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The Steve Laube Agency

Helping to Change the World…Word by Word

The Steve Laube Agency

The Steve Laube Agency

Helping to Change the World Word by Word

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Home » Book Sales

Book Sales

Bookstore Economics 101

By Steve Laubeon May 3, 2021
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It will be interesting to see what the physical retail bookstore landscape looks like a year from today. Mark your calendar. We’ve had over a year of varying degrees of physical store closures and limitations. Much optimism is circulating that a form of shopping in stores will return. But how much and will it be enough?

To help understand the economics of bookstores, I’ll take a quick look at some of the things that make selling books out of brick-and-mortar stores difficult. So put on your math cap, and let’s take a ride.

This article focuses on the bookstore, not the publisher or writer. I spent over a decade in the Christian bookstore business; and while that was a long time ago, the economic principles are the same.

Let’s start with a $10 book (retail price). I’m using $10 because it will make the math a little easier to follow. [Yes, books retail for more these days; but doing math for retail prices of $13.99 or $26.99 is harder to illustrate!]

The bookstore buys the book for $6.00 (or 40% discount off the retail price) from the publisher (who calls that $6.00 the net price). Note that this discount varies between 40% and 50%.

When the book sells to a customer, the store then makes a $4.00 profit ($10.00 – $6.00 = $4.00).

(Still with me?)

If the store discounts the book during a 20% off promotion, they have to sell two copies to make that same $4.00 profit. But often a 20% off sale is not enough to double the sales volume. Why? Because a high-volume operation like Amazon.com is happy to sell that $10.00 book for $6.50 (35% off) every day. They can do this because they plan on selling 10 copies at the discounted price and clear $5 in profit. This pricing strategy has a chilling effect on the ability of the local store to compete. The industry calls this a “volume” business model.

An operation like Amazon can do this because they have a different expense structure than your normal store-front bookstore.

Remember, the publisher is obligated by law to offer the same discounts to the same vendors based on the volume of their purchases. So don’t believe the myth that Amazon is buying the above book for $3 and selling it for $6.50. (This law is the Robinson-Patman Act of 1936.)

In my heyday as a bookseller, our store did nearly $2 million in annual sales. That sounded like a lot until I discovered that the local Price Club (a precursor to Sam’s Club and Costcos) did $1 million PER WEEK in sales. High volume, low prices. Their sales crushed the local independent stores because they simply didn’t have the volume in sales to compete solely on price. And Price Club was not reliant on a single type of product line to generate their sales. They did not care if they sold a Bible or a set of new tires. Now we have Amazon that carries all the same products found in the bookstore (not just ten bestsellers) but also sells nearly everything imaginable (including a $31,000 safe). A one-stop-shop.

Let’s go back to that store that made a profit of $4.00 for the sale of a $10.00 book. Here is a list of some expenses that the $4.00 in profit covers:
Rent
Salaries
Utilities
Telephone
Advertising
Office supplies
Shrinkage
Bank charges
Taxes
etc.

Shrinkage? That fun line-item is about 3% of sales. It includes shoplifting, employee theft, and paperwork errors. Believe it or not, one of our Christian bookstore’s biggest areas of “shrinkage” was leather-bound Bibles.

Bank charges include the percent that the credit-card company charges to process your purchase. This can range from 1% to nearly 3% of every credit-card sale.

Our store did a training video to show new employees how this all worked. We started with a $10 bill in the palm of a hand received for the sale of the book we mentioned above. When all expenses were deducted (cost of the book, rent, salaries, etc.) there were two dimes left in the palm of the hand. There is very little room for error for the storefront retailer.

See why your local stores are having a tough time in this online age? A good friend of ours had her bookstore for 32 years. When the economy soured in 2008 and the city built a light-rail track in front of her store, her sales during Christmas plummeted 40% compared with her previous year. She went bankrupt.

To counter the online pricing wars, some stores are becoming boutiques where books are not as critical to their profit margin. A store may have a larger gift or greeting-card section–items with which they do not have to compete with Amazon. Others create community spaces with coffee shops and hold local events to draw people to the store. But it is a huge struggle because it is hard when the profit margins are thin.

Another friend of ours had a store for nearly 30 years, but a competitor moved close by that was part of a large chain. And then the landlord wanted to increase their rent by 30% with escalating rates during the life of the lease. They had survived the economic struggles of 2008-2009, but this lease was the last straw; and they could not continue operating.

Will the bookstore industry fade away as the computer stores have? Will we find fewer places where we can browse for selections, or will book sales move entirely online?

Time will tell!

But if you see this as a downer of a post, remember that book sales themselves are just as healthy as ever. Publishers have found new places to sell their books. And many authors have seen the need to be authorpreneurs to get their books into as many hands as possible.

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Category: Book Business, Book Sales, TrendsTag: Book Sales, Bookstore, Economics

What Are Average Book Sales?

By Steve Laubeon June 24, 2019
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by Steve Laube

We recently received the following question:
"What does the average book sell today? An industry veteran at a writers conference recently said 5,000. What??? I know it all depends....but ... nowhere near 5K, right?"
My simple answer?
It’s complicated.
It depends.
HAH!

Average is a difficult thing to define. And each house defines success differently. If a novel sells …

Read moreWhat Are Average Book Sales?
Category: Book Business, Book Sales, Get Published, Money, The Publishing Life, The Writing LifeTag: Book Business, Book Sales, Get Published, Trends

Same Message, Different Reader

By Dan Balowon August 7, 2018
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When a published book is successful (sells well), the publisher and author begin pondering how to be successful again with the next book. Often times, the solution to the repeat-success puzzle in non-fiction is having a similar message but aimed at a different audience. You’ve seen it happen many times, whether you realized it was intentional or not. Examples of branded book lines which have been …

Read moreSame Message, Different Reader
Category: Book Business, Creativity, The Writing LifeTag: Book Business, Book Sales, Career, Creativity, Nonfiction, The Writing Life

Make Much Ado of Your New Book

By Bob Hostetleron April 18, 2018
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(5 Ways to Plan a Success-Guaranteed Book Launch Event) I am no marketing genius, and though I’ve written fifty books, I still have much to learn about author and book publicity. But I nonetheless had a great time launching my book, The Bard and the Bible: A Shakespeare Devotional, a book of daily reflections drawn from a quote from Shakespeare and a verse from the King James Version of the Bible …

Read moreMake Much Ado of Your New Book
Category: Book Sales, Career, Marketing, Platform, The Writing LifeTag: Book Launch, Book Sales, Marketing, Platform

Three Significant Announcements Regarding E-books and Audiobooks

By Steve Laubeon January 29, 2018
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Last week there were three significant announcements from Apple, Google, and Walmart of interest to all authors. First the three bits of news and then a few observations. Apple Apple announced that their iBooks app is being renamed to simply Books. Accompanying it will be a complete redesign of the reading app, their store, and the addition of an audiobook tab to make it easier for users to access …

Read moreThree Significant Announcements Regarding E-books and Audiobooks
Category: Book Business, Book Sales, E-Books, Economics, News You Can Use, The Publishing Life, TrendsTag: Audio Books, Book Sales, ebooks, Technology

How Do You Count Lifetime Book Sales?

By Steve Laubeon January 22, 2018
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A key element in a book proposal is your sales history. Of course, you can ignore this if you’ve never published a book before. But if you have published, either with a traditional publisher or independently, your sales history must be included in your next book proposal. Here is an example: Sales History: The Bestest Book Ever (XYZ Publishers, 1996) – 12,449 sold The Other Bestest Book I Wrote …

Read moreHow Do You Count Lifetime Book Sales?
Category: Book Proposals, Book Sales, Get Published, MarketingTag: book proposals, Book Sales, Independent Publishing, Traditional Publishing

It’s All About You — Sometimes

By Tamela Hancock Murrayon January 18, 2018
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When I visit the bookstore or library, I seldom fail to see at least one novel where the entire back cover consists of an author photo. That’s it. No endorsements, no story blurb, no author bio. Just a picture of the author. And usually the front cover doesn’t offer many clues, either. Maybe a vague illustration, along with the title and author’s name. To my mind, this means this author has built …

Read moreIt’s All About You — Sometimes
Category: Branding, MarketingTag: Book Sales, Branding, Marketing

Retail is Dead! Or is it?

By Steve Laubeon November 6, 2017
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You’ve read the news. This calendar year bankruptcies or total closures were announced by Toys R Us, Gymboree, Bebe, American Apparel, Guess, Rue 21, The Limited, Gander Mountain, Vitamin World, and Family Christian Stores. Sears and Kmart announced last Friday that they were closing another 63 stores in January, on top of the 358 they closed already this year. And the watchful vultures are …

Read moreRetail is Dead! Or is it?
Category: Book Business, Book Sales, Economics, Publishing History, Publishing News, TrendsTag: Book Business, Book Sales, Publishing News

Be Published? or Be Read?

By Bob Hostetleron October 18, 2017
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Is your goal “being published” or “being read?” What pieces of writing and publishing advice do professional agents and editors wish would go away…forever? I asked that question of some of my friends in the industry (yes, I have friends, and most are much smarter than me). The last two weeks I have posted (here and here) some of their responses. But I’ve saved one more for last. One savvy, …

Read moreBe Published? or Be Read?
Category: Book Business, Book Sales, Career, Marketing, Platform, The Writing LifeTag: Book Business, Book Sales, Get Published, Marketing

When Your Book Doesn’t Sell

By Steve Laubeon November 14, 2016
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You have spent years writing your book and now it has been published by a traditional publisher. It took a while for the publisher to bring it to market. But it is finally out there. Dreams have been realized. You. Are. A. Published. Author. But then the sales reports begin to appear. Sales have floundered. There isn’t any buzz. No one is even commenting on your Facebook page. It’s a …

Read moreWhen Your Book Doesn’t Sell
Category: Agents, Book Business, Book Sales, Career, Economics, Editing, PlatformTag: Book Marketing, Book Sales, Failure
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