In the Guardian‘s 2019 review of Shaun Bythell’s Remainders of the day: A bookseller’s diary (US edition, 2022, Godine) Mr Bythell is quoted as musing “why is it ‘acceptable to try to screw the profit out of struggling small businesses’ but not supermarkets?” The answer is probably that in the supermarket you think of yourself as dealing with an impersonal and inaccessible force, while in a second-hand bookshop you imagine you’re dealing with the principal who is solely responsible for the price put on a second-hand book. At LitHub Mr Bythell quotes R. M. Williamson, an Edinburgh bookseller of the early nineteenth century who wrote “Booksellers are constantly giving their patrons extraordinary bargains. In London recently a copy of an early edition of Keats’ Poems, originally bought from a dealer for 2s was sold for £140, and a first edition of Burns’ Poems bought in Edinburgh for 1s 6d brought £350.” Bythell’s reaction displays a judgement and patience which would disbar me from the trade — “provided you sell a book for more than you’ve paid for it, what happens to it after that is largely in the hands of fate”. This is of course true — if you made your £2 what does it matter if with perfect knowledge in an alternate universe (or shop) you might have made £200? So maybe those hondling customers are just trying to influence fate. Mr Bythell has, we hope, made more money from writing about bookselling than he has from his bookselling itself!

Who does make most off a book? Well, of course, it’ll vary wildly.

In the case of new books, where some kind of regular pricing formula can be discerned, I always used to say the paper supplier did best: they get paid first, so though they are not dealing with a huge slice of the manufacturing cost, they get their money earlier than anyone else, and that makes a difference doesn’t it?* Plus of course you can’t have a book without paper — or back in the day you couldn’t. (The paper supplier will probably have been paid before the book is printed, or soon thereafter.) Publishers will tend to take their time paying the printer — you can stretch it just so far before you begin to find reluctance to accept your next book for printing though! A balancing act: I was always lucky in working for companies that paid their bills on time, which makes the production department’s job so much easier.

If the book’s a bestseller the author will of course do very nicely thank you, though naturally the publisher will be doing well too. Many, maybe even most books have royalty escalator clauses — if the book sells more than X copies the royalty rate will increase to Y%. If the book’s a failure, the author won’t make much, but they won’t lose anything (apart from the time spent writing!), whereas the publisher will be on the hook for the whole cost.

The bookseller will always get something, maxing out at between forty and fifty percent of the retail price. (Discounts vary book to book, publisher to publisher, store to store.) If they end up not selling the books they can (usually) return them to the publisher for full credit. But unfortunately bookshop costs are high — think of rentals and then consider the shop next door selling clothing with an average price five or ten time greater than the price of a book. This means bookstores can’t afford to pay their employees a lot; the pleasure of working with books has a value! Bookstores often have difficulty paying their suppliers promptly. Of course the bookstore will do well with a bestseller — but not because they’ll be getting any bigger discount, just because lots of copies will flow quickly through their space, giving them every retailer’s friend: volume.

Publishers will tend to cost their books to allow for a net profit of 10% — net just means profit after all the other costs have been accounted for. The problem with this is that that 10%, which may sound OK, is only available when the copies of the books have been sold; not 90% of the books, 100% of them. Clearly 10% net profit on a bestseller will add up to a whole lot — plus along the way a bestseller will pay for a whole lot of overhead: every copy sold of any book will be costed to make a contribution of 35% to 40% towards overhead costs — wages, rent, electricity, coffee, paper clips etc. etc.. It doesn’t take a financial wizard to work out that if the overhead cost of running the company is $X, there will come a point when a super bestseller will have contributed more than $X to the pot, and all the other dogs you published that year will now be getting a free ride. But of course as these other books aren’t selling worth a damn, without that bestseller the company wouldn’t be earning enough to pay its day-to-day costs. There is also a cost of capital which remains tied up in the non-selling books, and this can end up a company-killer. That’s why on-demand (or even just very short run) printing is such a great boon to the business: it enables you to limit your exposure on inventory cost while still being able to make all the sales there are to be made.

So who ends up making most? If it’s a bestseller the publisher probably edges out the author. But their reward is hedged about with risk and may end up at zero or below for the publisher. The printer and bookseller will get their smaller bits of the pie whatever happens, even if the book only sells 12 copies! On a book which does really badly probably the printer makes to most — after all you ordered 10,000 copies, so you’ve got to pay for 10,000 copies.

See Bookshop Memories for Mr Bythell’s previous book. For more on pricing policy for new books see Costing. Pricing a second-hand book is simpler — there are just two cost elements: the amount the person who sold it got, and the mark-up the bookseller adds to that.

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* The timing of payments is of course relevant to profitability. The books will be published and in the bookstores before the publisher needs to pay the printer. So, many customers will have laid down their money before anyone else in the supply chain has been paid. The booksellers will not be paying the publisher till a few weeks/months later, so there’s a float which needs to be financed. Unscrupulous booksellers will try to float their debt on the publisher’s books, while unscrupulous publishers will try the same trick with the printers. Too much of this behavior leads to bankruptcies. It is thus extremely rare.