August 01, 2007

POD Secrets Revealed: List Prices, Royalties and Author Discounts By Angela Hoy

Last Week, we looked at how much some POD publishers inflate shipping fees.

This week, we'll look at List Prices, Royalties and Author Discounts.

When authors are researching POD publishers, they often just look at the setup fees, glance at the royalties (not knowing what they're a percentage of), and go from there. Unfortunately, they often don't think about asking what the list price of their book would be, don't understand how the royalty structure works or when royalties will be paid, and don't always ask how much they'll have to pay for copies they purchase themselves after the book is ready to sell.

Many POD publishers charge several hundred to over a thousand dollars to get a book to market. They then charge way more than the market will bear for the finished books. I've wondered in the past why they do this as it ultimately hurts sales. But, since they've already gotten so much money out of the author up front, maybe they just don't care about subsequent sales? Or maybe they think the book won't sell anyway so they might as well get as much as they can out of each copy that does sell? I personally believe that they think only friends and family will buy copies of most self-published books anyway. And, perhaps they believe this because they publish just about everything coming over the e-transom, no matter how bad a book is. Of the companies listed below, only Booklocker.com actively screens manuscripts for quality and sales potential.

A new author asked the publishers below for specific information about his 248-page, 6 x 9 paperback book.

SETUP FEE
The information below is based on the least expensive package offered by each publisher on similar offers targeting U.S. authors. Setup fees include setup, original cover design, print proof, ebook creation, up to 25 interior photos/graphics, an ISBN, barcode, a listing on the publisher's website and distribution by Ingram (book available on Amazon.com, et. al.), all within 6 weeks.

LIST PRICE
The list price is the minimum offered by the publisher for a 248-page, 6 x 9 paperback book. Some POD publishers force authors to use specific list prices. Others have minimums and allow authors to price their books higher, if they wish.

ROYALTIES
Some POD publishers pay royalties based on the list price, some pay royalties based on their net profit, and others provide confusing formulas that are very difficult to decipher.

AUTHOR DISCOUNT
The author's discounted unit prices listed below are based on the purchase of 100 copies.

Booklocker (Booklocker.com is owned by the author of this article)

Setup: $492 (deduct $175 if submitting your own cover). Authors of multiple titles receive $99 setup fees (plus optional cover design) on second and subsequent books.

List: $14.95 (Authors may, of course, price their books above the minimum)

Author Discount: $7.92

Royalties: 35% based on the list price for sales through publisher's website; 15% based on the list price on wholesale/retail orders.

Lulu.com

Setup: $595.00

List: "Printing cost (2¢/page x 248 pages = $4.96) + 4.53 fixed cost for cover, binding, materials + Lulu's commission (20% of total profit)" + author's desired royalty.

Author Discount: $9.49 plus Lulu's 20% profit. If an author wants 10% royalties, the list price would be $12.53. If the author wants 20% royalties, the list price would be $13.67.

Royalties: Author determines the royalty by choosing a price above Lulu's minimum (see above). Lulu's 20% commission above printing costs goes up as the author's royalty increases. See examples above.

Lulu claims to be "free." However, formatting, cover design, graphics, barcode, etc. are offered through a variety of third party services providers who run ads on their site. Lulu profits from these services by getting referral fees from these companies. Lulu sells their ISBN/Distribution service directly to authors.

iUniverse

Setup: $599.00

List: "$17.95-$21.95"

Author Discount: $9.87-$12.07

Royalties: "20% of the payment the publisher actually receives" for sales through publisher's website and "25% of the payment the publisher actually receives" for wholesale/retail sales (wholesale/retail sales are discounted, of course).

xLibris

Setup: $1383.00

List: $21.99

Author Discount: $10.00

Royalties: 25% based on the list price for sales through publisher's website; 10% based on the list price for wholesale/retail orders.

AuthorHouse

Setup: $1567.00

List: "$10-$18" on AuthorHouse.com and "$14.50-$21.50" at bookstores, including Amazon.com.

Royalties: "$0.70-$8.69 per book." The AuthorHouse rep specifically stated, "Royalty is really not a part of our lexicon." The author asked (more than once!) for a chart showing their list prices vs. royalties. They never sent it but instead just sent examples and more marketing verbiage, even adding him to their spam list without his permission. Their system is beyond confusing! They quoted numerous prices and percentages, but the numbers were examples and weren't based on the actual book size provided. Again, the author repeatedly asked for their list prices vs. royalties and it was never provided. The rep even apologized at one point, saying, "I apologize for being unable to state our policy clear enough."

What was the question? It was, "Can you please give me the list prices with accompanying royalty percentage options for my 6 x 9, 248-page paperback?"

How hard can that be to answer?! Yet, they danced around the question and never sent the requested information! Does anyone else have their chart? We'd love to see it. It appears to be a closely guarded secret!

Author Discount: $9.31? The author shared copies of all AuthorHouse emails and he nor we are sure exactly what the author's price would be... nor is it clear if the author would get an additional discount for large quantity orders.

Of all the POD publishers the author approached, AuthorHouse gave him the biggest run-around...and the strongest sales push. Perhaps the AuthorHouse reps work on commission. More on that later in this series.

Trafford

This company is located in Canada. I'm only including them because they claim on their website, "Compared to other printers' and publishers' prices, Trafford's low on-demand printing prices could save you hundreds, even thousands of dollars over the years, depending on how many you buy and sell yourself." Uh huh...

Setup: $2247.00

List: $19.78

Royalties: Based on the minimum list price listed above, royalties are less than 17% of the list price for sales through the publisher's website and less than 8% of the list price for wholesale/retailer orders.

Author Discount: $8.85

Next week, we'll look at how some POD publishers nickel and dime authors, and will compare the prices of those products/services to actual costs if the author obtained these things on their own.