...my surprise over the increase in the shipping costs from a couple weeks ago to this is astounding…USPS media mail has increased from 3.95 to 5.90 for shipping one hard bound, so net increase of $4.95 over all.  And gas prices have gone down. . . .go figure.

Shipping expenses have always been a lingering demon in the book selling business.  Profit margins on books are so small for bookstores anyway, so controlling shipping is an easy way for them not to lose profit.  Selling you fancy book markers, over priced lattes, book lights, biscotti, greeting cards, candy, pretty note cards, bags of coffee, and other non-book items also help make up for the loss because those items have a higher profit margin.  A majority of publishers offer free shipping across the board or if a bookstore buys a certain volume they are eligible for tier discounts on shipping costs.

Most bookstore chains have their own collect and third party accounts set up with their shipper of choice, usually UPS.  They ask vendors to ship against their account numbers because they have contracts in place with UPS that give them huge discounts based on the volume of business they do and for shipping exclusively with UPS.  This is why Amazon.com can offer free 2 day shipping right now. Barnes & Noble is also one such book seller who demands free freight from its vendors or asks that they ship via their third party account.

For the rest of us, we are subject to UPS fuel surcharges.  UPS now tacks on service charges to their daily rate based on the cost of fuel.  But as LK mentioned, the cost of fuel has steadily been dropping, but I seriously doubt the cost of shipping drops with it.  You would think the post office would be cheaper and in some cases it is, but with the rising use of email/computers these days to communicate and pay our bills, the use of the postage stamp has dropped tremendously.  Therefore, the price of shipping with the USPS has gone up across the board.

Shipping is also another way a POD company like Lulu can pad its production expenses.  While the weight of a book and its packaging should ultimately define how much you pay in shipping, most companies have made up their own shipping tier based on the number of books you are purchasing taking into account the actual cost they have to pay the post office while adding their own service charge to it.  $4.95 for 1 book via media mail, $6.95 for 2 books, $8.95 for 3 books, and so on.  I did a test order at www.usps.com using LK’s zip code for a 2 pound package (which is probably way more than the weight of her actual book in an envelope).  Priority Mail (about 2 days in transit) was only $4.75 if I ship using the website; it’s $4.80 at the physical post office.

Lulu is charging $4.95 for media mail which is the slowest rate (about a week in transit), but the post office shows only $2.58 for media mail shipping on my 2 pound sample package.  That’s a $2.37 increase if LK’s package even weighs 2 pounds!  This leads me to believe that, give or take a bit for the weight, Lulu’s “hidden service charge” is about $2.00.

If Lulu ships at least 200 single book packages a day via this method (I’m sure it’s more.), that’s an additional $400 in the bank for them.  Keep in mind, we haven’t factored in the cost of packaging materials and payroll, so that extra $400 comes in real handy.  By the way, the packing materials for Priority Mail at the post office are “free.”

And overall, that’s why the Ebook is slowly catching on.  There are no packaging materials and fuel surcharges involved in transporting a book file from a company’s database to your laptop, home computer, or Amazon.com Kindle Ereader (at least, not for now).  We save trees and reduce our carbon foot print as well due to it being paperless. Unfortunately, it’s the demise of the physical paper book which means it’s the fall of the brick and mortar bookstore.  We all know indie bookstores are closing every day.  There are already publishers out there who sell nothing but Ebooks and give authors 35% royalties because these expenses, like shipping, practically don’t exist for them so it doesn’t cut into their profit margins.

So why does this matter?  Because overall the POD prices (for production and shipping) which are  covered by the author are going to continue to increase, which means less profit for the author.  However, if the Ebook market continues to grow with it, traditional publishing, physical bookstores, and hard copy books will be a thing of the past.  Don’t believe me?  Read this. Or this. Or even this.