One of the growing clichés
in independent publishing is that getting a book to market is cheap and easy.
The reality can often be quite different, although it is certainly cheaper to
go out on your own than it was five or ten years ago. The problem is I haven't
seen many stories that define exactly what "cheap" means. Many of the
comments on my last essay (See How
to Find an Editor Without Going Insane) revolved around the cost of my
editor. Since there might be a shortage of independent publishing economics out
there, it makes sense for me to expand my costs beyond editing to the entire
publishing process for my upcoming book Smooth
Operator.
Disclaimer: Prices may vary. Past performance does not guarantee future
results. Prices do not include tag, title or taxes. Check with your local
dealer for details.
The Elements of Book
Publishing
When I was in house counsel for an anime and manga company, the price we paid to sell comics and video (what real business people refer to as the cost of goods sold) were divided into five parts; acquisitions, production, advertising, sales and finance. I decided to break my costs down the same way.
When I was in house counsel for an anime and manga company, the price we paid to sell comics and video (what real business people refer to as the cost of goods sold) were divided into five parts; acquisitions, production, advertising, sales and finance. I decided to break my costs down the same way.
Acquisition in this context means the creation of the
manuscript. I set this cost at $0, even though there is a significant number of
man hours put into the process (See Building
the Better Novel series of posts). In addition there is an associated opportunity
cost for lost wages that I could have made doing something else. I'm not smart
enough to figure what that cost is, so I set it at zero to keep things simple.
Production has four costs:
- Editing: $1,200 from Create Space (See How to Find an Editor). Other editors charged per word or per page for a 75,000 word manuscript and most of the prices were in this range.
- Cover Design: $10 I do my cover design in house for the most part (because it's cheaper and kind of fun to do), but I get royalty free images from istockphoto.com and $10 covers the licensing cost of a decent sized image.
- Formatting: $40 from a program I called Jutoh that can create e-books in most major formats. Because I plan to use this program for all my books, I could amortize the cost across all titles, but for the sake of this exercise, I'll count the entire cost here.
- Printing: $250 Create Space offers printing on demand, but there is an initial set up fee for this service (Note: if you only release an e-book, this cost is zero. I'm only adding it in because vanity compels me to put my books on my shelf.)
Advertising has two costs:
- Online Advertising: $50. This will be split between Google and FB ads for a week after the launch of my book to specific demographic groups that are interested in my genre (See the Secret Struggle for the Magic It)
- Press Release: $60 through pr.com on the day the book launches. Again this will be a targeted release that will improve the SEO of the book as well as notify the relevant journalists and bloggers.
Sales: $0 When people say independent publishing is
cheap, this is what they mean. I'm planning to use Kindle Direct Press for at
least one cycle, but even if you use Smashwords, Kobo or Nook, there are no
upfront costs for registration, distribution, shipping, storage, returns, or
all the other little costs that publishers normally deal with. Of course,
online book outlets take a significant percentage the revenue from each sale,
but everybody has to eat somehow.
Finance: $0 I have a separate account for my publishing
company and there are fees associated with maintaining that, but I don't factor
that in here because I'd be paying those fees either way and this is
complicated enough already.
Total Cost to publish Smooth Operator: $1,600
Of course, each of these
costs could be boiled down to almost zero or expanded to tens of thousands of
dollars depending on the writer. The key is to find a cost that fits within
your budget and helps you create the best book possible.
Profit, Loss and
Breakeven
Once I know how much my book costs, I can figure out how many books I need to sell for it to be financially successful. A book breaks even when the number of books sold equals the cost of making the book. When I was at Marvel, they had a complicated spreadsheet (called a P&L or Profit and Loss statement) that laid this out in great detail. My method is similar, but not as fancy because again, my brain capacity is limited.
Once I know how much my book costs, I can figure out how many books I need to sell for it to be financially successful. A book breaks even when the number of books sold equals the cost of making the book. When I was at Marvel, they had a complicated spreadsheet (called a P&L or Profit and Loss statement) that laid this out in great detail. My method is similar, but not as fancy because again, my brain capacity is limited.
The formula is simple: Breakeven number of books
= Revenue per book/ $1,600
If my book sells for
$2.99 and my share of each Amazon sale is 70%, I make about $2 per book. If
that's true, then I need to sell 800 books to breakeven. Every book sold after
that is pure profit that I can horde in my basement and swim around in like
Scrooge McDuck from Duck Tales. It also follows that the more I can reduce my
costs the fewer books I need to sell to break even. A higher per book price
also reduces that number, but you don't want to set the price so high that readers
won't take a chance on you.
Business vs. Pleasure
Now, I don't have a basement. And I won't be swimming in a pool of money from the sale of Smooth Operator. In fact, the chances that the book will breakeven are quite small. But that's OK. By definition, independent publishing is not a cash cow. If I just wanted to make money, I'd invest in the defense industry or start a meth lab. There are many other reasons to publish besides money (See The Other Benefits of Independent Publishing), but that doesn't mean the profits and losses don't matter. Understanding the financial aspects of independent publishing are just as useful as learning to build web pages or understand social media. Publishing can become a vehicle for broad types of learning, even if you can't make a swimming pool out of the profits.
Now, I don't have a basement. And I won't be swimming in a pool of money from the sale of Smooth Operator. In fact, the chances that the book will breakeven are quite small. But that's OK. By definition, independent publishing is not a cash cow. If I just wanted to make money, I'd invest in the defense industry or start a meth lab. There are many other reasons to publish besides money (See The Other Benefits of Independent Publishing), but that doesn't mean the profits and losses don't matter. Understanding the financial aspects of independent publishing are just as useful as learning to build web pages or understand social media. Publishing can become a vehicle for broad types of learning, even if you can't make a swimming pool out of the profits.
As always, please let me
know what you think of my random rambling.
Have fun.
Gamal
Gamal