How much will it cost?
Sales commissions are usually paid on “ledger business” in the territory, i.e. all shipments made to bookstores, book wholesalers, and other qualified accounts in the states covered by the sales group. Usually exempt from commission are sales made directly to libraries, institutions, individuals, and premium or catalog accounts, unless the rep has been involved in presenting the product and making the sale.
“House accounts”—wholesalers, large chains, or special accounts that would normally be commissionable—are sometimes reserved by the publisher. This practice is not acceptable to independent reps but an adjusted commission may be negotiable in special circumstances.
In the case of customers who do business in more than one territory (chains, national wholesalers, major specialists, etc.) several options for the payment of commissions exist:
- Rep account. Commission paid to territory where books are billed.
- Shared account. Commission paid to territories to which books are shipped.
- Parity account. % paid to bill-to territory and % to ship-to territory.
The growth of national wholesalers, chains, and superstores as sources for books and the increasingly centralized buying for these sources raises sensitive issues for publishers and their reps. Reps who service these large accounts need, of course, to be compensated for their detailed and time-consuming work in selling to multiple buyers in many subject categories. Reps in the field in other territories need to be compensated for the business they generate in independent bookstores that is channelled to national wholesalers.
The absolute need to get a title in the store—bought, on the computer database, displayed in order for a sale to happen and begin the process of re-ordering—is best accomplished by a personal sales call and face-to-face, title-by-title presentation to a buyer. All subsequent purchases of that title, regardless of source, follow from the success of the initial sale by a rep. It is essential that independent reps be adequately compensated for their services in this process and credited with commissions on purchases through wholesalers as well as direct purchases from the publisher.
Wholesalers who furnish data on shipments made to various states or bookstores and reps who secure and submit data on purchases made by their accounts from wholesalers outside their territories are supplying sales information that can be the basis for commission payments. Clause 5 of NAIPR’s sample letter of agreement suggests a format for compensation for indirect purchases channelled through wholesalers or other sources—books that are not shipped and billed directly from the publisher.
Sales commission rates fall in the range of 10% to 15% of net invoice value on shipments made to retailers and 5% to 10% on shipments made to wholesalers. Commission rates are higher (15% to 20%) on calendars and other non-book merchandise for which no royalties are paid. Rates may be adjusted by mutual agreement when special sales at discounts above 55% are made.
Sales commissions already paid on merchandise that is returned or on accounts that are written off are deducted from commissions due. Independent reps try to avoid overselling or selling to accounts with doubtful credit since, ultimately, no commission is retained. The result, though not foolproof, is a useful and natural control for the publisher in the troublesome areas of returns and bad debts.
Cost cutting is always important in book publishing where many increasing expenses are beyond the publishers’ control. The judicious use of independent reps (with variable expense for their support in the field, for their travel and entertainment costs, and without the administrative and financial burdens of insurance, incentives, pension and benefit plans) can reduce sales cost.
NAPIER’s Sample Letter of Agreement (if not enclosed here) is available on request. Many reps have their own recommended agreements that may differ in several details from the NAIPR draft which is only intended to raise some of the points that need to be covered in such a contract.