The (Whose) Advantage

So, maybe you’re a free-spirit who doesn’t exactly want to be shackled into lock step with Amazon by its chief henchman, Igor Booksurge. But if the thought of being exiled to the land of no red buttons is causing heart palpitations, there is an alternative route. It’s called the Advantage program.

To join the Advantage program, for an annual fee of $29.95 and a 55% discount off your list price, you are permitted to send five copies of your book to the Amazon warehouse and keep your red button. Oh, wait a minute…you didn’t price your book with the 55% discount factored in? Hmmmm…let’s run some numbers. Your book is $15.00 minus the discount of 55% ($8.25). So now your gross profit is $6.75. Production costs are $3.83 (which incidentally, you will be prepaying plus the shipping to the warehouse). So your actual net profit is $2.92 per book. But darn, you paid that pesky $29.95 already. That’s an overhead cost which needs to be recouped. So dividing the $29.95 among the five books sent to the warehouse is $5.99. So now you actually have a net loss of $3.07 per book for those five books.

And we would think there is a question of whether, since you are granting (however involuntarily) a 55% discount to Amazon, if you will be required to grant it to all other book stores, virtual or otherwise, in order not to violate the Anti-Price Discrimination Act. (Sorry, we don’t know the answer to that question, but it could be worthwhile to find out before trouble starts knocking at the door.)

A curious thought just came into our heads. They are demanding 55% from Advantage members and 48% from PODs using Booksurge. Is that 7% difference significant? Does it correlate to profit margins being built into the cost of each book printed through Booksurge? Is it what they figure you should be paying for the space your five books are taking up in their warehouse? Or is it just punitive?

Before leaping to sign on the digital line, work through the numbers carefully. How many books will need to be sold through Amazon’s Advantage program before it becomes profitable? Will you have to raise the price of your book to compensate for the higher discount? And if you do, will you be pricing yourself out of the market?

Writing isn’t just an art; it’s a business for everyone from authors to publishers to book sellers. Amazon has the right to make money, just not ALL the money.