you usually take cash and don't have the shipping fees etc. I usually recommend a 20% discount when selling direct. For Michael's book I make it an even $10.00 (when selling in state I make it $9.52 so with tax it comes to an even $10.00) this means he pockets $3.52 for each book he sells and would have pocketed $6.19 if self published.

Direct selling is the most profitable way for an author to get money in his pocket he receives much more than sales done through bookstores and Amazon where his royalty is a small in comparison. With PayPal there is no setup fees or monthly fees and there is more than enough profit to account for their transaction fees. It is simple to setup and easy to process the sales - simply click to print a label, stick it in a bag, and drop it in a mailbox. If you are not direct mail selling make sure to get this on your to do list right away.


Unknown said...

Hi Robin;

Very interesting post. I have two polished novels waiting to be snagged by an agent. I was hoping to go through NY publishing. The more I read about self-publishing (e-books), the more I'm wondering if I'm barking up the wrong tree.

My post today was about sm vs lg publishers. Check it

It does seem like a shame to have almost three years of work sitting and not published (which is my goal). Perhaps I just have to take a confidence pill and swallow my fear.

Thanks for sharing your site. I'll be reading more in the future.

Jo-Anne Vandermeulen
Professional Support Network for Writers
Prolific Writer of Romantic Fiction

Unknown said...

Jo_Anne V is an Internet friend of mine and she has been very helpful to me. As a matter of fact she has some great comments on my page:
I am really enjoying your blog and would like to follow it as long as you let me. I liked the part where you mentioned a premium charge for signed books. One of my sponsors buys fifty books at a time, has them shipped to me for signing and then sells them for $100 each. OR, he uses them as a $100 value prize at his own business open house parties. I have been writing for forty years and I see some of my books being listed on the used book sale for even a higher price than that of my sponsor above. It is an interesting business, you have a wonderful amount of good information and I hope to learn from you.

Tomspry said...

Great opportunity for people who are looking for part time or full time jobs online. Work from home, set your own hours, be your own boss & no experience required.

Direct Selling