AddMe - Search Engine Optimization Book Printing Forum: Helping Publishers Minimize Inventory Expense

Friday, April 15, 2005

Helping Publishers Minimize Inventory Expense

It’s Tax Day. Authors and publishers seldom consider the tax implications of their inventory of books. This oversight is a strong selling point for book printers to exploit when discussing printing quantities.

Printing too many books creates excessive inventory. While the printing costs can be expensed in the year they are incurred, the inventory is capitalized over several years during that time period the author/publisher must pay taxes on the inventory. If the books sell, there is cash to pay the taxes. If the books do not sell, however, then it costs the author/publisher money to hold the inventory of unsold books.

The smart printer knows this and capitalizes on the fact when selling to small or mid-sized publishers. The print salesperson knows that unsold inventory is bad for the author/publisher. Consultative print salespeople work with the publisher to select the optimum print quantity—one that is cost effective to print and to hold as inventory.

On the surface, this looks like a bad deal for the printer. Typically, this results in printing fewer books on the initial print run. If the printer stops and considers the facts, however, it works out to be a better deal. First, the act of consulting with the author/publisher on the quantity builds rapport and trust between the printer and the author/publisher. Second, two shorter print runs mean the author/publisher spends more money with the printer than one longer print run. Why? Because there are two set-up costs on two short print runs instead of one single set-up cost on a longer run. Third, if the author/publisher finds the market for the book on the first print run, the second run is longer and the two print runs typically are for more books than the initial print run would have been—which results in more money being spent for printing.

Remind the author/publishers with whom you work of the tax implications of printing too many books. Consult with them on how to optimize the initial print run so as not to pay too much in taxes on the inventory they create. By doing so, you will help the author/publisher and yourself at the same time.


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