Thursday, July 30, 2009

Economics of an Independent Bookseller: Sales and Salaries

Have you ever thought it would be fun to own a bookstore? Did you think it would be a good way to make a living? Many people say "yes" to the first question, and hopefully nowadays people have no illusions about the second: you may be able to make a living as an independent bookstore owner but you won't get rich.
If you want some details on the finances of an independent bookstore, read this Washington Post article about Politics & Prose, one of the country's most respected independent stores. The owners were quite frank about the money:

  • P&P grossed $6.8 million last year
  • The average Barnes & Noble grossed $6.2 million last year
  • About 8,000 people pay $20 a year to be a "member" at Politics & Prose (this entitles them to a 20% discount on certain books)
  • 50 full time employees make $9-10 an hour plus health benefits
  • Some managers earn $40,000 a year
  • The two co-owners split $173,000 in salary and bonus
  • After covering all their expenses (merchandise, payroll, marketing, etc) their net profit was $73,000
  • Fortunately, the two store owners also own another building nearby, which they rent out for an annual profit of $18,000 each

So in this case, being the owner of an established, popular independent bookstore (plus a little real estate) can earn you about $105,000 a year-- not too bad, but you won't get rich. And with online shopping and electronic books growing ever more popular, running an independent bookstore isn't going to get any easier. But if you love books, and don't mind the hard work that is the flip side of the autonomy that comes with running your own business, there are definitely worse things you could do!


Anonymous said...

Uhhhhh, I lived in the DC area for ten years, and $100K+ sounds pretty rich to me. It's a lot richer than $10/hour! said...

It seems nowadays that the amount of money you make in a particular business is an inverse correlation to the amount of competition you have. Once the chain stores (like Chapters/Indigo in bookstores) move in, the income will drop significantly for any independent stores. Once you factor in the online stores like Amazon, it becomes a business opportunity that doeesn't interest me much.

Little Dough Girl said...

I always thought this would be something fun to do in "retirement." Thanks for the low down. My degree is in English so having a book store has always been on my mind.

mOOm said...

So is the $73k in profit part of the $173k in salary and bonus? i.e. they paid themselves $50k each salary and the profit is what was left after that? Also the article says they earn $4,000 a month from subcontracting the coffee shop? Is that then $48k of the profit? This store must be similar in size to one of the chain ones. I'd guess that there are some economies of scale going on here and if you cut the coffee shop and get much smaller you aren't going to make much profit and maybe not even the $100k in salaries for the owners...

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bugbear said...

Hmmm-Politics and Prose is one of the best, and most recognized, independents in the country, with a good location in a major metropolitan area. There are probably only 2 to 5 other independent bookstores as significant(and with as much business) as them in the entire Unites States--Powell's and The Strand are two that come to mind.

If the 2 owners are each taking home 80K plus, they are doing probably twice (or more) as well as most independent bookstore owners.

I also am curious about the distinction between "profit" and owner's salary. I'm guessing that the 70k profit is above and beyond the 170K that the two owners receive in salary (which is an expense, and goes to the corporate or llc cash reserves. Of course, the owners could take this 70k as salary at some time in the future if they deemed it appropriate.

It's much sketchier for the smaller stores.