Let’s look at the typical wholesale discount for books, and why you should consider listing your books with IngramSpark AND KDP.
I use both KDP and IngramSpark for my book printing needs.
KDP is entirely in charge of print and ebooks that get sold to Amazon customers, whereas IngramSpark handles book printing and distribution for all other booksellers, such as the wonderful, independent bookstores that enthusiastically hand-sell my books to their customers. (I will explain more about why I do this further down in this post.)
It’s important to me that booksellers get fair, industry-standard discounts on my book.
I understand that the typical wholesale discount for books that booksellers might expect from a small publisher is 40% off the retail price. When my first book was published, it was easy for me to personally handle distributing my books to local booksellers and to offer them that standard discount.
Now that I have published several books, it gets messy for me to handle processing all of those orders. Not to mention, most booksellers would rather order books directly from the distributor rather than doing business with several authors and small presses.
A 40% discount with IngramSpark is not a 40% discount for the bookseller!
You can imagine my dismay when I learned from one of my local bookstores several years ago that they prefer not to order my books from Ingram because they only get 20% discount from them as opposed to the industry-standard 40%.
I was baffled, because at the time, in my IngramSpark settings, I clearly had my book discount at 40%. Sure, it did say that 55% is the recommended discount (at the time, the calculator doesn’t say that any more), but they didn’t explain why. I wasn’t just going to discount my book by that much without some reasoning behind it. I didn’t know that 55% was the typical wholesale discount for books.
After contacting IngramSpark’s customer service, they explained to me that unless a book has a wholesale discount of 55% in their system, the bookseller is going to get less than the industry standard because Ingram is going to get their cut for distribution regardless of what discount the bookseller gets.
In other words, if my book has a 40% wholesale discount in IngramSpark’s system, Ingram distribution takes a 20% cut and the bookseller gets a 20% “short discount.” If I up my discount to 55%, however, Ingram reduces it’s cut to 15% so the bookseller can get the full 40% industry standard discount.
It turns out that book distributors usually take 15% and the bookseller gets a 40% discount, which means 55% of the retail price is tied up in wholesale and distribution.
Why bother with IngramSpark? Doesn’t KDP have Expanded Distribution?
KDP does offer Expanded Distribution, but for me, the royalties are still better at IngramSpark for non-Amazon booksellers, even with a 55% discount in the IngramSpark system.
Let’s look at the numbers for a 275 page novel priced at $14.00 (as of February 2021):
Print Charge (per book, does not include shipping) – $4.61
Royalty based on short discount (40% discount – 20% for distribution; 20% bookseller discount) – $3.78
Royalty based on industry standard discount (55% discount – 15% for distribution; 40% bookseller discount) – $1.61
Print Charge (per book, does not include shipping) – $4.15
Royalty (per book sold via Amazon.com) – $4.25
Royalty (Expanded Distribution) – $1.45
A few observations:
KDP is great when it comes to books that get sold to Amazon customers, but since I want my books sold by all kinds of bookstores and not just Amazon, it’s important to me to find the best situation for general distribution.
KDP does not allow an independent author-publisher to set their own expanded distribution discount. From what I understand, even KDP ultimately uses Ingram to distribute their books.
An author can short discount their books through IngramSpark. That will certainly help them maximize their royalties per book.
The disadvantage, of course, is that booksellers are unlikely to carry their books if they can’t sell them for a reasonable profit, and a 20% discount is hardly enough for a bookseller to make a decent profit on the book, especially when they have to figure in shipping, too.
If an author’s book is short discounted through IngramSpark, booksellers will likely only purchase the book for special order customers, but not keep it stocked on their shelves.
On the other hand, if the book is offered at an industry standard discount to booksellers, those stores might be more likely to carry the books. (There is also the issue of whether or not a book is marked as returnable, but for many independent booksellers, that’s not important anyway. Bookstores like Barnes & Noble, however, won’t order your books from Ingram, regardless of the discount, if they aren’t marked as returnable. Setting your books as returnable can turn out to be an expensive endeavor for independent publishers, as it means a book store can order several books to stock in their stores — and the author pays for the printing of those books as they would with any print-on-demand sale — but if the bookseller decides the books aren’t moving, they can return them. The author is left with the loss of the printing PLUS the author has to decide whether or not to have Ingram destroy those returned books, or to ship them back to the author at an additional cost.)
Setting the typical wholesale discount for books is a good idea if your goal is to sell books any place other than Amazon
Once I understood how the numbers were broken down in the IngramSpark system, I didn’t mind setting my discount to 55%. Books are a huge industry, and the author is just one part of that industry.
Booksellers are on the front lines. If they aren’t getting the typical wholesale discount for books that they require to make a profit, what incentive do they even have to carry a book?
The same is true of a distributor. Maintaining those catalogs and handling the process of billing and shipping to the booksellers who order books is a business that is also worthy of compensation. (If you don’t understand the typical royalty percentages that indie authors get versus traditionally published authors, you’ll want to grab my free PDF, The Tenacious Writer’s Guide to Success. In it I explain why traditionally published authors get such a pitiful royalty on their books and why independent author publishers get to keep more of the money their books earn.)
Some might argue that IngramSpark is already making money off of printing the books, so why are they charging a distributor’s fee on top of it? I understand that concern, but it’s important to remember that printing is one business and distributing is another.
The fact is, IngramSpark is making it easy for authors to publish high quality books and make them available to booksellers around the world through their already established Ingram Content Group book distribution system. The fact that they both have the same name doesn’t change the fact that they are doing the job of two different industries and so they will be expecting compensation as such.
What are your thoughts on making your books available for expanded distribution? Leave a comment below!
(This article was originally published 5 November 2015. Updated 22 February 2021.)