Understanding the Trade Discount in Print-on-Demand (POD) Distribution

A "trade discount" is the percentage of a book's retail price that a retailer (e.g., a bookstore or Amazon) or wholesaler (e.g., Ingram) earns from the sale of an author's book.

The standard trade discount in book publishing is 55 percent. A "short discount" is anything under 55 percent. If you set your trade discount below this percentage, few, if any, physical bookstores or other retailers will give your book a second look. Traditional publishers often use a short discount for books like backlist titles that aren’t expected to sell through brick-and-mortar stores.

The publisher or publishing service provider you use may affect your book's trade discount and your ability to change it. Most self-publishing companies set the trade discount at 55 percent. Of that 55 percent, the retailer selling your book gets 40 percent and the wholesaler (e.g., Ingram) gets the remaining 15 percent.

Example: A 200-page, 6x9, black-and-white interior POD paperback with a glossy cover selling on BN.com for $14.99

$14.99
-$8.24 (55% trade discount)
$6.75 (net profit)
-$3.86 (print cost for book sold through third-party retailer)
$2.89 (profit; royalty split depends on publisher)

The Trade Discount at IngramSpark/Lightning Source

IngramSpark and Lightning Source are owned by Ingram, the largest book wholesaler in the United States. Both of these divisions provide POD printing and distribution. Lightning Source is for publishers/authors with more than two titles, and IngramSpark is for publishers/authors with fewer than two titles. The costs of both services are similar.

Lightning Source allows publishers to set a trade discount as low as 20 percent, while 30 percent is the lowest trade discount that can be set through IngramSpark. Few brick-and-mortar retailers will accept a trade discount less than 40 percent, and when you add Ingram's portion of the trade discount (15 percent), a 55 percent trade discount is a must if you want a shot at bookstores and other retailers.

Both Lightning Source and IngramSpark require one trade discount across the board, which prevents authors and publishers from setting a higher trade discount for brick-and-mortar retailers and a lower trade discount for online retailers.

The Trade Discount on the CreateSpace Distribution Platform

If you distribute a POD book through CreateSpace, the trade discount for sales on Amazon is only 40 percent, and the printing costs are a bit less than IngramSpark or Lightning Source. But the downside to distribution anywhere other than Amazon is that CreateSpace requires a trade discount of 60 percent—higher than Lightning Source.

Example: A 200-page, 6x9, black-and-white interior POD paperback with a glossy cover selling on Amazon for $14.99

$14.99
-$6.00 (40% trade discount)
$8.99 (net profit)
-$3.25 (print cost for book sold on Amazon)
$5.74 (profit; royalty split depends on publisher)

The Ideal POD Trade Discount Scenario

The ideal POD trade discount scenario is to distribute through CreateSpace for Amazon sales and through Lightning Source/IngramSpark for distribution to all other retailers and wholesalers. This strategy maximizes your royalties.

How Mill City Press Helps

We're the only self-publishing company that distributes all POD titles through CreateSpace and Lightning Source, thus securing a low trade discount for sales on Amazon while preserving the higher trade discount required for maximum sales potential through all other retailers and wholesalers.

Mill City Press also allows our POD authors to set their trade discount anywhere within the ranges permitted by Lightning Source, although we strongly advise choosing the 55 percent trade discount, which provides your book the most opportunities in the marketplace.

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