Friday, July 3, 2009
The disadvantage of Amazon Advantage
Amazon.com’s Advantage program enables authors and publishers to list and sell their products on Amazon.com alongside products from the big brand names.
After you agree to Amazon’s terms and are accepted into the program, you ship inventory to an Amazon warehouse. Advantage is a consignment program, where you get paid after Amazon sells one of your books. Payment is transferred to your bank at the end of the second month following a sale. If a book is sold on January 7, Amazon should pay you at the end of February.
Amazon monitors sales and sends email when it's time for you to ship them more books. You pay for the shipping and insurance and have to follow their rules for packaging and labeling.
Now for the bad news. Amazon’s standard purchase discount is 55%. You get 45% of the List Price. That 55% may sound OK to you because it’s the same percentage you’d give to a distributor and bookstore.
With Advantage, if a book costs you $4 to print and Amazon sells it for $20, they pay you $9. After you deduct the cost of shipping and insurance, you are lucky to make $5 - $7 on a book.
On the other hand if you have Lightning Source print the book and ship it to Amazon’s customers as orders are placed, Amazon keeps just 20% ($4) and you keep $11 after the cost of printing and shipping. (Lightning's shipping expense is built into their printing price.)
Advantage may make sense if your sales are high enough to justify ordering large offset print-runs of your books which will cost less per-copy than POD digital printing.
However, most self-publishers are better off with POD and will have a big advantage if they don’t use Advantage.