Have you ever wondered how some stores can sell a high profile book, such as Harry Potter at a steal, while others charge full price? The answer lies in the practice of using the book as a Loss Leader.

What is a Loss Leader?

When you enter your local discount department store or buyers’ club, you see impressive displays of the latest hardback releases such as books by Robert Ludlum, Tom Clancy and Patricia Cornwell.

Of course, when a new Harry Potter is brewing, pride of place is reserved for King Harry. Even blockbuster authors like Ludlum, Clancy and Cornwell are usurped by the selling power of J.K. Rowling.

Loss leaders are sold at less than the cost price. Yes, the store is losing money on that book. This is not about books. It’s about store marketing. The rationale is that these books are such as draw, that people will come to the discount store to grab the book at the right price. While there, they will also buy other things on which the store is making a good margin.

Discount stores rely on high volume sales. The more people in the store, the more is likely to be sold. The marketing hype heralding a book such as Harry Potter, coupled with the risk of “missing out”, drives people to the store. So yes, Harry Potter can sell soup or detergent, or maybe even a washing machine.

Independent Booksellers

Independent Booksellers work on fine margins, and rely on a loyal customer base, many of whom they know by name. These customers depend on them for book knowledge, recommendations, personalised service, and a hand selected range.

When a new Harry Potter comes out, the bookseller is working on their usual discount structure. With high overheads and running costs, many booksellers explain that they cannot afford to sell at less than cost price, even to their regular customers. Interestingly, with the Harry Potter books, many independent bookstore owners reported good sales from loyal customers at the full price.

Support Your Local Independent Bookseller

Loss leaders are a fact of life, but don’t forget that your bookseller supports you all year round. If you don’t support them, you may find they are not there next time you need them. As a writer, mutual support, and a two way relationship with your local bookseller is key. You may consider the extra you pay once in a while, (as against baling out on your bookseller to grab a loss leader), is a worthwhile investment in your writing career.

One person I know snapped up what may be the cheapest Harry Potter around at a buyers’club. Even an independent bookseller would forgive a regular customer who could come away with the latest Harry Potter for… wait for it… four cents.

Now that is a loss leader.

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