Sell-in, Sell-through, and Earn-out

*and Returns

Kind of a dry post today so I've included a YouTube video below for your entertainment -- "NaNoWriMo in 3 Minutes." (Just in case you aren't doing NaNoWriMo and/or you've been living in a deep dark cave somewhere and don't know what it is.)

Anyway, today I want to explain some terms that sometimes get confused: sell-in, sell-through and earn-out (and I'm reluctantly throwing in returns at the last minute.)

SELL IN: This is the number of copies ordered by retailers (or any other entity) prior to publication of the book. Sometimes this number is called the "lay down" and you'll hear publishing types say things like, "What was the lay down?" The number tells you how many copies are available to consumers on the day the book first goes on sale. The sell-in figure helps to determine the initial print run.

Of course, the publishing industry has this lovely little tradition called returns* so the sell-in could be just the beginning of your skyrocketing sales figures... or it could be a vastly optimistic early sign of your book's success, only to be decimated by reality, otherwise known as:

SELL THROUGH: Also known as "net sales," this is the number of books consumers actually purchase. The number is calculated and recalculated over the life of the book, and always takes into account the returns to-date. Sometimes you'll hear people say things like, "The sell-in was terrific but the sell-through was disappointing."

So to simplify: Sell-in refers to the number of books placed in bookstores. Sell-through refers to the number of books consumers carry out of bookstores.

EARN OUT: This refers to whether or not your book sold enough copies for you to earn back the advance you were paid by the publisher. (See last Tuesday's post on How Book Royalties Work.) To use this term in a sentence (verb form): "Did your book earn out?" Or to use it as a noun: "What's the earn-out on that book?"

*And what's the deal with returns anyway?

Basically the deal is that "returns" are probably the number-one lamented aspect of the publishing industry, blamed for everything from making it difficult to have a profitable business to global warming and possibly even swine flu. (Okay, maybe not those last two.)

Bookstores can return unsold books to the publisher and get full credit on their account. So this is why your sell-in is one thing, and your sell-through is something else entirely. If your book is doing well, the bookstore will sell out and order more. If your book isn't selling, the bookstore will package it up and send it back.

The tighter a bookstore's finances are, the quicker they'll send back a book. Some bookstores will only give a book a month on the shelf to show some significant sales (however they define significant) and if it doesn't measure up, back it goes. In tough times, bookstores occasionally return books for credit rather than paying their bills with actual money, setting into motion a devastating financial spiral for many publishers (who actually need cash to run their business, not a warehouse full of unsold books).

Thus ends my publishing vocbulary lesson for today. Now here is some NaNoWriMo silliness.