Tag s | Get Published

Many Happy(?) Returns!

Every traditionally published author needs to understand the principle of “Reserves Against Returns” which is an integral part of publishing economics. It can reduce the amount of money an author receives in their royalty statement. It is usually a shock and elicits a phone call to their agent crying “What happened to my money?”

Did you realize that book publishing is the only “hard goods” industry where the product sold by the supplier to a vendor can be returned? This does not happen with electronics, clothing, shoes, handbags, cars, tires…you name it. If it is a durable good the vendor who buys it, owns it (which is why there are Outlet Malls – to sell the remaining inventory). Except for books. Somewhere along the line the publishers agreed to allow stores to return unsold inventory for credit. In one sense, publishers are selling their books on consignment. Bargain books are actually resold by the publisher (after getting returns or to reduce overprinted inventory) to a new specialty bargain bookseller or division of a chain (which buys the bargain books non-returnable).

Consequently book contracts have a clause allowing the publisher to establish “a reasonable reserve against returns.” By “reserve” they mean a pool of money withheld from the author…holding that money in “reserve.” The intention of the clause is to protect the publisher against paying the author for books that have been shipped and billed to a store but may eventually be returned to the publisher.

Imagine if Walmart purchased 10,000 copies of your book. Everyone celebrates. If you are earning $1.00 in royalty (on average) for every book sold, that means you will receive $10,000 from your publisher at some point. Hooray! Steak dinners for every one!

But wait.

What if Walmart doesn’t sell all the copies they purchased and returned 5,000 of them?

And what if your publisher had already paid you for all 10,000 sold copies? That means your publisher overpaid you by $5,000. Do you have to give that money back? You really don’t want their collections agent (his name is Guido) to come to your door to get their money back.

Instead, the publisher makes an estimate on every royalty statement and withholds a “reasonable reserve against returns.” In some situations it can seem like the publisher abuses the word “reasonable.” One author I know had 70% of their revenue withheld for a complete royalty cycle because their publisher had made a big sale to a big box chain. But is that really abuse?

The Big Box retailers are notorious for returning over half of what they purchase.

I don’t begrudge a publisher for holding a reserve. I’d rather they not demand the money back later!

But never fear! If the returns do not use up the reserve the difference is credited back to the author. Let’s watch the math in the following example:

  • Book sells 10,000 copies which generated $10,000 worth of author earnings in July-December. (This is assuming the author earned $1 in royalties for every book sold.)
  • Publisher creates a reserve of $5,000 in January in case there are returns after Christmas. This, in essence, means they hold back paying the royalties on 5,000 copies in case a truck full of that book suddenly appears at their warehouse. Meanwhile they send the author $5,000.
  • In Jan-June there are $3,000 worth of returns sent back which is charged against that reserve. So the publisher gives back to the author the $2,000 balance in their account.

Does this make sense? I hope so. The bottom line in this example is that the book sold 7,000 copies and the author earned $7,000.

By the way, lest you think I’m ignoring the E-elephant in the room? Ebooks technically do not have returns since there is no physical inventory on a shelf to handle. Consequently there should never be a reserve against returns on e-books. It can happen if a bunch of people return their ebook purchase, but it would be rare if it were thousands of copies.

 

[This is a heavily updated version of a post published in June 2011.]

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How to Know if Self-Publishing is for You

Technology and Amazon.com have opened up the world of book publishing, making it far more “democratic” than ever before and allowing anyone with word processing software and connection to the internet, to become a published author. The traditional publishing industry is a $25 billion or more industry in the United …

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Amazon Rank Obsession

Admit it. You’ve checked your Amazon.com sales ranking at least once since your book was published. You feel the need to have some outside confirmation of the sales of your book. And Amazon’s ranking are free to look at.

I’ve even seen book  proposals where the author has gone to great lengths to include the Amazon ranking for each title that is competitive with the one the author is proposing. A prodigious amount of wasted effort.

Publishers rarely pay attention to Amazon rankings unless yours gets below 1,000 or if you get in the top 100.

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Promotion: Faithful or Self-full?

“What’s the difference between promotion and self-promotion? How do we promote ourselves/our books so that we honor God, respect others, and use common sense?”

The constant tension between marketing and ministry has plagued the Christian author, speaker, bookseller and publisher forever. Why? Because Jesus threw the money changers out of the temple. Because we are commanded to die to self and to humble ourselves in the sight of the Lord….

And yet, our society…our culture insists, even demands, that we market and promote our message.

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How an Agent Reads

I’m seldom at a loss for words (though often at a loss for something of value to say), but the question took me aback for a moment. I was on an agents-and-editors panel at a writers’ conference within a few months of becoming an agent. I’d done this sort of …

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Author Says / Agent Hears

Many aspiring authors communicate things they think are positive, or at least in the spirit of honesty and transparency, but end up being understood entirely different than the intended message. In an attempt to show commitment, an aspiring author says, “I’ve been working on this book for ten years.” An …

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The Wild Pitch

In honor of the upcoming baseball season I thought it would be fun to explore the art of pitching.

A couple years ago I was watching a Major League baseball game and the pitcher unleashed a horrific throw that sailed about eight feet behind the batter. It floated to the backstop without a bounce and everyone in the stadium wonder what had just happened. It looked like the pitcher lost his grip and could not stop his delivery. In baseball terms this is classified as a wild pitch.

Unfortunately many writers unleash a pitch on an agent or an editor before it is ready to deliver. Let me list a few actual letters I have received.

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