Q: I have a question. I looked at my book on Amazon this morning. There are other companies selling my book at lower/higher prices than Amazon. How do they get to sell it and how do I get paid for their sales of my book?
A: This is a common question and it helps to understand how retail sales work. The products you buy in a store are not exclusive to that one store. Kleenex, for example, is sold in nearly every grocery, convenience, department store, gift shop and even hotels across the world.
The same applies to books. For our example, let’s use Create Space as the POD (print on demand) printer source.
Distribution Channels: Standard and Expanded
Create Space prints and sells your book. When choosing Distribution Channels through Create Space your are essentially allowing other bookstores the right to purchase your book at a set cost– (commonly) 55% above wholesale — and then sell your book (see royalty chart below). Bookstores choose whether or not to put your book in their store. Whether the bookstore sells your book for more or less is entirely up to them — it’s their business.
Below is a screenshot of Create Space’s Channels selection page. You can choose all or none. Note that each selection has more information regarding the choice (“What’s this?”)
Standard Distribution consists of only two sources: Create Space and Amazon. Since Amazon owns Create Space, they have their own distribution channel (listed first) and their European stores (second). Your Create Space eStore is an online sales detail page where Create Space fulfills all eStore orders and handles the customer service.
Amazon is only “one” online retailer that Create Space works with to distribute your book. Yes, Amazon “owns” Create Space, but the two companies are treated as separate entities. If a consumer purchases the book directly from Create Space, then the author makes the most royalty. If they purchase from an online book store, like Amazon, then you make a little less royalty (since Create Space, Amazon (online retailer) and you make money) – a 3-way split.
You (the publisher) working with a Distribution Company (Create Space) who lets bookstores (Amazon and others) sell your book.
Bookstores and Online Retailers: Like Amazon, Create Space offers other bookstores and online retailers the option to sell your POD book. By enabling this channel, you can make your book available to thousands of major online and offline bookstores and retailers, and expand the size of the potential audience for your books.
Create Space Direct: By enabling this channel, you can make your books available to certified resellers such as independent bookstores and book resellers. The CreateSpace Direct program allows eligible resellers to buy books at wholesale prices directly from CreateSpace.
For example. ABC Bookstore chooses to sell your book in their store. They purchase the books from Create Space for set wholesale cost and may choose to sell above or below the retail price. ABC Bookstore may even choose to combine your book with a complementary book to boost sales. No matter what they sell your book for, you, the author, receive the same royalty.
When a bookstore lowers the price of your book, they are essentially taking “less” profit if the book sells.
Your royalty remains constant no matter what price is set.
Libraries & Academic Institutions: By enabling this channel, you can make your book available to public libraries, elementary and secondary school libraries, and libraries at other academic institutions. In order to take advantage of this option you must have a CreateSpace-assigned ISBN.
Depending on the channels you’ve chosen, and the price, your royalty will vary. You can see that at a price of $12.95, your royalty for “Expanded Distribution” is only $1.93. While this may seem shocking, you need to remember that your book is not just being sold by third-parties on Amazon, but also in their own stores.
Note that the minimum price for this particular layout is $8.13 (small print below list price). This mean that any price OVER the minimum price to produce the book minus Create Space, Amazon and/or Expanded Distribution* fees is your royalty. (*based over their wholesale purchase price)
Bookstores selling on Amazon
Now most online bookstores don’t have “other bookstores” selling on their site. Amazon, however is different, so that is why you see third-party stores selling your book via “new and used”. Amazon gets a very small percentage of the “sellers” royalty by “renting them space”. So it the split would still be Create Space, THE SELLER and you receiving a portion of the royalty but THE SELLER has to pay a portion of their royalty to Amazon for “selling space.”
You can’t get away from the New and Used element completely. Even if you opt-out of Expanded distribution, eventually “used” books will show up being sold by individuals and used book stores.
You can OPT OUT of select Expanded Distribution channels at any time. Simply go to Create Space, click your title and then choose “Distribute”.