Getting to the book distribution step of publishing is very exciting! However, it can leave you confused as to which service to choose. To add to that, you can also combine services to maximize your profits.
Amazon KDP Print is one of the most common routes authors take to get their books into the Amazon store. But you also want to get into all the other stores. So, adding distribution by IngramSpark makes that happen. Let me state right up front that you should only use Amazon to get your book into the Amazon store. You’ll find out why in this post.
You’ll also learn about discounting. Both the bookstore and the distributor will take a slice of your profits, but that’s okay; it’s just the cost of doing business. Amazon’s discount is 40% but IngramSpark allows you to choose the discount you offer to stores. 30%, 40%, and 53% are common choices, and you’ll find out why. These discounts will of course affect your profits or royalty rate. You’ll find out why you should sometimes choose 30%, other times 40%, and when, or if, you would ever benefit from a 53% discount with a bookstore returns option. Woah! Yes, the bookstores are allowed to return your books.
So, in this post, you’ll find:
- How To Calculate Royalty
- IngramSpark Royalty Calculator
- Amazon’s Royalty Calculator
- Final Compensation Comparison
- Why Use Amazon KDP Print?
- Why Use IngramSpark to get to Amazon?
- The other services (Draft2Digital, PublishDrive, BookBaby)
- My recommendation
HOW TO CALCULATE ROYALTY
There is a formula for calculating royalty, and here it is:
List Price – Discount – Print Cost = Publisher Compensation / Royalty
Use IngramSpark’s Publisher Compensation Calculator to determine the cost of your book. As a sample for comparison, I chose to calculate using a 6×9, 280-page paperback priced at $14.99.
With IngramSpark you can choose to offer stores discounts between 30% and 55%, but Amazon offers only a 40% discount. Amazon is not a distributor–well, they are, but you should never use them as a distributor. Use them only to get your book into the Amazon store.
If you choose to offer bookstores a 30% discount (on your 6×9, 280-page paperback priced at $14.99) you’d make $5.29 profit. With Amazon at their 40% discount your profit would be $4.79.
If you want to compare apples to apples, the 40% discount on IngramSpark leaves you with $4.79 to the $4.30 profit you’ll make in the Amazon store. But there’s little reason to set a 40% discount with IngramSpark… okay, maybe during the holidays, when bookstores are more likely to stock your book. A 40% discount will attract them to do so. But really, bookstores want 53% and the option to return your book. (More on that later.) So, offering a 30% discount on your book will get you a greater profit.
INGRAMSPARK ROYALTY CALCULATOR
Here’s what IngramSpark’s publisher compensation calculator looks like and the results for my sample 6×9, 280-page paperback book.
Apply the 30% discount required to distribute to the online retailers. If you want to market to bookstores, you’ll need to set the discount to 53% and enable book returns. But it’s important to remember that 99% of your print book sales will happen online. Here’s the math:
(List Price – 30% IngramSpark Discount – Print Cost = Publisher Compensation)
$14.99 – $4.50 (30%) – $5.20 = $5.29
AMAZON’S ROYALTY CALCULATOR
Amazon takes 40% of the list price. They may discount your book, selling it for below that price, but you will always be paid 60% of the list price.
Here are the results for the same 6×9, 280-page paperback book:
(List Price – 40% Amazon Discount – Print Cost = Publisher Compensation)
$14.99 – $5.99 (40%) – $4.21 = $4.79
To estimate your book, go to the Royalty Calculation page (shown above). You can either use their calculator or download their KDP Royalty Calculator Excel file and plug in the numbers.
Don’t forget to file a resale certificate, so when you purchase your own books you don’t pay sales tax twice – once when you purchase your books and once when you resell them. Learning about resale certificates and how to file taxes are just two of the other tasks you need to do when setting up an author-publisher business.
Final Compensation Comparison
Here’s the final price comparison.
- List price is $14.99, which is the same on both platforms, minus
- Discount, which is 30% for IngramSpark and 40% for Amazon, minus
- Print cost, which is $5.20 for IngramSpark and $4.21 for Amazon
- Compensation, which is $5.29 for IngramSpark and $4.79 for Amazon
You’re better off using IngramSpark to distribute to Amazon, and all the other stores, to get 50 cents more on each book. However, there are reasons to use Amazon to sell your book in the Amazon store.
Why use Amazon KDP Print?
If your book isn’t just flying off the (virtual) shelves, Amazon might mark your book as Temporarily Out of Stock or Ships in n Days status if you don’t use Amazon KDP. So, understandably, you may want to create a direct relationship with Amazon by setting up an account with them. That way you don’t lose customers (who want instant gratification) in the highest-volume bookstore on the planet.
Going direct with Amazon also gives you immediate control over the information readers see on your book sales page on Amazon. You can experiment with metadata, keywords, categories, and you can take advantage of Amazon’s marketing features if you want.
Read this NFAA blog post for further information on out of stock issues and an overall review of Amazon KDP vs IngramSpark.
Why use IngramSpark to get to Amazon?
As we’ve seen in this post, the advantages of using IngramSpark to distribute to Amazon is financial. Who doesn’t want to make more money on each book? (In our example, 50 cents more, which can add up!) If your book is a consistent seller, you probably will not be listed as out of stock on Amazon, even when distributing with IngramSpark.
Distributing using IngramSpark offers other perks, too. These include:
- The convenience of a one-stop shop
- Preorders on Amazon (Amazon, strangely, does not offer print book preorders)
- Option to turn on 40% or 53% discount and Returns if you want to sell to bookstores
The other services
It’s difficult to directly compare other services as they don’t provide royalty calculators. But here’s some general information that can help you decide which service to use:
Draft2Digital uses IngramSpark distribution and offers a 30% royalty rate at this time. Though its print distribution system is still in beta you can sign up and use it now. Stay tuned, because they offer great customer support. (Though IngramSpark promises better customer support in the near future.)
PublishDrive is a great option for authors and small presses with three or more books that sell consistently. They also use Ingram distribution but their fee and royalty structure differs from the other POD companies. If you sell a lot of books, using PublishDrive will be more profitable for you.
Lulu is a favorite for printing books including coil-bound books. See their Retail Revenue Calculator on the bottom of this page to figure your profits.
With BookBaby distribution (see FAQ page) you’ll get between 10-30% royalties for most books. (You have to have an account to use their royalty calculator.) BookBaby uses their own distribution system, unlike the others, which use Ingram’s.
There are many distribution options to choose from. However, for print, I think the Amazon + IngramSpark combination is the best choice right now for most authors. What about you? I welcome your thoughts and questions on this topic.
To learn more about IngramSpark, listen to our podcast episode with Paige Allen. To learn more about Draft2Digital, listen to our episode with Kevin Tumlinson.