Example of a $10.00 book being sold:
Retail price: $10.00
Wholesaler buys for $4.50
Wholesaler sells to bookseller for $6.00 (wholesaler makes $1.50/book).
Bookstore sells to consumer for $10.00 (bookstore makes $4.00/book)
One crucial bit of information unknown by most people is the unique arrangement between publishers, wholesalers and bookstores. Unlike any other sales and distribution channels the end purveyor of the product takes no risk!
That is because bookstores reserve the right to return any unsold merchandise for full credit. The wholesaler then returns the product to the publisher for full credit. The only one in the distribution chain that takes any risk is the publisher.
Bookstores can also order directly from a publisher if they wish to, generally asking for and getting the same 40% discount from the retail price.