All site content copyright 2009 Vault University, all rights reserved. No part of this content may be reprinted, reproduced or excerpted without the express, written permission of the author. 
I recently met a self-published author who seemed at first glance to be doing everything right and whose book is on track to sell 10,000 copies. The only problem is, by the time all those books are in the hands of buyers this author will have lost over US$32,200 and will have no idea how it happened. I’ve changed identifying details of the author and book for purposes of this lesson, but the pitfalls to which this author fell victim are still very clear.
The author, we’ll call him Jim, had an idea for a novel and decided to self-publish. Jim’s job gives him lots of exposure to consumers from all over the world, so he set up an online shopping cart early on and began pre-selling before the novel was even finished. He figured a typical book in a store sells for about US$20, so that’s where he set his retail price. Jim did a lot of community outreach as well as personal outreach, and by the time he was finished writing the book he’d pre-sold 5,000 copies. At US$20 a pop, that’s US$100K! Even after subtracting the online payment processor’s service fee of 3% ($3,000), he still stands to net $97K. Sounds terrific, right? There was only one problem: he’d not yet paid anything to have the book produced, printed or shipped to buyers.
Jim settled on a subsidy publisher I’ll refer to as Publisher X. Jim decided he wanted a top-quality book, so he opted for a hardcover publishing package. Publisher X charges a minimum of US$1000 for project setup on a hardcover book, plus US$12-25 per author copy (depending on quantity ordered). Jim wanted to get the maximum discount and already had 5,000 copies pre-sold, so he ordered 10,000 copies of his book at the author price of $12 each. Jim opted to pay an additional US$1000 for Publisher X’s add-on editing and interior layout/design service, and paid US$8500 for professional photography and design services for production of a wraparound, full-color dust jacket for the books. Jim’s total expense up to this point is US$130,500.
You’re probably thinking (as I’m sure Jim is) that when Jim sells those additional 5,000 copies, he’ll earn another US$97K and have US$66,500 in profit. Not so fast: Jim still has to pay to have those hardcovers shipped to him, then he must turn around and pay for packaging materials and shipping expense on every copy sold to get his books to his buyers. If Jim didn’t charge his presale customers sales tax on their orders, he must pay that government tax out of his own pocket too, but let’s cut Jim a break and assume he did charge for sales tax.
Hardcover books are heavy. If we assume Jim will pay about fifty cents per book—which is a lowball estimate, but let’s just go with it—to have them shipped from the publisher to his home, that’s US$5,000.
In order to ship the books to his buyers, he must package them in padded envelopes and pay for postage on each copy, and many of those copies are going overseas. If we assume Jim gets a bulk deal on padded envelopes so that they cost him just ten cents each, that’s still US$1000. But that’s nothing, it’s the shipping expense that’s going to kill any chance his book had of being profitable. Even if Jim uses book rate mail for shipping instead of first-class, he’ll pay US$6 per copy on average to ship the books domestically, and US$15 per copy on average for international shipping. Let’s assume only 1/3 of his buyers are international (3,300 of 10,000). The shipping and packaging expenses still work out to US$49,500 for international shipping and US$40,200 for the remaining 6,700 domestic shipments.
You should now be able to see why Jim’s book cannot possibly turn a profit. If he’s paying the publisher US$12 per copy to buy each book, plus fifty cents per book to have them shipped to his home, plus ten cents per book for padded envelopes and US$6-$15 to ship each book to his buyers, you don’t even have to take the US$10,500 he paid Publisher X into account to see he’s either just breaking even, or losing money, on every copy sold.
Let’s review all of Jim’s income and expenses on this book project.
| Item | Income/Expense |
| 10,000 books sold at US$20 each, minus 3% proc. fee | + $194,000 |
| Fees paid to Publisher X for setup, + add-on services | - $10,500 |
| 10,000 copies of book @ $12 per copy | - $120,000 |
| Shipping from Publisher X | - $5,000 |
| Padded envelopes | - $1,000 |
| Shipping to international buyers, 3300 copies @ $15 ea. | - $49,500 |
| Shipping to domestic buyers, 7500 copies @ $6 ea | - $40,200 |
| Total | - $32,200 |
Remember, this is assuming he sells all 10,000 copies of his book; he’ll be out much more than $32,200 if he sells less. Had Jim done some number crunching ahead of time, he could have made better choices, spent his money more wisely and turned a profit.
To determine what it will really cost you to self-publish, and how much you stand to earn on a book, you must calculate all of the following—ideally, before you publish:
1. Upfront costs
2. Author copy costs
3. Net “Royalty” per copy sold
4. Break-even point
Upfront costs include any fees you must pay your publisher or printing service provider for any or all of the following:
1. Registration/membership – some service providers require their author clients to sign up for website or service membership for a fee
2. Project set-up fees & publishing package fees – some outfits may charge a flat project set-up fee to everyone, then allow the author to select from a range of publishing packages at different prices; others may simply charge a publishing package fee. If the two fees are separate in your case, don’t forget to include them both in your upfront expenses
3. Distribution package fees – fees charged for getting your book listed on Amazon, distributed to brick-and-mortar stores, listed in book catalogs, made available to book clubs, etc.
4. Add-on service fees – optional services made available to you for a separate fee in addition to your selected publishing package; common add-ons are ebook publication services, dust jacket design and printing for hardcover books, advertising/promotion packages, etc.
5. Fees paid to professional service providers – if you’re paying out of pocket to hire an editor, cover designer, layout artist, photographer, or any other professional service provider, that expense is also part of your book’s upfront costs
6. Fees and expenses related to promotional activities
Author copy costs include the cost of the books themselves, plus the shipping expense to have them sent from the publisher to you. If you’re working with a Print On Demand service provider and don’t intend to store, hand-sell and ship copies of your book, author copies will be limited to copies you purchase for family, friends, to send to reviewers, and for promotional giveaway purposes. Otherwise, you’ll need to figure the cost of your author copies since that cost will figure into your royalty calculations for hand-sold copies.
Net “royalty” per copy sold is the retail price minus the production cost per copy (this is generally the same as the price you pay for author copies; in Jim’s case, it was $12 per book), minus any of the following expenses that are applicable to your book: bookseller fee (for copies sold through book retailers like Amazon, Borders, etc.), packaging material cost for shipping books yourself, postage cost for shipping books yourself.
The break-even point is the number of books you must sell (which translates to the quantity of “royalties” you must earn) to recoup all of your upfront cost investment plus whatever you’ve spent on author copies you’ve purchased to give to book reviewers, or for other giveaway purposes. In Jim’s case, there is no break-even point because he will never recoup all of his upfront investment.
No matter which author or print services provider you choose to work with, there are two major categories of expense you must take into account just for getting the book produced: upfront costs and per-copy costs.
You need to know your upfront costs in order to figure out how many books you must sell to recoup your upfront investment (e.g., how many books you must sell to break even and at what point you’ll really begin to earn a profit on each copy sold), and you need to know your per-copy cost in order to figure out how to set a retail price that will get you the royalty (profit per copy sold) you want.
Calculating Upfront Costs
Upfront costs are one-time fees you must pay regardless of how many copies of your book you order, and upfront costs are separate from monies paid for printed copies of your book.
If your service provider charges a membership fee, a project setup fee, or an optional, one-time upgrade fee in exchange for reducing your per-copy costs, any and all of those fees are upfront costs. Likewise, any fees you pay for services or service packages are upfront costs. Upfront costs will play into your break-even calculation, but not your per-copy cost calculations.
Calculating Per-Copy Costs
Per-copy costs are a critical calculation, because the amount you must pay to get your books produced sets the bar for the minimum retail price you must charge. For example, if you’re a shopkeeper and you buy 100 candy bars at a price of 25 cents per bar, you know you must charge a minimum of 26 cents per bar to make any money on candy bar sales. You also know that every cent above 26 you charge is more profit for you. The same idea applies to books: whether you store the books in your garage and hand-sell them, or utilize a POD service that will sell and deliver the books for you, there’s the price you must pay to get the books produced and then there’s the price you will charge when selling the book.
When Your Provider Requires A Minimum Book Order Up Front
Some service providers will require you to buy a minimum number of copies of your book up front, and will charge a shipping fee to send the books to you. In that case, your cost per copy is:
Total amount you paid for books + shipping fee divided by the number of books
In the example given for Jim, he paid:
($120,000 for books + $5,000 shipping fee)/10,000 books = $12.50 per book
To figure how much Jim is out of pocket per copy he hand-sold, he must add packaging material and postage costs to the production cost figure:
US Buyers: $12.50 + .10 packaging cost + $6 average postage = $18.60
Intern’l Buyers: $12.50 + .10 packaging cost + $15 average postage = $27.60
If Jim had done these calculations before publishing his book, he would’ve seen that the $20 per copy he charged his buyers isn’t enough to cover the per-copy production costs on his hardcover book. He’d see that he will lose $7.60 on every copy sold to an international buyer, and he only stands to earn $1.40 on each copy sold domestically. He’d know he must sell 5.4 copies domestically to earn enough profit to cover the loss on every copy sold internationally (5.4 x 1.40 = $7.56). And these are just the ugly figures for hand-selling his book; if Jim elects to sell any of his remaining 5,000 copies through a bookseller, his financial picture gets even worse, as you’ll see in the Break Even Calculations section below.
Note that Lesson #5 in the Publishing curriculum goes into greater detail on how to choose an author services provider, and why it’s rarely a good idea to pay for a complete publishing package or go with a subsidy publisher—both of which mistakes were made by Jim.
When Working With A Print On Demand (POD) Provider Which Doesn’t Require A Minimum Book Order Up Front
If you’re working with a print or author services provider that offers printing/POD services on a standalone basis (as opposed to selling you a complete package of pre-publishing, publishing and promotion services), and does not require you to order a minimum quantity of books up front, the provider will calculate how much to charge per book for their production costs based on a per-copy flat fee (for cover printing and binding) plus a per-page printing fee. Note that for purposes of these calculations, “per page” means “per page side” – in other words, the front side of a page counts as one page, and the back side of a page counts as a second page. There may also be a project setup fee, a site membership fee, or an optional upgrade fee you can pay to reduce your per-copy and per-page fees, but if so, those are all part of your upfront costs. Per-copy cost calculations are as follows:
Per-Copy Fee + Per-Page Fee = Production Cost For One Copy of Your Book
Total Production Cost + Shipping Fee = Cost Per Author Copy Purchased
Author Copy Cost + Packaging Materials Cost + Postage = Cost Per Copy Hand-Sold
Comparison Shopping for the Best Per-Copy Production Cost
When deciding amongst print/POD service providers, it’s important to do some what-if calculations based on your specific book before you commit to a provider. In the table which follows, I’ve provided sample pricing from three different service providers for a 300 page book that will have a full-color, perfect-bound trade paperback binding and a black and white interior. As you look at the table, consider what a mistake it would be to choose your provider based only on the basis of whether or not the provider charges a setup fee, or what the provider charges per copy or per page alone. It isn’t until you take all three factors into account that you get an accurate picture of which provider is offering the best deal.
|
Provider A |
Provider B |
Provider C |
|
| 1. Set-up fee | $0 | $0 | $50.00 |
| 2. Per-copy fee | $.85 | $1.25 | $.45 |
| 3. Per-page fee | $.035 | $.030 | $.02 |
| 4. Shipping, per book | $5.60 | $7.00 | $5.50 |
| Prod cost per copy = #2 + (300 x #3) |
$.85 + 10.50 = $11.35 |
$1.25 + 9.00 = $10.25 |
$.45 + 6.00 = $6.45 |
| Cost per author copy = #2 + (300 x #3) + #4 |
$.85 + 10.50 + 5.60 = $16.95 |
$1.25 + 9.00 + 7.00 = $17.25 |
$.45 + 6.00 + 5.50 = $11.95 |
At first glance, you might reject Provider C out of hand simply because Provider C charges an upfront fee whereas Providers A and B do not. However, as you go down the table, you can see that in exchange for your setup fee, Provider C will give you much lower per-copy production costs. The lower your per-copy production costs, the more you stand to earn per copy sold, as you will see in the next section.
Yet another consideration is author copies. If you’re already planning to buy 20 author copies for family, friends, reviewers and promotional giveaways, Provider C’s upfront fee will be more than covered by your savings in author copies alone because the next-closest provider would’ve charged you $5 more per author copy. $5 x 20 = $100.
Calculating Net “Royalty” Per Copy Sold
I place “royalty” in quotation marks because for a self-published author, what you actually earn is net profit. Royalties are what is paid to a mainstream-published author after every other party in the publisher/bookseller chain has taken his cut (e.g., publisher, agent, attorney, bookseller), and only after the publisher has held back enough in profits to pay back whatever it paid the author as an advance, and only after bookseller returns have been subtracted. However, since “royalty” has become the typical term for book profits in common usage, I’ll continue using it here.
Your net royalty per copy sold depends on three factors: your per-copy production cost, whether the book was hand-sold or sold through a retail outlet, and the retail price at which the book was sold. You already know how to figure your per-copy production cost; now let’s look at the other two factors.
If you’re hand-selling your books, the additional costs you must take into account are the cost to have copies shipped from the service provider to you, the cost of any packaging materials you must use to ship books out to your buyers, and the postage expense for shipping the books to buyers. You must also pay sales tax on every copy sold, but so long as you charge the customers the correct rate for your geographic region at the time of sale, that expense is covered by your customers.
If your books are sold through a retail outlet (e.g., Amazon, Barnes & Noble, Borders, CostCo, Target, etc.), the seller will generally keep a 40% cut of the retail price on every sale as a reseller fee.
The fee can be substantially lower when working with an ebook publishing service provider, such as just 15-25%, but since the retail price of an ebook is usually much lower than that for a print book, the lower reseller fee doesn’t necessarily translate into bigger royalties per copy sold, as compared to print copies sold.
To get some concrete figures to work with, let’s look at Jim’s book once again.
Royalty Calculations For Hand-Sold Books
We already know what Jim’s profit or loss per copy sold will be for books he hand-sells at $20 per copy. Had he done his production cost calculations before setting his retail price, he might have decided to charge $28 for his book (which isn’t an atypical retail price for a hardcover book of 250-300pp) and ensured he would earn $8.56 per copy sold domestically, and lose just 44 cents per copy sold internationally:
Online payment processing fee is 3%; 3% of $28 = .84
Royalties on US Sales: $28 – ($12.50 + .10 packaging cost + $6 avg postage + .84 online payment processor fee) = $8.56
Royalties on Intern’l Sales: $28 – ($12.50 + .10 packaging cost + $15 average postage + .84 online payment processor fee) = -$.44 (44 cent loss per copy sold)
Even so, upon seeing these figures Jim might’ve elected to sell only domestically, since his royalty on domestic sales is a whopping 30.57% and he’d still be taking a loss on every copy sold internationally. Considering that mainstream-published authors generally get only 10-15%, Jim could’ve done very well for himself, indeed. He might also have elected to charge a retail price only slightly higher than $20 in order to make his book more appealing to prospective buyers while still netting a royalty higher than his mainstream peers.
Bear in mind that if Jim had hand-sold his books in person rather than having to ship them out to his buyers, he could’ve saved all that packaging material and postage expense. However, it’s pretty difficult to move 5-10,000 copies of a book at in-person events alone, and there’s always some expense involved in attending such events.
Royalty Calculations For Books Sold Through Retailers
If Jim had sold all 10,000 copies of his book through U.S. retailers who kept the standard 40% cut, his net royalty picture would look like this:
Bookseller cut = 40% of $20 = $8
Royalty = $20 – $12.50 – $8 = -$.50 (fifty cent loss per copy sold)
Not only would Jim earn no royalties at all, taking a loss of 50 cents on every one of 10,000 copies sold would’ve cost Jim $5,000.
Had Jim planned to sell through retailers to begin with, he could’ve taken the bookseller’s 40% cut into account when setting his retail price to ensure he’d still be earning a royalty of 10% or better on each copy sold. Again, since his is a hardcover book, a retail price of $25-$28 would still be quite reasonable to prospective buyers.
Bookseller cut = 40% of $28 = $11.20
Royalty = $28 – $12.50 – $11.20 = $4.30, a 15.36% royalty
Bookseller cut = 40% of $25 = $10
Royalty = $25 – $12.50 – $10 = $2.50, a 10% royalty
Notice that Jim’s per-copy production cost of $12.50 is fixed, it is what it is and he can’t change it. However, he gets to decide what to charge for the book, which determines his royalty.
Setting Your Retail Price: Per-Copy Production Costs Can Be A Dealbreaker
When setting your retail price, it’s very important to aim for a price that’s no higher, and ideally is slightly lower, than the retail price charged for a mainstream-produced book that’s comparable to yours in terms of format (hardcover vs. softcover, binding type, book dimensions) and length. Obviously, if your per-copy production costs are so high that you must charge more for your book than a comparable mainstream book just to clear even ten cents of profit per copy sold, your book will be a tough sell.
Consider the example of a typical, 6×9 trade paperback. Retail prices for this type of mainstream-produced book run anywhere from $11.99 – $16.99, so you should be aiming to price your book no higher than the middle of that range, at about $14.99. The bookseller’s 40% cut on a $14.99 book is $6, so it’s clear that if you’re paying $8.99 or more in per copy production costs, not only will you not earn any royalty at all per copy sold, you may actually be losing money. If you’re only paying $6.99 in per-copy production costs however, you’ll be earning $2 in royalties per copy sold—a royalty percentage of 13.34%.
If you’re self-publishing in order to generate income and your per-copy production costs are so high that you must charge $20 for a standard trade paperback, you must either find another service provider who can offer lower per-copy production costs, or abandon the project completely. There’s little reason for a consumer to pay $20 for your book when they can buy a comparable mainstream bestseller for $15 or less.
There’s an important caveat here, however. While per-copy production costs can be dealbreakers, so can poor production quality. It doesn’t make sense to go with the lowest per-copy production cost if the resulting book is of poor quality.
So when comparing service providers, in addition to looking at costs, be sure to do some online searching under the publisher’s name to see if you can find reviews of the service from other authors. If that fails, look in the provider’s online store to collect some author names, then Google those names. You’re sure to come up with at least a few who have author websites, and most of them will have contact information on their sites. Email the authors to ask about the quality of the books produced by their provider.
Calculating Your Break-Even Point
Okay, now that you know how to calculate your per-copy production cost and your royalty per copy sold, you can calculate your break-even point: how many books you must sell to earn back your upfront investment.
Recall that your upfront investment includes any fees paid to service providers excluding fees paid in exchange for actual copies of your book, plus the cost of any author copies you’ve purchased for reviewer or promotional giveaway purposes. However, that’s not the end of the upfront fees story. You must also include any expenses you’ve incurred for professional services or promotional activities specific to the book.
In Jim’s example, recall that he paid $8500 for professional photography and dust jacket design/printing services; that’s an upfront cost. If you’ve paid for professional editing, layout, design, book doctoring, or any other services in addition to what you’ve paid your author/print services provider, those are upfront costs, too. If you’ve paid for a website featuring you or your book, that also counts as an upfront cost. Promotional flyers, bookmarks, travel expenses related to book tours, signing events and speaking engagements: these are all upfront costs because they’re expenses you incur regardless of how many copies of your book ultimately sell. The list goes on and on, but you get the idea. Money you’re laying down for any product or service related to getting your book produced, distributed, promoted or sold, excluding money you’ve paid for copies of the book you intend to re-sell, all of that expense must be included in your upfront costs.
In Jim’s case his upfront costs were the $1000 in setup fees paid to his service provider, the $1000 in add-on fees he paid for his provider’s optional editing and layout service, and $8500 for outside photography and dustjacket design/printing services, for a total of $10,500. Going back to Jim’s example, if he had set his retail price at $28 and hand-sold all his copies in the U.S. only, he’d have earned $8.56 in royalties per copy sold. For the sake of simplicity, let’s assume Jim did not invest in any additional products or services to help promote his book. To figure how many copies of his book he must sell to break even, Jim just needs to figure how many times $8.56 goes into $10,500:
$10,500 / $8.56 = 1,227
So even with his very high royalty of 30.57%, Jim would have to sell over 1,200 copies of his book to earn back his upfront investment. That’s a lot of books, and while Jim is a consummate salesman (as evidenced by his presale figure of 5,000 books), most of us aren’t. But Jim’s book is a hardcover, and he opted to work with a subsidy publisher whose fees were very high. He also invested in some costly add-on services. Let’s look at a more typical example.
Consider a 6×9, 300pp trade paperback that’s being produced by Provider C from the previous comparison chart. Provider C charges a $50 setup fee, .45 per copy and .02 per page, for a total production cost per copy of $5.50. Let’s say the author also paid $500 for professional editing and cover design assistance, and purchased 20 author copies to send to reviewers and use for promotional giveaways at a cost of about $240. The author opted for a free author website and utilizes only free options for promotion. The author’s total upfront costs are:
$50 + $500 + $240 = $790
Let’s say the author priced the book at $14.99, and only sold the book through Amazon. Amazon’s reseller cut is 40% of $14.99, or $6. This results in an author royalty of:
$14.99 – ($5.50 + $6) = $3.49 (23.3% royalty)
The author’s break-even point is:
$790 / $3.49 = 226 copies sold
It should be very clear to you by now why it’s so important to track your expenses, and to be a smart shopper when it comes to choosing a service provider and deciding whether or not to pay for additional services.
Crunch the numbers! It can save you literally thousands of dollars, and turn what could be a financially disastrous undertaking into a profitable endeavor.
- April L. Hamilton
All site content copyright 2009 Vault University, all rights reserved. No part of this content may be reprinted, reproduced or excerpted without the express, written permission of the author.
April L. Hamilton is an author, blogger, Technorati BlogCritic, and a leading advocate and speaker for the indie author movement. She’s also the founder and Editor in Chief of Publetariat, the premier online news hub and community for indie authors and small imprints, as well as the Publetariat Vault. She’s a frequent conference speaker on subjects related to self-publishing, and judge for self-published book competitions. In her popular self-published reference book, The IndieAuthor Guide, to be released in an updated and revised edition from Writer’s Digest Books in November ‘10, she offers aspiring self-published authors a roadmap to success.
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Big-name publishers always put together a P&L account before they make a decision on a title they’re interested in: if self-publishers want to do well, it’s something they have to do too. Thanks for this article: it’s a clear, detailed and valuable piece which I hope gets widely read.
This is a great breakdown, but what I want to know is why, with 10K sales in hand, Jim went POD in the first place. I’d like to see the calculations for hiring appropriate professionals and engaging the services of a printer.
Jim did not go POD, he went with a subsidy publisher which required a minimum print run up front. That was one of his mistakes.
If you go through a POD print services provider such as Lulu or Createspace, there are no setup fees and no minimum quantities to order up front. Some authors find Lightningsource to be the most cost effective approach for their purposes. Again, as it states in the article, comparison shopping and number crunching are key.
Jim also erred in the professional services he hired out for by overpaying, and by taking a package publishing deal that undoubtedly included charges for services he could’ve done on his own for free (e.g., registration with catalog companies and the US copyright office) and charges for services he didn’t need, or which didn’t help his book’s prospects very much.
But his biggest error was setting his retail price before he knew what it would cost to produce and distribute the book.
A great lesson on *several* things not to do. I’ve seen this happen to too many people who just didn’t know any better. I do have a minor issue with the article title, though. His was not a self-published book (as mentioned in the title); it was a subsidy-published book, and from the sound of it, not by one of the reputable subsidy publishers either (there are a few but you really have to know what you’re getting into). If he had truly self-published with his own company, the financial picture could have been very different. Writing may be an art but no matter which track you follow, publishing is a business.
Yes, it was a subsidy outfit, but it was one of the biggies. As to the matter of whether or not this qualifies as self-pub, that’s a matter of semantics. It’s true that the author signs over some (or all!) of his publication rights when working with a subsidy outfit, which is one very good reason not to work with a subsidy outfit in the first place. However, in common usage, most authors and publishing pros still consider this “self-publishing” because the author has made arrangements to have his book published himself, he hasn’t received a contract offer from a traditional publisher and isn’t working with a literary agent.
It’s also worth mentioning, it is not necessary to form one’s own imprint in order to self-pub effectively. I have two novels and two nonfiction books in print, and while I report my book expenses and earnings on my taxes each year, I operate as a sole proprietor. I did not form an imprint, partnership, or corporation, and none of those business structures are necessary for the author who intends to publish his or her work only. Incorporation may be an attractive option for certain authors, based on their specific circumstances, but that’s a question that’s best put to a tax professional. I just wanted to let those would-be indie authors who felt a chill go up their spines know that forming your own imprint is entirely optional.
Lesson #5 in the Publishing curriculum, Setting Up Shop & Print Decisions, goes into detail about the pros and cons of forming your own imprint and choosing between an author services provider versus a print services provider. Lesson #1 in the Author Platform/Promotion curriculum, Establishing Your Brand, also touches on the imprint question, but by the time you’ve got a book in print it’s too late to make that decision for any work that’s already out there.
As a former and relatively small-scale publisher I recall some of my authors being shocked when I did a rough calculation of printing costs and then used a multiplier of between 5 and 8 to calculate the likely retail price.
Printing costs may be the biggest individual item but they form only a minor part of total costs. Freight (from printer to publisher and/or distributor, and from publisher to buyer) are substantial too and then what is even the self-publisher to do if he gets an order from a bookstore or library distributor. In the interests of quick orders bookstores etc generally take whatever discount you’ll offer the first time but if you want repeats you’ll have to give between 25 and 40% and you’ll still have single copy postage.
Although you still need to do the rest of the calculations, print cost times 5 will give a rough idea of whether you can make a profit, or at least cover all your costs.
Gordon Woolf.
Hmmm…Gordon, your figures don’t jibe with my experience.
For example, both of my trade paperbacks are priced at $14.99 and the production cost on each is around $5, which leaves me a net royalty on copies sold through Amazon of $3.99. That equates to a 26.68% royalty. I use Createspace as my service provider, and Createspace doesn’t charge any up-front fees or require authors to purchase a minimum number of copies up front. It’s totally free to get your book in print and listed on Amazon through CS, all you have to pay for is the cost of a single proof copy (plus shipping) for author review before you release the book for sale. This is becoming more and more common among POD print companies, and there are plenty of options for ‘publishing’ for free in ebook and podcast formats too, so I think the old days of costly, minimum print run self-publishing are slowly but surely coming to an end.
It all depends on how carefully you shop for services, and how savvy you are about internet marketing opportunities (most of which are free) I think. That’s what the Vault U. programs are all about: teaching self-publishing authors how to do it right, so that they end up with a quality product and can *still* earn a profit.
If an author has to price his book at $28 per copy to make a profit, he’s pricing himself out of the market.
Hi Merrilee,
That’s true, but it’s very hard for a self-publishing author to make a profit with hardcover anyway, unless they REALLY know what they’re doing. (Most likely if they are going to profit off hardcover they’re going to be doing a print run with an offset printer and they know they can move the number of books they’re printing. If they don’t know they can move the books, they’re likely to end up in the hole even if they crunch their numbers right from unsold books in their basement.) It’s not impossible to stay price competitive and make a profit using POD but you really have to crunch your numbers. And Lightning Source is really the best option for profit margin IMO if you’re going to use print-on-demand technology.
Pricing oneself out of the market isn’t an option, but neither is pricing oneself competitively and losing money because of lack of pre-planning/number crunching.
Also, while $28 “is” pricing oneself out of the market, this was a hardcover, so it’s not pricing oneself that far out of the market. I have hardcovers on my shelf that are $25.95. $28 per copy is about the only way Jim could have made a profit using the company he used. If he really wanted to do hardcover, he should have picked either another company, or another business model.
Also, in reply to Gordon, it sounds like you’re doing your number crunching based on the offset printing model. POD works through an entirely different set of calculations. The price per book is a lot higher, but a lot of costs generally get cut out such as shipping and warehousing, and many have distribution partnerships where you can get your book listed in places like Amazon at a more attractive discount (to you the publisher) than someone putting offset print books up for sale there.
Most of the really great self publishing books out there have preached the “offset print” gospel and overlooked print-on-demand. While I’m not a personal fan of author services companies, it doesn’t mean the technology isn’t a viable option, especially if someone is working through Lightning Source.
The individual in the example instead of selling through distribution channels was hand-selling, and therefore having to “hand-deliver” so to speak, adding the shipping costs right back into the equation. IMO if someone wants to use POD, while they CAN sell some books off their own site, they’re going to do better if they can keep as many of their books in sales channels where the shipping is totally hands off and not affecting their bottom line.
Jim screwed up, and it was subsidy publishing (vanity press by any other name…) that did him in.
If you can pre-sell a thousand copies of a book at $20 each, there’s no reason for you to lose money, provided:
1) You can print them for $3 each or less (not difficult, really.)
2) You’re handling fulfillment yourself (web store, s&h calculator, charge buyers for postage, etc…)
3) You’ve actually pre-sold a thousand copies (you’re not kidding yourself about your popularity.)
Note that I don’t actually recommend this avenue to most folks… not unless they’ve got a large following on the web and can afford to be wrong about whether or not their fans actually want books.
Self-publishers who have done well in the past have traditionally printed offset. It’s much more efficient both from a production and a pricing point of view.
But these self-publishers are the cream of the crop. They are typically well-known in their own field, have access outside the book retailing and distribution system to a large pool of interested buyers, and they may also have one of those traditional “platforms” (pre-digital!) that puts them right in front of motivated book buyers happy to pay retail.
As soon as you can assure yourself that you can sell 2,000 or 3,000 books within a few months, you’ve beaten the hell out of the POD model already, and that level of sales is very reachable for authors with the kind of scenario outlined here.
Until digital one-off printing gets somewhere near the efficiency of offset the odds will probably remain tilted against the print-on-demant model.
Just one thought.
Hey Howard, I agree. For someone who has pre-sold several thousand copies, they should have gone with offset printing. Because the real danger with offset printing is that you never know how many copies you need to print. And that’s true for all publishers, not just self-publishers.
Hey Joel,
I can respect your point of view, but I think very few people take into consideration that for many authors it’s a good idea to “start” with POD. And I personally don’t recommend using an author services company for that, but starting one’s own imprint and going through Lightning Source (which many mainstream publishers also use for backlist.)
The idea is to start small where it’s affordable so you don’t lose your shirt, while you build your platform and figure out what you’re doing. Then later you can either incorporate offset printing into your model, or switch fully over to it.
So many people see it as an either/or option or which is “better.” And I really believe that for some people POD is a better starting point (and depending on how they’re running things it may be a better ending point for that individual.) And for others offset is the way to go.
Unfortunately most people seem to think the options are: Author services company or offset printing. I’m continually surprised by the people who are getting into self-publishing who have never heard of Lightning Source and don’t know it’s an option for them. (Another benefit of working with LSI is the many distribution options you have built into that system. And for anyone self-publishing who doesn’t already have an audience they can reach independently of the entire publishing system, they’re going to have a harder time getting into distribution channels.)
For those authors who work with Lightning Source for their POD, LSI, also does offset printing, so if they have a book starting to “break out” in context of their own business, they can get fast turn around time with a company they’re already working with, to get offset printing and volume discount. (I know I sound like an LSI commercial, I just really love the company. And no, I don’t make a penny from them for mentioning them. I’m not even linking.)
The POD model also works well for an author putting out and wanting to keep in print several books. Perhaps if they’re doing well they want their most recent book in offset, but they want their other books in POD. Even large mainstream publishers can’t keep their full backlist without utilizing some POD, and a strong backlist can help sell front list. It can also be a strong financial backbone in it’s own right.
So I feel those who totally ignore the viability of POD technology through a company like LSI (NOT an author services company) do their long-term business a disservice. I don’t know of many self-publishing authors, even successful ones, who can keep all their books in print indefinitely using the offset model exclusively. And for some authors, especially those doing a series of books, it’s absolutely vital to their business plan that all books in the series remain in print to reach optimum sales.
And sorry that was so long-winded.
Zoe,
Thanks for the reply. I find myself in complete agreement with you and, in fact, I publish through LSI myself. Sometimes I think self-publishers are so entranced by the POD model they just never consider the alternative, and that’s one of the things I was trying to get at. And putting backlist titles (whether you are large or small) with a POD provider just makes good sense. I just brought a book I’d written in the 1980s back into print, and I would never have paid the cost of doing it offset now.
I’m also dismayed sometimes that despite all the efforts of people trying to educate authors who contemplate self publishing, the subsidy companies (Vanity presses of old) continue to capture a lion’s share of the market.
Becoming a publisher doesn’t mean that you have to do everything yourself, and most books that are self-published would certainly benefit from an encounter with a professional editor and designer. Just because the book is printed digitally doesn’t mean it can’t be a great reading, great looking book!
Best,
Yeah, the author services companies co-opt everything and try to make it seem like you’re doing exactly what a self-publisher does if you go that route. Now I will say there are ways in which it works out for some authors. It just depends on a lot of factors. If someone isn’t ready to do LSI and they’re too intimidated then maybe they want to very carefully consider diff companies, but IMO it would be better for them either to learn so they can use LSI, or use CreateSpace, because at least that’s more DIY and doesn’t have a lot of hidden fees. It just gets you into Amazon, but it’s a place to start.
A lot of the author services companies are using terms like “indie” now. And it’s like whatever term you use, they start co-opting it for their own purposes. And I’m not wholesale “against” author services companies, they can be good for hobby publishers, and for people who are just trying to get their feet wet and don’t expect much in terms of profits, but I do wish people wanting to self-publish would take the time to research more and learn their options. There’s a whole world out there.
I think a lot of authors are just at a loss as to how they get these services they need to get like interior layout and cover design and printing and editing. If it’s not all in a package and they can’t do it all themselves how can they do it affordably? Or at all? Because if you don’t know a lot about the industry you may not know where to go to get this stuff done, and so the author services company becomes the default. But that’s part of what we teach in the publishing curriculum, is how to either do some of these things DIY, or how to get them affordably a la carte, without having to get a “package” somewhere.
I’m more curious how a self-publishing author managed to pre-sell 5,000 copies of his novel and is on track to sell 10,000 copies. Perhaps he’s published a number of books already and has established a readership, but then you’d think he might have made smarter budgeting choices. It’s notoriously difficult to sell a new novel by an unknown author. It can be a great book, but letting people know about it is an uphill battle. An editor at Grove-Atlantic told a group at a writing conference I went to this summer that he’d consider a new novel by a first-time writer a success if it sold 7,000 copies in hardcover. And that’s assuming some level of national marketing and having the book in stores nationwide. The above calculation doesn’t include anything on marketing or publicizing the book.
Susan -
He’s a first-time author. He did it through personal contact with each and every buyer. He works in a hospitality field, and while I’m pretty amazed too, I suppose I can believe he could do this if he’s got exposure to thousands of people through his job. To my knowledge, that’s how he’s sold every copy to date, there has been no marketing campaign, nor even any author platform effort.
Susan P,
If someone at Grove-Atlantic considers 7,000 copies sold with major bookstore distribution and nationwide marketing a success, then I most definitely have no interest in an outside publisher at this stage in the game. Mainly because, to make the same amount of money, I’d just have to sell 1,750 copies. And if I can’t sell 1,750 copies in a year with a concentrated marketing effort and well-produced book, then I shouldn’t be in publishing at all, under any method.
Self-publishers who have done well in the past have traditionally printed offset. It’s much more efficient both from a production and a pricing point of view.
But these self-publishers are the cream of the crop. They are typically well-known in their own field, have access outside the book retailing and distribution system to a large pool of interested buyers, and they may also have one of those traditional “platforms” (pre-digital!) that puts them right in front of motivated book buyers happy to pay retail.
As soon as you can assure yourself that you can sell 2,000 or 3,000 books within a few months, you’ve beaten the hell out of the POD model already, and that level of sales is very reachable for authors with the kind of scenario outlined here.
Until digital one-off printing gets somewhere near the efficiency of offset the odds will probably remain tilted against the print-on-demant model.
Just one thought.
For example, both of my trade paperbacks are priced at $14.99 and the production cost on each is around $5, which leaves me a net royalty on copies sold through Amazon of $3.99. That equates to a 26.68% royalty. I use Createspace as my service provider, and Createspace doesn’t charge any up-front fees or require authors to purchase a minimum number of copies up front. It’s totally free to get your book in print and listed on Amazon through CS, all you have to pay for is the cost of a single proof copy (plus shipping) for author review before you release the book for sale. This is becoming more and more common among POD print companies, and there are plenty of options for ‘publishing’ for free in ebook and podcast formats too, so I think the old days of costly, minimum print run self-publishing are slowly but surely coming to an end.
+1
Yeah, the author services companies co-opt everything and try to make it seem like you’re doing exactly what a self-publisher does if you go that route. Now I will say there are ways in which it works out for some authors. It just depends on a lot of factors. If someone isn’t ready to do LSI and they’re too intimidated then maybe they want to very carefully consider diff companies, but IMO it would be better for them either to learn so they can use LSI, or use CreateSpace, because at least that’s more DIY and doesn’t have a lot of hidden fees. It just gets you into Amazon, but it’s a place to start.
A lot of the author services companies are using terms like “indie” now. And it’s like whatever term you use, they start co-opting it for their own purposes. And I’m not wholesale “against” author services companies, they can be good for hobby publishers, and for people who are just trying to get their feet wet and don’t expect much in terms of profits, but I do wish people wanting to self-publish would take the time to research more and learn their options. There’s a whole world out there.
I think a lot of authors are just at a loss as to how they get these services they need to get like interior layout and cover design and printing and editing. If it’s not all in a package and they can’t do it all themselves how can they do it affordably? Or at all? Because if you don’t know a lot about the industry you may not know where to go to get this stuff done, and so the author services company becomes the default. But that’s part of what we teach in the publishing curriculum, is how to either do some of these things DIY, or how to get them affordably a la carte, without having to get a “package” somewhere.
Susan P,
If someone at Grove-Atlantic considers 7,000 copies sold with major bookstore distribution and nationwide marketing a success, then I most definitely have no interest in an outside publisher at this stage in the game. Mainly because, to make the same amount of money, I’d just have to sell 1,750 copies. And if I can’t sell 1,750 copies in a year with a concentrated marketing effort and well-produced book, then I shouldn’t be in publishing at all, under any method.
I’m more curious how a self-publishing author managed to pre-sell 5,000 copies of his novel and is on track to sell 10,000 copies. Perhaps he’s published a number of books already and has established a readership, but then you’d think he might have made smarter budgeting choices. It’s notoriously difficult to sell a new novel by an unknown author. It can be a great book, but letting people know about it is an uphill battle. An editor at Grove-Atlantic told a group at a writing conference I went to this summer that he’d consider a new novel by a first-time writer a success if it sold 7,000 copies in hardcover. And that’s assuming some level of national marketing and having the book in stores nationwide. The above calculation doesn’t include anything on marketing or publicizing the book.
As it says in the post:
“Jim did a lot of community outreach as well as personal outreach, and by the time he was finished writing the book he’d pre-sold 5,000 copies.”
He hand-sold nearly every copy. Jim works in a hospitality field where he’s exposed to thousands of people every year, most of them wealthy.