How to manage sales channels and masterchannels

What are sales channels?

Sales channels are records in Consonance that contain default information about the costs you have agreed with distributors, sales agents and authors, by geographical area, for various product types. The fields include the average distribution rate, the sales rep rate, the average royalty rate and the default royalty basis. Storing these defaults is like setting up a template.

Relevance to sales estimates: discounts and currency

When you add a sales estimate, you only need to say which product you are forecasting for, its sales channel, and the forecast quantity. In parallel with the sales profiles, Consonance can use the default discount and default currency on the sales channel to build up a detailed monthly volume and value forecast.

Relevance to costs: royalties, distribution charges, sales commissions

In the forecast column of the work profit and loss, Consonance uses your channel defaults to calculate the forecast costs of royalties, distribution, and sales commission.

Relevance to royalty calculations

Consonance calculates royalties at channel level, and can print channel-level detail on your royalty statements.

What are masterchannels?

You must add each channel that you create to a masterchannel. For example, you might name a masterchannel ‘All UK’, and have it contain ‘UK Home’, ‘UK Trade’, ‘UK Concessions’ and ‘UK Gratis’. This hierarchy matters because you’ll pay different royalty rates for different channels.

How to decide what sales channels to set up: consider your sales reports.

A data source needs to exist for your sales channels. Consonance calculates royalties at channel level, but only if you import your sales tagged up with the channel that they belong to. This means if you create a channel called ‘US Sales’, you need to be sure that you want to report royalties for ‘US sales’, and that you are able to import sales from ‘US sales’. If you want to be able to calculate royalties at a lower level, for instance ‘US Concessions’, ‘US Trade Shows’, ‘US Author Gratis’, then firstly create those channels, but also make sure you’ll be able to import sales tagged up accordingly in the future.

If you have different royalty rates for different product types, you need to set up a matrix of sales channels that accommodate the variations. See the table below for an example.

Sales channel Product types Royalty rate Recommended sales channel name
Home Paperback 10% Home Pbk
Home Hardback 12% Home Hb
Home ePub, Mobi, PDF 50% Home Digital
USA Paperback, Hardback 10% US Print
USA ePub, Mobi, PDF 50% US Digital
Europe Paperback, Hardback 10% Europe Print
Europe ePub, Mobi, PDF 50% Europe Digital

How channels work with royalty specifiers

A royalty specifier is something like 7.5% of net receipts. Read up on them here. If no royalty specifier is present for a sales channel, then the specifier for the parent master channel is used. If there is no specifier present for a master channel, then the specifier for the product is used. It is also possible for a specifier to inherit particular attributes from a parent, so we can modify the royalties for a particular channel in respect of, say, the base rate, while also using the same date escalator steps as defined for the product.

Forecasting

Consonance assigns sales to a channel, which are themselves assigned to a masterchannel. A masterchannel might be called ‘eBooks’, and it might have multiple channels assigned to it, named ‘Direct eBook sales’ (sales through your own website, if that’s something that you do), ‘Vearsa’ (sales through Vearsa), and ‘Amazon Kindle’ (…).

The royalties payable on any ebook sale might always be the same – 25%, for example. The costs associated with each sale are different, though, because Amazon and Vearsa might take a different commission, and your own website does not (or maybe does, if you had spun off your website hosting into a different company that was then charging you a commission, for example).

So, each sales channel can have its own forecasting configuration, with respect to the following:

  • Discount (e.g. 45%)
  • Percentage of sales that are subject to commission. (e.g. 30%)
  • Sales commission on those sales (e.g. 10%)
  • Distribution charges (e.g. 12%)
  • Pristine returns rate (e.g. 15%)
  • Restocking fee (e.g. GBP 0.80)
  • Average royalty rate: (e.g. 15%)
  • Whether the royalties are usually based on net or list price.

Therefore when someone forecasts sales of 1,000 books with a list price of GBP 9.99 through a particular sales channel, the forecast is as follows.

  • Gross revenue: 1,000 x 9.99 x (1 - 45%) = GBP 5494.50
  • Net sale revenue: (1 - 15%) x 5494.5 = GBP 4670.33
  • Of those the commissionable sales: 30% * 4670.33 = GBP 1401.10
  • The sales commission would be: 10% * GBP 1401.10 = GBP 140.11
  • The distribution charges: 12% * 4670.33 = GBP 560.44

Actuals

When you specify actual royalty rates for a contract, do so for the following:

  • Any sale of a particular product (for example, an eBook), or
  • Any sale within a particular master channel (for example, ‘Export sales’), or
  • Any sale within a particular channel (‘Direct export sales’).

Print product sales are more complex, and depend on the sales channel. You may need separate channels/master channels for the following.

  • UK trade sales through your distributor (e.g. royalties 10% with discount escalator at 50%)
  • Export sales through distributor (e.g. 7.5%)
  • Export sales on consignment (same royalty as export sales, different forecast costs)
  • Special sales / special editions (e.g. 7.5%)
  • Direct sales through the website

Create a sales channel

Go to Settings > Configuration > Channels to add a new channel, and click the Add button. Fill in the name of the channel.

Delete a sales channel

Go to Settings > Configuration > Channels and click Delete in the last column for the channel you want to delete.

You may get a notification that you Cannot delete record because dependent estimates exist.

Whenever you see the P&L page for a work, an empty estimate record is created for you to fill in. You see those empty estimates when you click on the plus button next to sales estimates and you are given a grid of all your sales channels, and all your products. You don’t delete these system-generated sales channels if you have set up these estimates, even if they are zero. Get around this by going to the list of all your estimates. Go to Estimates. Delete all the zero-value estimates there. Once you’ve done that, go back to the sales channel page and delete the one you don’t want.

Edit a sales channel

Edit many aspects of a sales channel directly from its list page. Go to Settings > Sales channels and fill in the fields to replace data.

How does Consonance handle changes to sales channels?

If you change the discount percentage on a channel, then the following happens on the existing P&Ls in the system.

  • Existing sales estimates will not change. When you add a sales estimate quantity, the system uses the channel discount to calculate the money amount. This is not recalculated each time the P&L is accessed. If you were to amend the channel discount, and then amend the sales estimate quantity, then the new channel discount will be used to calculate a new money amount.
  • Forecast variable costs that are calculated on the fly, however, will change. Changing the Distribution, Sales commission, Royalties rate, Returns numbers on a channel will change the forecast column on every historical P&L. The budget column will not change.