Whenever the subject of discount comes up in a bookseller discussion group, back come a wonderful range of opinions and advice. Most of it being the ‘it works for me’ variety, but of such a mixed message that any newcomer must be left wondering how on earth one can make any sense of it.
This article is an attempt to clear the thinking on this thorny subject.
Of course, you Americans are part of the problem: – not content with over-tipping our taxi drivers, you mess up our discount structure too!
From time immemorial, the accepted trade discount in Britain was 10%. Somehow, our transatlantic cousins seem to have crept up to 20% in some quarters, but we will leave that to one side at the moment.
The key point about this discount was that it was TRADE and it was RECIPROCAL. It was referred to as ‘TWC’ – Trade, With Card. It was therefore offered only to genuine fellow traders – not collectors, amateurs, or poseurs. To qualify, you had to be a member of a recognised book trade association such as ABA or PBFA, or be listed in one of the bookdealer directories such as Shephards, Skoob, Coles, or even the memorable Drif’s guide. Or at the very least, to produce an acceptable business card or catalogue.
The arrival of the internet has blurred these lines considerably, but that is no reason not to have standards and stick to them.
Why bother, you might ask?
(Once again I have to give the health warning that I seem to have to give with all the articles I write for the IOBA – if you are a ‘bookdealer’ for any of the following reasons, do not bother to read on – this article is not for you:
I’m lonely, and need the emails and ‘contact’ that my ‘business’ gives me.
I’m just doing this for fun.
Its only pin money and my day job is my real income.
I love books and I don’t care whether or not it makes money.
But if you are serious about trying to run a business, read on.)
Why not just increase your prices and give discount to anyone who asks? (And rub your hands with glee when they don’t ask.)
Well, for one reason, it is not FAIR.
Secondly, it tends to make your books overpriced. And, most importantly, it encourages the culture of haggling.
Haggling in itself is fun, but as a business practice it is time consuming and therefore expensive. Every time you have to negotiate a price, the dollars or pounds are going out of the window – not only are you having to give a discount, but it is costing you money to do so!
Or why not keep your prices level but give a discount whenever the customer asks or insists?
Once again, because it is not fair. But more importantly, because it eats into your margins, both in time and money. And the more you encourage this sort of haggling by caving in, the more difficult you make it for yourself in the future. Whereas I do not care too much if you struggle to make a profit because of your own stupidity, I do care about the effect it has on other more sensible dealers – who strive to run a fair discount policy and are constantly undermined and have their time wasted by customers expecting a discount for no good reason beyond that they asked for it.
So what is a fair discount policy?
One way is to give no discount whatsoever.
This has many advantages and is certainly easy to administer. But it does not encourage trade. Nor does it reward genuine major orders or regular clients.
Another way is to establish straightforward rules – and stick to them:
A fixed reciprocal discount (in our case, 10%) to genuine fellow dealers, to be offered whether or not it is asked for. (And hope/expect to be given the same treatment if ever you order a book from them.)
A quantity discount whenever an order qualifies for such a discount – again, whether or not it is asked for.
An education or library discount whenever the institution qualifies.
An ongoing quantity discount to proven major buyers.
A special negotiated discount for a significant major order.
No discount for any other reason whatsoever!
‘Genuine fellow dealers’?
Set your own standards, but our criteria goes like this: Trade discount – a note to dealers:Although we operate the usual 10% reciprocal trade discount to accredited fellow dealers for our main catalogue range, this does not extend to the ‘Bargain Book’ section (the under £10 range) of our catalogue. Books from this range are strictly net.Important – trade accreditation: We require ONE of the following references: EITHER (1) direction to a trade directory (Sheppard’s, Cole’s, Skoob, PBFA, IOBA, etc.) where you are listed, OR (2) the URL of a site where your catalogue is listed, OR (3) A scan of the cover of a recent book catalogue that you have issued.
We regret that without one of these references, we will be unable to offer trade terms.
All right, you Yanks, give me 20%, but don’t expect it to be reciprocal!
If you do decide to adopt a solid discount policy in some similar fashion to the above, how do you handle those customers who ask ‘What’s your best price?’
The answer is to treat them in a courteous, friendly, but firm manner – they are still potential customers and it is not their fault that others have encouraged haggling in the past.
Our stock reply goes along these lines:“Long ago we had to decide whether we should inflate our prices so that we could ‘give’ a ‘discount’, or work from a straight margin. For better or worse, we chose the latter course.
I’m very sorry we cannot help in this instance.”
Quite apart from this being fair to all (a concept on which I am very keen), in practice I have found it to be effective – as often as not the customer proceeds with the purchase and accepts the clear guidelines that have been laid down. ‘Sorry we cannot help in this instance’ seems to increase the appetite to purchase, not diminish it!
On a few occasions, just as an experiment, we have tried the other tack – giving in to an unjustified discount demand/request and offering the book at the price the customer wanted. The astonishing result of this experiment was less finalised sales than refusing to reduce the prices, which gave much food for thought and helped solidify the advice being offered in this article.
Selling books on the web at any old price is easy – any fool can do it and many do. But SUCCESSFUL book dealing (i.e. selling books in enough volume and at a big enough profit margin to make a proper living), whether on the web or via a bookshop, is quite a skilled and complicated business. A sensible discount policy is only one of a myriad of things you have to get right, but it is a very good foundation stone to lay before tackling other issues.
If you think that selling your books at any price is more important than maintaining your profit margins, keep on doing it your way, but don’t blame me if you join the many moaners that I see on the book discussion groups complaining of their lack of profitability.
But for those who have followed this complex argument to the end, I thank you – If I have convinced just a few of you to tighten up and clarify your discount practices, I will be well pleased – welcome to the professionals.
Having had a surprisingly large response to my article ‘Penny Selling’ in the last issue of ‘The Standard’, I intend to talk further on pricing and profitability next issue – if I’m asked back!
Stuart Manley, co-owner, Barter Books, Alnwick, Northumberland, England http://www.barterbooks.co.uk