The Fair Share model - a fair go for everyone
The Fair share models starts with the publisher setting a realistic, viable and fair retail price for the title. The publisher negotiates a fair author royalty and negotiates the distributor discount. The distributor then sets its base discount and volume discounts to book stores. Finally, books stores sell the title at or near RRP, focussing on differentiation from their competition through quality of service and specialisation rather than the “race to the bottom” of price competition.
The book trade has some very unfair discount structures, creating a playing field that is greatly in favour of the huge online book superstores.
What margin are you really getting? RRP less your discounted price is the standard calculation for margin. If your customers are able to find the title heavily discounted online with a quick search, then your realisable margin is more realistically your competition’s sale price less your discounted price.
Many of the titles available through Australian book wholesales & distributors have very poor realisable margins, in some cases we have even seen negative realisable margins. In that case the price to the book store from the wholesaler is higher than the price a customer can order the book for online with free delivery to the door.
The distributor sets one of the key factors that recreates a level playing field in the Fair Share model, the base to volume discount margin and the volume discount threshold.
Base to volume discount margin is simply the volume discount less the base discount and represents the advantage offered to the biggest players over the smallest. In the fair share model the typical volume discount is 37% and the base discount is typically 35%. The threshold for bulk discount is moderate, rewarding bulk purchase but not so high as to exclude all but the biggest online superstores. Very high base to volume discount margins and very high bulk discount thresholds have created a hugely stratified book retail sector. With just a handful of the top players having such huge discounts, smaller bookstores are having to battle to stay afloat.
The fair share model aims to level the playing field and return you a fair realisable margin. As an example, if you search for RetroSuburbia in Google, most sellers offer the title at or close to RRP so you can too. With a 35% discount on RetroSuburbia, your bookstore has a significant realisable gross margin of AU$29.75!
Now if we look at a book coming from a different supplier, such as The Art of Fermentation, you will see what we are talking about. Let’s say you get a 45% discount from the distributor after some good sales and hard bargaining. With an RRP of AU$67.95 that gives you $30.58 gross margin, but what’s the realisable margin? The example below shows it available for $49.25. That gives you a realisable gross margin of less than $12, effectively reducing your 45% discount to a 24% discount.
Our model is here to return you a proper realisable margin and give everyone a fair go.
One size does not fit all
Melliodora Publishing is setting the example with most of it’s own titles for the Fair Share model, but there are reasons why it’s not suitable for all of the titles that we offer. For example, the authors of The Art of Frugal Hedonism wanted to make their publication as widely available as possible. It is being distributed internationally and has made it’s way into the BIG online retailers. Fortunately our stance within Australia has helped to maintain it’s price.
Melliodora Wholesale also supplies titles from other Independent Publishers. They tend to use either Print on Demand (POD) or print themselves and work with other International Distributors. These approaches offer the publisher access to the BIG online retailers, who often discount their titles. This is why we offer larger discounts for these titles.
We are committed to building the Fair Share model and we are super excited to have your support on this journey. Together we can recreate a fair and sustainable book trade.