"Amazon charges 55% for it's Amazon Advantage Program because that is what self-publishing authors are used to paying distributors." This came directly from the lips of an Amazon.com employee at a recent publishing conference. Since Amazon is acting in the capacity of a distributor when an author participates in their Amazon Advantage program, they feel 55% is fair. Unfortunately for their customers, they are not taking into account their computerized processes and lower overhead (nor their $29.95 yearly fee).
First of all, what is Amazon Advantage? In a nutshell, it is a sales program offered by the largest on-line retailer that allows independent writers and publishers the ability to list individual books on the Amazon.com website, thereby reaping the rewards offered by worldwide distribution and a gigantic brand name. Amazon's Advantage program is clearly advantageous but is it really all its cracked up to be? Let us investigate the potential earnings a little closer...
For our example, we will take a 250 page book with a retail price of $14.95, an average figure on Amazon. If your book's retail price is higher or lower, you will have to adjust the numbers in this example accordingly. Amazon takes 55% of your retail price right off the top, leaving an amount of $6.73. In order for them to sell your book, they need to have access to it, which means you will need to mail it to them. On average, Amazon requests 2-3 books at a time ("3 weeks worth of inventory" according to this Amazon source.) Never mind that mailing 2 books to Amazon costs approximately the same as mailing 6; you will be investing the time and postage to conduct three different mailings, each of them eating into your profit margin.
Let's be fair and say the shipping and handling cost per book is $2. In actuality, it is probably higher if you factor in your hourly rate for taping up the box and traveling to the post office. That leaves you with $4.73 for each book. Now let's factor in the printing cost. How much did that book cost to print with an off-set printer? It depends on your print-run, naturally, but let's be generous and say it only cost $1.50, not including the shipping costs to you. Yes, this method has you paying for shipping twice, which is not unlike paying taxes twice. And who wants to do that?
In this generous scenario you are left with $3.23 of profit, plus the headache of shipping books, managing inventory, and accounting costs. You would like to list your book with Barnes & Noble.com, Powells.com, BAMM.com, and elsewhere, but who has the time? Amazon is already taking too much away from time better spent writing and promoting. Introducing 20% Amazon Listings With On-Demand Technology
What if an on-demand edition of your book could generate more profit with less work?
Thanks to new printing technology and inventory management software, custom on-demand publisher Outskirts Press can publish an on-demand edition of your book and make it available on Amazon for just 20%. Inventory, shipping, billing, and production are all handled by Outskirts Press and its wholesale partners. Let's take the same 250 page paperback book with a retail price of $14.95. A 20% discount leaves you with $11.96 (instead of $6.73 with Amazon's Advantage program). Granted, the on-demand production cost is higher (costing $6.65 per book with Outskirts Press' Diamond Package). $11.96 minus $6.65 leaves you with $5.31 of profit. There's no additional out of pocket printing or shipping costs since all of that is handled behind the scenes by Outskirts Press and its partners. You are making $5.31 for each book you sell on Amazon, rather than $3.23. Plus you are saved the hassles of inventory, shipping, billing, estimating print-runs, and paying interest and overhead. More profit. Less risk. How does Outskirts Press do it? Through an inventory management system known as EDI.
What is EDI?
EDI stands for Electronic Data Interchange. The transfer of data between different companies using networks and the Internet. As more and more companies get connected to the Internet, EDI is becoming increasingly important as an easy mechanism for companies to buy, sell, and trade information. Amazon's computerized system can manage sales and inventory with very little human involvement, particularly if one computer speaks to another. How does it work?
When an Amazon order is placed, EDI communicates the order through Outskirts Press wholesale partners and the book is produced. Turnaround time according to Amazon's own website is 24 hours. Why does EDI drop the discount so substantially? Amazon would rather deal with 1 wholesaler via EDI handling thousands of books than with thousands of authors via email handling 1-2 books. They make their profit in volume, and hence the considerably lower discount.
Any other advantages? Yes.
All that time and effort involved in listing your self-published book independently with Amazon's Advantage program has probably prevented you from listing it with Barnes & Noble, Powells, Books-A-Million and countless other online retailers. Each online retailer you pursue independently multiplies your time expenditure, and therefore further decreases your profit margin.
On the other hand, with Outskirts Press and EDI, the same 20% discount can be applied across the board, resulting in automatic distribution and listing with all participating online retailers simultaneously. Even if you have already printed a book off-set or have published a book elsewhere, you owe it to yourself and your profit margin to explore adding an on-demand version of your book to take advantage of this win-win opportunity. |
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