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The New Financial Realities of Book Publishing

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Published: 30Sep2007
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Especially if you self-publish, you will want to set up a financial model. While no one can tell you with any certainty how many books you can expect to sell, you can be precise about what you will spend to get an idea of how many books you must sell to break even and then turn a profit.

More important, you need to consider opportunity cost. The time away from your business that you spend authoring a book will be time away from clients. But it is time invested in the intended return of more and usually larger client projects once you are recognized as an author.

It is a reasonable strategy to decide to break even on a book (or possibly take a loss) on your first book on the basis of book sales alone. Your real financial gain may be to your primary business, and your book may be one method of marketing for that business.

Big chain stores and Amazon.com have significantly changed the publishing industry over the past decade. The good news for the consumer: Books are less expensive and more readily available than ever. Amazon.com regularly discounts 30 percent off the retail price of books.

Where does this 30 percent come from? It comes directly from the publisher's profits and ultimately from the author's royalty. It is estimated that only 10 percent of books published are profitable to both publishers and authors. Because this leaves about 90 percent of books that either break even or lose money, publishers have had to decrease their costs in order to stay in business. Cost reduction usually takes the form of offering fewer services to authors, especially first-time authors. Unfortunately, they are essential services that formerly helped increase the odds of success. For instance:

• Publishers now give surprisingly little editorial guidance. Writers must be able to communicate and organize their ideas in a marketable way, a skill relatively few authors have developed.

• Writers face the significant hurdle of having to market their books. Even if an author writes an outstanding book and isn't a promotions expert, the book may only sell a few hundred copies.

Because publishers are no longer able to help bridge the gap between author and reader, the author must be able to do it all or have the budget to hire the help she needs. Of course, this assumes she can find the right people. The learning curve is so high for a first book that most writers end up frustrated. If they're willing to tough it out, though, they may be more successful with a second book...or they'll never try again.

The Costs of Publishing a Book
Book publishing costs arise from three areas, and the costs can be substantial in all three whether you traditionally publish or self-publish. Here's the story on each cost area:

1. Writing-If you publish with a traditional publisher, they may pay for most of the editorial costs, but you may still be responsible for some. For example, you will still spend money for book proposal coaching if you need it or for someone to write the proposal for you. You may also want to hire your own editor before you send the manuscript to the publisher. You pay any costs associated with permissions and indexing. In addition, if you make too many changes once the book has been designed, you may be asked to shell out more money for some of the corrections.

2. Publishing-If you publish with a traditional publisher, you won't incur the costs of production. But if you self-publish, you must consider the expense of book design and layout, book cover design including back cover copy, prepress production, indexing, proofreading, and printing. After books are ready for sale, there are the charges of carrying inventory (unless you use a print-on-demand process), packing, and shipping (although shipping costs are ultimately passed on to the purchasers).

3. Marketing-Even if you use a traditional publisher, you will be responsible for most of your own promotions and any travel you do to represent the book. For the vast majority of books, a publisher will allocate a budget of $1,000 or less for marketing the book, and that just isn't enough. The publisher may also do some collaterals-bookmarks, event posters, one-sheet flyers-but generally very few.

Here is a rough estimate of the expenditure to produce a softcover book in which you do most of the writing and you self-publish:

 Expected editing costs: $2,000
 Self-publishing production, book interior
design, and layout: $2,500
 Proofreading: $750
 Indexing: $500
 Cover design, listings, print prep: $3,000
 First Printing: $600
(200 review copies at $3 per book,
high-quality, on-demand)
 Collateral materials for book events: $2,000
 Small book launch publicity effort:
press releases and follow-up to trade journals
and targeted media, some local speaking
and exhibiting: $3,000 to $5,000

You can expect to fork over from $10,000 to $15,000 and up to self-publish a book and do some modest marketing. Additional outlay may be incurred if you desire additional help. And, of course, you can spend a lot more at each stage of the process if you don't find a high-quality professional to work with the first time and have to redo some of the original work.

Gail Richards is founder of http://www.AuthorSmart.com a dynamic website connecting aspiring authors with the classes, audio library, tools, information and resources needed to make smart, informed decisions at each step in the nonfiction book publishing journey. Jan King is the founder of http://www.eWomenPublishingNetwork.com a membership organization devoted to supporting and coaching women who become successfully published nonfiction authors.

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