You misinterpret their rules entirely. If you price the book at cost, of course you’re going to get no royalties. I’ve published ~200 books with Lulu (for myself and others) and have made money on every sale. Compare the profit from a book sold by Lulu to the profit on the same book sold by Amazon. It’s about the same. What “retail print” means is that your book is pushed up to Ingram who list it in their catalogue and take a 10% commission. The book is then taken by Amazon, and Barns and Noble, and Baker and Taylor who take an additional 40%. So right off the bat there is a 60% cost to any book sold retail. Additionally, if you publish through Amazon, then 100% of your sales will come from Amazon. No bookstore will touch it, no book store will order it, no book store will allow you to do readings in their store. Can you blame them?
It’s no wonder you were asked to take your story down. It is full of misinformation and did enough damage to Lulu’s reputation I wouldn’t be surprised if you got a visit from their lawyers. In the future, think before you mouth off.
