HI New Sellers - and anyone else who is confused and wondering “Why do people sell books for a penny? How do they make any money?”
As an homage to Caramora, the originator of this thread - I would like to include her post here:
About twice a week a question is posted here as to why people sell books (or other items) for a penny. They ask, “How can sellers make any money on it?”
Many of us have answered this question countless times, but none has answered better and clearer than Tom Stabler did back in April, so I am reposting his answer to this question here.
Any other penny book commentaries can be (re)posted here too. I might dig up a few of mine and repost them here as well (if I’ve added further comments in them to questions about penny selling that some up all the time.) Others may want to do the same.
This does seem to be a question that everyone has at one time or another.
Caramora
This question comes up about every two weeks, and there are lots of threads discussing it.
(Updated numbers include Postage Rate Increase May 11, 2009.)
In brief:
A seller lists a book for $.01
Amazon collects $3.99 from the buyer and gives $2.66 ($.01 + $2.64 shipping allowance) to the seller. (The $1.35 ‘closing fee’ is subtracted from the shipping allowance by Amazon)
The seller is a ProMerchant, so doesn’t pay the $.99 fee (but does pay $40 per month to be a ProMerchant).
The 15% fee on 1 cent is zero.
The seller pays $2.38 or $2.88 in postage for a 1 or 2 pound package (or less, if it is very light weight and can go First Class. Much less if the penny seller is high volume and uses Bulk Mail).
The seller cost for the book is zero, because he got it for free somehow.
The seller used recycled packing materials, so those cost nothing, too.
The seller ends-up with $.27 (if it’s 1 pound media mail) in a domestic shipment (a bit more if it’s mailed using Bulk Mail).
The seller is happy with his “profit”.
Amazon ends up with $1.35 from the shipping.
Amazon is even happier than the seller.
An add’l money saver for the large volume sellers is to use Bulk Rate Mail, which can lower their shipping cost to approx .80 per package. That is for large operations though, the number of pieces mailed at one time are in the hundreds.
Please add relevant information if you have it, or relevant discussion about penny books.
Please also remember that people who sell penny books are sellers who have simply selected that as their business model. Hating on them and arguing like mad here is not the purpose of this thread. I don’t happen to be a penny seller, but I see the value in having this thread for informational purposes and I wish all sellers the best no matter which business model they are using.
If this thread prompts other issues that you’d like to discuss, please start a new thread for those. It will help if we can keep this one clean and narrow it down to penny sales discussion.
Happy Sales,
:> earthmom
Re: *** WHY PENNY BOOKS? HERE'S THE ANSWER! (Updated 5/11/2009) ***
Posted: May 10, 2009 11:31 PM in response to: earthmom22
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marilynsattic
[Read] Why Penny Books are an even worse idea for small sellers after May 11th
Posted: May 10, 2009 8:26 PM
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For your average 2# hardcover:
For Non-Pro-Merchants:
.01 + $3.99 = $4.00 charged to customer
$4.00
-$1.35 variable closing fee
-$0.99 non PM fee
-$2.77 postage equals
a loss of $1.11–yes, you are paying Amazon $1.11 to take the book off your hands (and that doesn’t even include shipping envelope, book acquisition costs, or labor)
For Pro-Merchants
$4.00
-$1.35 variable closing fee
-$2.77 postage equals
a twelve cent loss (you are paying amazon .12 to take the book off your hands), and again, that doesn’t include the cost of the shipping envelope, the book or labor.
For a 1# book, it’s only a nominal improvement:
Non-PM:
$4.00
-$1.35 VCF
-$0.99 Non PM fee
-$2.38 postage equals
A seventy-two cent loss per book (paying Amazon to take books off your hands).
PM:
$4.00
-$1.35
-$2.38 equals
A whopping twenty seven cents profit, from which you have to deduct book acquisition cost, shipping envelope, and labor.
ALWAYS RUN THE NUMBERS BEFORE SELLING ONLINE and make sure you know what your bottom line price point is. Otherwise you won’t be in business very long.