Warning: This will be a general post designed to help regular folk understand some real basics in indie publishing accounting, so publishing experts and accountants, please give me a break. This is very, very general. Thanks!
Also, this is a long one. Sorry.
The term “Margin” is thrown around in so many ways, by so many people in publishing these days, I figured it was time to try to make sense out of the word and other basic accounting issues. In fiction publishing, that is. I’m not getting into stock margins or buying covered calls on margin or anything along those lines. This is about fiction publishing and accounting and profit margins and how to figure them.
Yup, lost about five hundred readers right there.
Here we go. There really will be a point in this for indie publishers, so ride with me.
Traditional Publishing Accounting and Margins
Starting from the top and working down.
Publishers and lines of books
Publishers (for the company or for an imprint) tend to like to make around a 4% margin of profit after all costs. More, they get happy, less, they get grumpy. And every company is different and some have different numbers, but most range in that area, so that is just a basic center number for conversation sake.
An imprint’s profit margin is figured (basically) by total gross receipts minus all expenses, including office overhead and salaries and costs of production and shipping. So ideally the company stays afloat and pays all bills and makes 4% of the total gross receipts. (Yes, I know, very simplified, but live with it.)
A Book
A single book is figured on the same formula as basically the entire line. (And it’s a giant guessing game. More on that later.) After a book goes through its life, the publisher looks at the total gross receipts for the book, take away all costs, including a percentage of the overhead and salaries, to get to a desired 4% net profit or profit margin. Some books are far, far more successful than that, most books are not, and many books lose money “on paper” for the company. About a zillion factors involved in the final per-book calculation that then gets fed into the overall calculation of the imprint.
Bestsellers have a far higher profit margin because of the set costs such as staff and overhead are factored over a lot more books than a 5,000 copy print run of a small book. But bestsellers also have more upfront costs and thus are a higher gamble for the publisher. Many lines make money by having a couple bestsellers that carry all the small authors and first-time authors who are losing the company money. Midlist authors are often the ones that can sell consistently at a 4% profit margin and don’t add or drain anything from the company.
Distributors
All distributors tend to try to work at a 5-10% profit margin where possible. Closer to 5% most of the time after all costs. Distributors are basically any company from Ingrams and Baker & Taylor to Amazon Kindle or Smashwords. All distributors, although the electronic and online paper sales have combined distributor and bookstore in many areas. But ultimately they are distributors. (For the publicly traded ones, you can read their year-end reports to see the thousand factors that are taken into account. Again, I said I am being very simple here.)
Bookstores
Bookstores like to get as high a discount as possible from publishers. Often a bookstore will pay ahead and order a certain number of copies because that savings in shipping and a few percent higher in discount can make all the difference on staying alive. Bookstores get books from 32% to 55% discount. Their overhead in buildings, employees, utilities and such make it critical that they do enough in sales to cover the costs.
For decades new bookstores have been helped by the return system and the smart owners used the system perfectly. If a book didn’t sell quickly, they returned the cover or the book for a full refund and credit against another book they were ordering and the publisher and author took the hit for the store not selling the book. So new bookstores didn’t get caught often with dead inventory. (You want to see a store with dead inventory, go into any Borders this week. Take a look at the books that didn’t sell in December.)
Barnes & Noble had a great last year, with some decent profits. Amazon, as a bookstore, also had a good year. Most bookstores, the small independents, didn’t do so well even with the no-risk inventory and considered it a good year if they paid all their overhead and salaries without borrowing money.
Writers
I typed that and started laughing. There are a few authors working with traditional publishers who actually think in these terms. Very few. But most writers don’t know enough about business to even know how to figure their own profit and loss on a book project, or even work a profit margin, let alone consider themselves an actual business. They should, but almost none do, which hurts all the rest of us.
I know for a fact that if a writer actually did do the profit and loss structure of a project, including overhead and time and so on, they would fire their agent in a heart beat. Spending 15% of all gross income on an employee is the most outlandish cost in any business model I have ever run across. But we’ve been down that road in other posts.
Let me just say that it is very possible for a writer to run a simple profit and loss on a project and also on a full year of writing. (Again I am laughing because I have such a low opinion of writers and their business knowledge. Sorry.)
Indie Publishing
Here is where things get confusing around the word “margin” to writers who want to be indie publishers, meaning publish their own work, or join a group working to publish their own works.
Margins for Indie Publishers
Very few indie publishers, because they are writers, have set themselves up in any kind of business structure. Or treat indie publishing as an actual publishing company. I have a hunch, as time goes on, we’ll see more and more that do. The ones that survive at least. An indie publisher is a publisher, just as any company in New York is a publisher. Same rules apply. And same basic accounting can and should be run.
An indie publisher needs to know costs and keep sharp track of them. Time spent, cost of production, cost of covers and proofing and so on. But more importantly, time spent by the writer on the creation of the project and time spent on the publication of the project should both be assigned amounts. Base costs. What is your time worth writing and indie publishing?
All those facts and figures are needed to figure out any real profit margin for an indie publisher.
For years I have done a profit and loss and figured profit margins for myself in my writing. I calculated that including everything, my time, my mortgage, my expenses, I needed to make $500 per day of work to cover everything. (Reverse calculation is $500 per day is 5,000 words per day times 10 cents per word.) For me, to make it simple, I use the $500 per day to cover my time and all my costs. And I figure ten hours in a day.
So figure your own. Add up all your expenses for a month, figure out how much your time is worth, and take the total from your money brought in (after the outlandish 15% agent fee) and that’s your profit margin for your writing. Or loss.
So using my way of calculating, which is very simple, a 30 day month has a base cost of $15,000. I subtract $15,000 from my income and get my profit or loss for the month. Then I also do a calculation for six months and for a year. Some years I have made a nice profit. And remember, my time is also worked into that $500 per day. So when my writing business makes a profit, it’s money earned above my hourly time wage.
Indie publishers have to do the same thing in some way or another. They have to figure all costs, including time, and then keep track of all income over a year and determine a profit or loss for the business. If your business is not earning at least a 4% profit margin, you are doing something wrong. (Maybe your pricing structure is off, which I will talk about in a moment. Or your expenses are too high, or you don’t have enough product out to actually carry the expense costs.)
Notice: It would be wise to get an accountant to help you set up your books to start with, especially if you plan on growing your indie publishing business as the years go by.
By the Story or Book: An Example
Notice I know pretty close how much time I spent when I put up a challenge story. (I am used to keeping track.)
My $500 per day is figured on 10 hours of work, or $50.00 per hour. Remember, that includes all my overhead including my share of our mortgage and so on. So if a challenge story takes six hours, it needs to make me $300 over the life of the story to break even. And more to give me a profit margin.
So let’s do a Profit and Loss Calculation on a simple challenge story to see if the work I am putting in is worth my time. And when can I expect a profit.
Story Costs: $300.00 total. (All overhead and employee hours worked into that number. No cover or proofing costs.)
Projected electronic sales: (5 sales total across all sites in one month for each state of the story.)
Selling the story as a single story for 99 cents. $1.75 per month for five sales (net income after each site fees).
$2.99 5-story Collection: 1/5th of $10.00 or $2.00 per month allocated to the story.
$4.99 Larger 10-story collection 1/10th of $17.50 or $1.75 per month.
Total income $5.50 per month for the story. Or $66.00 per year. Projected profit in under 5 years.
Of course, I would need to track the story sales. But that calculation seems pretty reasonable in most publishing business structures.
(For a publisher doing a profit and loss in Traditional Publishing, a book is bought, but expenses have already been spent on the book before the author is offered a contract. Book comes out in two plus years, book might hit profit status in just under four years after first money is spent.) So under five years seems pretty reasonable to me, especially since after that five year period, in theory, the story will continue to sell and just increase my profit margin.
So that’s a profit margin and figuring a profit and loss for a story in indie publishing. Few indie publishers do that simple math.
PRICING OF INDIE BOOKS
I hate to go back into this area, but indie writers need to start thinking about pricing of books like a real publisher.
So here we go:
Electronic Pricing
99 cents at 35% = $.35
$1.99 at 35% = $.70
$2.99 at 70% = $2.10
$3.99 at 70% = $2.80
$4.99 at 70% = $3.50
You have to sell ten times the number of copies at 99 cents then you do at $4.99 to earn exactly the same amount of money.
So doing a simple profit and loss calculation on a novel that took 100 hours to write, the cost I would have into the book would be $500 x 10 days (at 10 hours per day) or $5,000.00.
To make a profit selling the book at 99 cents, I would need to sell 14,285 copies.
If I priced the novel at $4.99, I would be in profit status at 1,429 sales.
If I managed to sell one per day total over all sites (30 average per month) the book would be profitable to me in under four years. Nice. And that’s assuming nothing went bigger. Having a $3.50 gross profit margin per copy sold helps me hit an overall book profit much sooner than a gross profit margin per book sale of 35 cents.
POD Publishings
Here where it gets really, really tricky for indie publishers. They want to keep the price of their book as low as possible. Duh, every traditional publisher wants the same thing. But unlike electronic publishing, you have more choices and more factors with POD publishing.
I hate the idea of short discounting bookstores. Short discounting is only offering a 20% discount on your book. That simply cuts off all sales for your book to bookstores and even special order counters. Bookstores will not order books with that low a discount. It really is that simple. Bookstores barely make it when they get full returns and 40% discount. They won’t bother with 20% (or short) discount.
So using a standard discount and CreateSpace’s nifty calculator and Pro Plan, here are some numbers. (Lightening Source is fine as well, just don’t short discount even though they offer it.)
Details of the Book: A standard 6 x 9 inch trim, 300 page book.
$12.99 cover price gets you a $1.14 gross profit per book in expanded (special orders from stores you don’t ship to) and $3.34 through Amazon and you can buy them for about $4 per book for direct sales to bookstores at 40% discount, so you make about $3.70 or so direct sale to bookstores. Those numbers are your gross profit margins per sale depending on how and where the book sells.
Now bump the price to a more logical $15.99 trade paper price. You know, about what traditional publishers charge for that size book. The expanded distribution jumps to a gross profit margin of $1.94 and the Amazon sale gross profit jumps to $5.14. And you make almost $6.00 per book on direct sales to bookstores.
So setting price is a cost calculation for a business to figure out depending on costs of the book, the amount of time and number of sales calculated to return the costs in a set amount of time.
A dirty secret: New York does the same guessing game, granted with more practice, but the same game. I’m not going to tell you which way to go, but doing the math for your costs will help you set a price which will eventually allow a profit margin in a decent amount of time.
Act Like A Business
I just shake my head at writers who set low prices for their books because of some unknown thing they heard on a blog post like this one. Or because another author used that price and it sounded right. Or because “everyone on the Kindle Boards is doing it.”
If you are jumping into being a publisher seriously, start acting like one. Track your costs to produce a product. And set a cost figure on your writing time. And your time to do covers and so on. And any other real costs. And if your computer lasts two years and you write four novels in two years, then each book needs to carry one quarter of the cost of the computer. And so on.
Get a real expense number, a real cost of producing a product. Then set your book price keeping that number in mind.
If you are planning for your book to hit a home run to make your money back, you aren’t being very real. I plan for everything I put up to bounce along the bottom, selling a minimum number of copies per month. Then I take my costs and work out at each price point how many copies I will need to sell to return my investment and start making me a profit in a decent amount of time.
I like to make a profit. I like to know when I will make a profit, and how many books have sold and so on.
Just like any publisher, I am setting up cash streams from older books repaying my costs to pay the costs of my overhead and the investment costs for new books.
It’s called business.
If you like the idea of this, but don’t understand it, it would be worth your money to hire an accountant to help you set up the systems for your business. It might be the best expense you will ever spend on your indie publishing business.
And you can expense that accountant’s bill out over all your books for a year.
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Copyright 2011 Dean Wesley Smith
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Okay, I admit it, I had issues at first with putting in a tip jar in the Magic Bakery. It was one of the “I have it made, why do I need to support my writing with tips.” A minor myth, sure, but still one that took me a few days and some talk with Kris to get past. And also, why put a tip jar in when I’m just trying to help people. But I figured I needed to get past that as well, so here it is.
And I also needed to start treating these chapters as part of my writing business instead of just a hobby.
And speaking of the Magic Bakery, this chapter is now part of my inventory in my bakery. (Confused on that, read the Killing the Sacred Cows of Publishing post about making money with writing.) I’m giving you this small slice as a sample. I’m giving you a taste, but not selling any of the pie.
If you feel this helped you in any way, toss a tip into the tip jar on the way out of the Magic Bakery.
If you can’t afford to donate, please feel free to pass this chapter along to others who might get some help from it.
And I would like to thank all the fine folks who have donated over this last year. The donations and the comments both after the posts and privately are really keeping me going on this. Thanks!
Thanks, Dean
Nice post. I think it’s important to start stimulating the business mind of some of the indie authors out there. Most writers don’t ever correctly value their time and costs, hence why most give up the craft and get “real jobs”. Too “much all or none” philosophy. Pricing with no method will result in total demise in any business, and selling books/stories is a business. Repeat…SELLING BOOKS AND STORIES IS A BUSINESS, granted it’s based on art, but still a business. Ego must be put aside and at some point bottom line must be considered. The emphasis the indie author puts on the bottom line is totally up to him/her, but keeping the lights on is necessary to extend your writing career and ultimately give a person the best opportunity to perfect their craft.
Another thing, NEVER VOLUNTARILY give up your pricing power! Bargain pricing without method relinquishes all pricing power and makes any ONGOING business concern more difficult. It won’t take authors long to notice how much more creating a novella versus a novel will be if everything starts selling at .99. Again, method to pricing must be used ALWAYS.
Okay, Dean, this post really hit home — not all the accounting stuff, which I don’t really understand, and which I’ll go over with my wife who was a finance major in college — but once again you’ve bluntly reminded me of THE fact of writing and publishing: namely, that this is a slow-moving business, so I gotta stop thinking short term.
Thinking short term is a trap that I’ve fallen into lately, especially with so many in the indie crowd talking about daily and monthly sales. These new “bestsellers” are just that — bestsellers. They are the Kings, Clancys, and Grishams of the new world.
But most of us are going to be the new mid-list writers: putting stuff out, growing our backlist, moving along slowly but surely. And what’s gonna happen is that the bestsellers are either going to become long-term bestsellers (like King and Cussler) or one-hit wonders (which is what I fear is going to happen to JK Rowling). Those who come into this business wanting to become bestsellers are going to quit when they don’t, but those of us who except our stories to “bounce along the bottom” are going to succeed.
And that brings me to the KEY point you made that put everything in perspective. “I plan for everything I put up to bounce along the bottom, selling a minimum number of copies per month.” That is just SO contrary to what you hear others saying … and yet, I’m reminded of something George Lucas said: back when he was negotiating STAR WARS in the mid-70′s, he was operating under the principle that ALL film-makers operate under, namely, that your film is going to be a flop. It seems to me that should also be true of writers. We should assume that our stories are going to bounce along the bottom and therefore our goal shouldn’t be the push to marketing and promotion, but, rather, writing more and varied things.
Suddenly, what you and Kris have been saying about promotion makes a hell of a lot of sense to me.
And strangely, when I accept the fact that my stories are going to bounce along the bottom, I not only feel a peace about this business I’ve not felt in a few weeks, but a joy, too. It means I can just keep writing whatever the hell I want without worrying about “audience expectation.”
Thanks again, Dean.
- Jeff Ambrose
You are right, Jeff. Taking the pressure off of any story, taking the “event” thinking away from any product and changing the accounting and thinking from produce to long-term sales makes a person feel very happy.
I got my simple 5 sales per month over all sites average by looking at how many different outlets there are. On all the statements in December Kris and I had stories in over 50 outlets that we could count, so selling just one copy every month in ten outlets is pretty much on the bottom. Yet that pace, when looked at in real publishing terms, brings a story or book to profit in 4-5 years. Normal. And if the world just keeps going on, can bring a book into a lot of profit for the writer every year after that. But that said, it looks like the world is making the shift to electronic and POD even faster than some thought, which might increase sales. Or it might not.
By the way, if I looked only at my short fiction Kindle numbers, I would panic. A number of my stories are selling five copies a month on Kindle, some are not, and a few didn’t sell a one. But then I look at B&N and add those numbers to the Kindle numbers and a ton more of my stories are selling more than five. Then I add in the Kobo numbers, which for some reason, I’m doing well in, and that takes my average above five sales per story, and then I’m doing well at Sony and iPad all over the world is selling my stories in different countries, and suddenly I am between three and four times my bottom figure on average. (My worst-selling story on the last full month of numbers from everywhere sold 4 copies. My worst.) So because I am doing better, do I change my calculations? Nope. I will just hit profit point sooner on many of those stories is all, but I leave the calculations and expectations alone.
>(Reverse calculation is $500 per day is 20,000 words per day times 10 cents per word.)
I think I might have misunderstood something here. I looked at this and though, “Dang! 20,000 words per day is friggin’ TOUGH!” Then I checked the math, and I came up with 5,000 words per day. Did I make a mistake here?
Jamie, you are correct. $500 per day is 5,000 words per day at 10 cents per word, or about 20 pages. Sigh. Thanks for catching that. I fixed it. Math mistake in an accounting article. Go figure. (grin)
Ah, numbers! Delicious crunchy numbers not pulled from a mystical buttock. This is why I come here.
If I hadn’t already made that chart on my whiteboard (and seen the difference between .99 and 2.99 esp.), that simple chart would have brought me on board re: reality-based price points faster than anything else.
Most interested in the POD section as I’m currently sorting through all the FAQs and manuals on the two sites and compiling questions for the customer support folk. It’s not excessively complicated, I just have to construct an glossary and best practices scheme from scratch before I roll in and mess up the requisite three times until I get it right.
Great piece DW, it appealed to my quant nature. It also supports your mantra for us to get as much quality content out there as efficiently (read: quickly * cost-effectively) as possible.
To continue your thought-line of ‘authors = business geeks,’ I would add (specifically for new authors like me) that no sound business plan is built on one product. Common sense dictates that the more widgets we produce, the more we can spread static costs across our growing catalogs = cost of doing business as a % goes down per published work.
If profit from every widget is the goal then our logical objective should be publishing as many quality widgets as we can, as quickly as we can, as efficiently as we can.
And for those who like to mix a little economics into their business plan – as for “opportunity costs” (for those who may not know, OC = how much you could be making if you were doing something else vs. the time you utilize to write/publish), I offer this qualitative value … JOY!
Just had a great conversation with a friend who knows that I come from the hedge fund world (no egg-throwing please, we were one of the good ones). As a friend will do, he was raining on my parade (just published my 1st novel) with “g, you gave up your hf paycheck for five-books-a-month income for the next 10 years?! (I was telling him about the “Tao of DWS”)
My reply was a calculation, “Pennies from selling my novels * the JOY I get from it > embarrassingly large salary made from something I hate to do / (misery from not writing + negative stress). How’s that for quantifying JOY?! 9-)
P.S.
I’m ‘submitting this for your approval’ for no reason except I loved Rod Sterling. He once said, ““Every writer is a frustrated actor who recites his lines in the hidden auditorium of his skull.”
That had to make a few of you smile. TGIF!
Gerard, boy got that one. I agree on both your points. And I love how you did a formula for the fun part. I just never allowed myself in my life to stick around a job that I didn’t like. Of course, that gave me the reputation of being very unstable and flighty, but I can live with pressure from families a lot more than I can live with a job I hate. And eventually I found the job I love that pays my bills, so win/win.
I’ve been accounting for pretty much everything you mentioned *except* my time, and I need to get on that yesterday, even though I doubt I’ll be making a profit for a couple years yet. I should have thought of that months ago.
Thanks for taking the time to write it all out for us. It’s insanely helpful to see the simplified version laid out in clear terms for those of us just getting our books set up.
Great stuff. Definitely a must-bookmark post. I know I’ll be reading it dozens, if not hundreds, of times.
This is a completely logical thing to do, but it simply never occurred to me. And my day job is office manager for a small engineering firm – we bill on a project basis, & I do the billing! For goodness sake …
In the process of learning to write, I’ve been trying to figure out what my “process” is (so far it seems to involve a lot of metaphorical flailing around in the dark, grin), and figure out how long it takes me to go from idea to completed work. For some idiotic reason, it never occurred to me to simply log my time. (And I go back to the first paragraph and repeat the head-desk.)
Hard to come up with a specific business plan if you have absolutely no idea what your productivity rate is. Imagine that.
All I’d been thinking about was how many words I wrote per session, but I spend time developing characters, world-building, figuring out plot issues, etc. That doesn’t go in the word count, & word count doesn’t measure that part of productivity.
I’ve actually been thinking on a broader, more vague macro-level. It’s a good to be reminded to consider the details & the micro-level, too.
And at the very least, I’ll start figuring out my productivity over time, which gives me a good place to start building the business side of things.
Thanks!
I think it’s interesting how when you and Kris start talking about money, no one seems to really want to talk about it. But whether anyone wants to admit it or not, it’s a big part of why most of us get involved.
This is an excellent point and I honestly hadn’t thought of running my business like this. And that disturbs me. It makes me wonder what else I’m not thinking about. Time to go research.
Thanks Dean! What a great article. You’ve just got me looking at what I need to earn for my books based on using it as a second income. I love my (half-time) job and don’t plan on leaving it. My writing I see as extra income and an investment for my retirement.
It’s nice to know that as an indie publishers I don’t need to sell 1000 books a day. If I sell an average of 1000 a year (publishing as few as 2 books a year) after five years I’ll have tripled my current monthly income with which, given my inexpensive non-consumerist lifestyle, I already live quite well.
Great post, Dean. I’d stopped tracking my time/wordcount because it’s plain depressing when you have the “write slow and rewrite” mode turned on and had been leery of doing it again in “write fast and don’t rewrite” mode, but it actually work out well to track on write-fast mode! So thank you.
As for the rest of the post, right on!
On all the statements in December Kris and I had stories in over 50 outlets that we could count, so selling just one copy every month in ten outlets is pretty much on the bottom.
Curious: How do you get 50 outlets?
There’s the “Big Two” — Amazon and B&N.
Then there’s Smashwords, who sends to Sony, Apple, Kobo, and Diesel (not counting Amazon and B&N).
And then there’s Scribd (which I just discovered).
That’s 8.
Where are the other 42?
How do you get to them?
Jeff, forget Scribd, a waste of time. You do realize don’t you that Amazon is selling in many countries? They have the Great Britain numbers pulled out, but the others are weaved into your sales. iPad sells in a dozen English speaking countries and actually break them out as well. You’ll see those on your statements on Smashwords. Kobo powers dozens of different major stores (including Borders and the company that just went into bankruptcy in Australia. All run by Kobo. Sony also powers a lot of sites. And don’t forget POD. And Overdrive. And so on. I tried to count them one day and got to about fifty before giving up. Luckily a lot of them all come down into the four major sites, Amazon, Pubit, CreateSpace, and Smashwords.
Yeah, I knew that Amazon is international … but I didn’t realize the others were distributing to other retailers. Thank goodness we writers only have to deal with Amazon, Pubit, Smashwords, and CreateSpace.
Question about POD: How many stories would make a good POD book? Just looking at the collections on my shelf, I’m thinking about 20. Though I as soon as I say that I remember some of OSC’s early collections only had eight to ten stories. I suppose it would depend on length? Aim for a short story collection of about 80,000 words?
Hey, Jeff, it’s a new world. Guess what???? No rules!!!!! Kris and I are doing 5 story collections, both electronic and POD. We sell them for $2.99 electronic and $7.99 trade paper. They range around 150 pages trade paper and look pretty nifty. Cream paper, a little thicker than a digest, 5 1/2 x 8 1/2 trim. We also do larger collections, ten stories or more, for $4.99 electronic. And Kris put 5 short novels together and we’re selling that for $4.99 electronic.
No rules. Come up with a publishing plan and then give it a shot and see what happens.
(Did you folks know that I did Short Story Paperbacks at Pulphouse? We did 60 SF/Fantasy and 10 Mystery books, all with a single short story in them, some with signed leather editions. Sold great and we got stories from writers like Joyce Carol Oates, Orson Scott Card, George RR Martin and so many others. And the book were nifty. Little perfect-bound books we sold for $1.99. Not a new idea, though. Dell did them back in the 1930s call the Dell Ten Centers.)
Brain smoking. I’ve got so much to learn. Thank you for the enlightening post, Dean. I didn’t realize there were so many outlets! This is truly exciting!
Great post as usual, Dean. I enjoy crunching numbers, as it seems do many of the folks here.
I’ve run two businesses before. One crashed and burned, in no small part because I had no understanding of accounting.
The other did quite well, and after six years I sold it to go do other things. It’s still going strong today. Understanding basic finance is *crucial* to business. Seriously worth studying.
But so many people don’t want to. Someone talks to me about their indie publishing, I ask them whether they registered a business name yet, and they sort of look at me with a quizzical eye. Drives me crazy.
Granted, registering a business name is among the least important prep bits one does – but failing to do so pretty clearly indicates the person isn’t thinking about the business as a business, which is a huge problem from day one.
OK, now a question. You said: “just don’t short discount even though they offer it”. I’m just not understanding that as a blanket statement. In the case of Robin’s sales on her blog, she would have earned $2000 more in Nov/Dec by short discounting, even if she had lost *every* non-Amazon sale. Why would you not short discount if short discounting made you substantially more money?
Wouldn’t it make more sense to say “don’t short discount if your business plan involves heavy marketing to get your book on bookshelves”? It seems to me one should look at their sales profiles, do the math, and then go which way makes more sense.
Case Studies:
If I’m making 800 POD sales a year on Amazon and 200 more on B&N.com, and another 200 at various bookstores – then on a $16 POD that costs $5 to print I make $3680 at Amazon, $280 from B&N.com, and $280 from the various bookstores = 4240. OR, I can make $7800 if I sell only to Amazon and B&N.com at 20%, and lose all the bookstore sales.
If I am making 500 sales to Amazon and 500 sales to bookstores for the same book, then I make $2300 from Amazon and $700 from the bookstores = $3000. OR, I make $3900 from Amazon at a 20% discount even if I lose every single one of the 500 bookstore sales in the process.
If I am making 500 sales to Amazon and 1000 sales to bookstores – twice the number – then I make $2300 from Amazon and $1400 from the bookstores = $3700. OR, again, the $3900 from Amazon at 20%, even losing all bookstore sales.
I guess I just don’t understand your negativity toward short discount, Dean, and I want to. Most indies whose numbers I have seen make only a small fraction of their POD sales at bookstores. Doesn’t it make more business sense, if that is the case, to maximize your income by short discounting? What am I missing?
I honestly know, Kevin.
Short discounting, as a business term in publishing refers to what a publisher gives a bookstore. I have no idea beyond that. So someone is going to have to explain it to me if it means you can short discount Amazon, which makes ZERO sense why Amazon would allow that.
So not a clue, because the only discounts I am seeing at all is to bookstores in both POD sites. So if there is a way to get Amazon to take only a 20% discount, you want to point me to that page. I’d love to try to understand it. But in all publishing, for fifty years now, short discounting means giving bookstores and distributors short discounts. I short discounted the rare signed limited edition books from Pubhouse because I would only have a few of them to sell.
Dean,
PLEASE, PLEASE, PLEASE warn readers that cookies have to be enabled to post a comment, so no one else suffers a lost post the way I just have. Grrrr …
Okay, now I’ll say “hear, hear” to the other comments of appreciation for your efforts to focus writers on the ‘business’ of writing. But one part of this post, along with your recommendation of Robin Sullivan’s recent blog post on CreateSpace vs. Lightning Source, has left me feeling obliged to say more.
You warn indie writers/publishers against choosing a 20% discount to POD retailers because it will cut off the possibility of brick & mortar store sales. So? How many indies can sell significantly in that channel? You know an indie’s only large-scale distribution possibility is online, where Lightning Source’s 20% offering is widely accepted. Here’s a blog post by Muriel Lede with a terrific exposition of an indie’s POD options: http://www.selfpublishingreview.com/blog/2010/08/16/publish-with-lightning-source/. I’ve found Aaron Shepard another good source for POD details.
CreateSpace may seem easier to use and profit-comparable (as it once did to me), but an author will definitely get better unit profits online going with Lightning Source and their 20% plan. The POD numbers in Sullivan’s article were seriously misleading (which she’s since acknowledged but not yet corrected, and which you don’t seem to have noticed) because she based them on the assertion that Amazon won’t accept a discount smaller than the 40% CreateSpace offers. But Amazon does – they do accept LSI’s 20%, which puts twice the profit into the publisher/writer’s pocket. And why would a writer in English ignore the international POD sales that LSI/Ingram can provide but CS can’t? There are more readers of English outside the US than inside it, with access to ‘local’ online sellers and Ingram-connected POD printers springing up across the globe. (Seems to me very few US writers think of the Earth as their market, the way they should.)
For all professional indie publishers, those who want to maximize their profits and grow successfully into the future, I’d call it dead obvious that, for now anyway, LSI/Ingram should be the preferred POD supplier and Internet sales the primary distribution channel.
And I’m not an Ingram shill. I’m just an independent author trying to make a living from my writing, which is why I want the most profitable publishing options I can manage. Thank all gods for ebooks and the 70%+ royalty!
Cheers, and thanks again to you Dean for all the thinking you encourage.
Okay, enough from me for now on this 20% topic. Off to do my research because I am clearly coming as a publisher at 20% discounting and the completely negative aspects of what it used to be. And trust me, it used to be hugely negative, just as self-publishing used to be hugely negative. So I’m off to do the research and see if I can dig up some more actual facts. But that does not mean I am supporting 20% (or short) discounting to stores. I am sure that somewhere in the process there is a downside. I’ll look at it and figure it out and be back with a fact-based post. Stay tuned.
Bill, wow, I was going to take out that link you put in to Muriel. But then decided it was enough to scare off most people. And, of course, she’s just talking from her like of LighteningSource with no real facts of the others.
And she is just dead wrong on one thing. She said, “That leaves us with the better and only viable strategy for self-publishers, which is to opt the for the minimum short discount of 20%, not returnable, and to hell with the Ingram Advance catalog! That means an online-only strategy, as brick and mortar bookstores will not carry your titles unless they take the lion’s share of the profits while having you assume all of the risks (if you ask me, it’s a racket). But that also means much more money per copy in your pocket and a safe business plan. Don’t be afraid to offer the minimum discount; some will tell you it’s risky because retailers might snub your title, but that’s just an urban legend.”
Okay, I used to be a very real publisher, you know, 5th largest publishing company in the US in Science Fiction and Fantasy. And you can trust me, that paragraph is so full of crap, I almost choked. Retailers WILL snub your title. I just asked one tonight, actually, while talking with him on the phone about another matter and he just laughed. He would never touch a 20% discount unless it was for a rare signed and limited. Period. No urban legend. Snort.
And wow, what little bit I have look at LighteningSource, I would use their full catalog and suggest anyone really trying to be a publisher use it as well. (I will use it for hardbacks I will do with them, no issue, but I sure won’t short discount.) For a writer with only one self-published book and a ton of money to spend, no issue, use the short discount, but holy crap, a new writer trying to wade into that with those prices. I used to be a publisher, I used to do book layout and it still took me three tries with CreateSpace to get my first one right and two tries on the cover and two rounds on the proof. If I had gone with Lightening Source, I would have spent almost $500 on those same mistakes. It cost me $64.00 with CreateSpace.
So far, in my research (luckily I have an account on both), I see only one-book writers with a lot of money short discounting. Anyone else, who wants to promote their books around the world needs to log into the full Ingram Catalog and sign up for the return system. Or use CreateSpace. But I am still researching, so give me more time.
This short discounting smells a great deal of the 99 cent pricing kind of thinking. It is just not making any sense to me at all. But I am trying to keep an open mind and keep researching.
Ah, OK. Aaron Shepard has talked about this a lot in his books and website. Zoe Winters also mentions it in her “Smart Self Publishing” ebook.
Amazon accepts as low as a 20% discount.
So does B&N.com, and so apparently do many (most? all? don’t know) other online book retailers.
So the bottom line is that pretty much the only place a 20% discounted book is denied access today is bookstore shelves. Which is a place indies generally can’t get anyway, without offering returns. I’m not sure if you can order a short discounted book from the front desk at a B&N, but I would guess it is likely you can, since you can order it from their website.
So – unless you’re trying to get stocked on bookstore shelves, I’m really not sure there’s any reason to go above a 20% discount…? On a $15 book, you break even compared to Createspace after about two dozen Amazon sales (less if you sell any on B&N.com), and after that it’s $2.50 extra per book on Amazon, and $5.50 extra per book on B&N and other sites.
Short Story Paperbacks intrigue me. I don’t think I’d buy them through Amazon, but if there were, say, a repurposed greeting card kiosk or postcard stand full of them I’d jump at the chance to build my own anthology. It might just be me, but I usually end up only reading half the stories in any given ~15 story anthology before I pass it along, and I still cheerfully pay the sixteen bucks.
The more I do the research into “NewPub” (I like to taint my neologisms with cautionary 1984 allusions), the more I’m discovering that I can Just Try the random business concepts that pop into my head and then with experience and practice the concepts will come easier and be better.
Kinda like how Just Write worked, then…
Amanda said: And that disturbs me. It makes me wonder what else I’m not thinking about.
In my experience, an expert is someone who knows enough about a field to know how much they don’t know about it. It’s us naive newbies who think we know a thing or two who are dangerous. (Often to ourselves.) Jerry Pournelle has a rule he quoted often in his old computer columns: “if you don’t know what you’re doing, talk to someone who does”.
Which is why I’m hanging out here listening to Dean.
David Barron said: I’d jump at the chance to build my own anthology.
Take a look at AnthologyBuilder.com. You choose the stories, you pick the cover, they print it and send it to you. Or you can buy one of the anthologies already put together by someone else, if they’ve made it available.
It’s a neat concept. They screen submissions, the content (about 1400 stories so far) is almost all reprints.
(Disclaimer: I have no financial connection to AnthologyBuilder, but it was founded by a fellow member of the online neopro writers group Codex.)
Excellent read. While I didn’t dive into figuring out the expense information and turning a profit, I did plan set a 3 year plan with the series I am writing. It feels good to know I naturally am taking some of the correct steps. And this article helps me a little further with what I should do.
Dean, her article was not very well written, but I think she was sort of thinking about “retailers who matter to an indie” when she said retailers – i.e., online bookstores. Not brick bookstores, which are pretty much off limits to indies regardless. Not well written, but based on the rest of the article (she says clearly at one point ” If you wish to see your book on the shelves of brick and mortar bookstores, you must offer a trade discount of 55%”, so she obviously knows this), I am pretty confident that’s what she had in mind.
I’ll be *very* interested to hear what, if any, drawbacks you see, because “can’t sell to brick bookstores” is not a drawback to an indie who already can’t do that.
Check in with Zoe, maybe – her print books are all LSI/20% discount. So are Aaron Shepard’s. They both seem to be doing OK, and their books are certainly available on Amazon/B&N (although I notice Zoe’s new one is listed on B&N and not on Amazon, not sure why).
Anyway, great article. =) Professionalism is *crucial* to success in any career, especially running your own business.
Kevin, wow, the assumptions, the assumptions…. I’m puzzled why indie publishers can’t sell to brick and mortar bookstores? Kris and I already are doing fine at that and we haven’t even started that phase yet. We’re focused with WMG of getting the inventory in place, or at least part of it.
And this kind of assumption from the same people (writers) who think that pounding brick bookstores with flyers and bookmarks is a smart thing to do to promote their traditionally published book. (It is not…it’s just stupid.)
So where does this (giving up on) thinking about where 80% plus of books are sold come from???? I know I sure never think that way.
Oh, by the way, “short discount” the way I used to understand it, still means EXACTLY the same thing in this new world. (I got that much figured out so far.) Short discounting is cutting the discount rate that you sell your book. If you sell copies under short discount, you make an extra 20% of the gross price (sort of). In the past short discounting was only used for highly desired and short print run books. Short discounting in the past and through LighteningSource cuts off 95% of the possible retailers and makes the book less desirable for the retailers who do decide to take it.
I called a friend this morning in B&N who overseas a B&N order desk and the short discount books don’t even show up on their computers most of the time. They have to be specially put there and the folks upstairs don’t like it much because the paperwork issue cuts into that 20% they are making. Most special orders from Ingrams and Baker&Taylor run between 32% and 36%. The stores will batch them to get higher discounts and free shipping to get that percentage discount up. That’s why sometimes a special order book will arrive in a week and sometimes take two or more.
You put your book into short discount and you are cutting a ton of possible orders. Orders you won’t even know you are missing because of your greed and your inability to price your book correctly. So far, after a number of hours of research and a few phone calls, that is my opinion. However, I am still searching.
So, now, someone want to tell me why the assumption that indie publishing companies can’t go direct to brick bookstores? I don’t mean through some distributor. That’s already possible, and trust me, if your book is running like a Konrath or a Hawkings, stores will be looking to order it in paper when they hear of it or see it on a bestseller list. But I’m talking about going direct to bookstores? Why is that an assumption?? Why do people think that isn’t possible? Again, trying to learn here myself.
Or, as I suspect, is this just another myth.
So far, I have made more money on one of the books WMG has at CreateSpace selling directly to brick bookstores than I have through any distribution channel. I’ll do a post in the near future on how to do this like a regular publisher.
Another hour on LighteningSource doing research. I am getting more frightened of that place by the moment. If you don’t have a perfect book the moment you send a file to them, either cover or interior, you better have your account full of money. That alone scares hell out of me.
So, at the moment, here is my plan. I personally am staying with CreateSpace for the cheaper author copies (which means cheaper books direct to Brick bookstores…I’ll explain later in a post) and no extra or hidden costs at all. I will use LighteningSource only for hardback with dust jackets on special books and I will use their full catalog and return program. But again, still working on the research between the two, and trying to combine in Lulu, but since I live in the States, failing to find much of value in Lulu in any program I could use.
Back with more.
Very helpful post and comments, Dean.
Especially the part about Scribd.
Thanks
Dave
http://www.davidbischoff.wordpress.com
I wish I knew more here. I see an AWFUL lot of 20% discounted print books in their catalog. I wish I knew better who all was using that rate, but of those I know are using it – all of them are there. Maybe Zoe Winters will stop by here and chime in.
I talked to the folks at my local B&N. They can order Zoe’s new book, but they noted that it’s a POD, so it might take a week or so for it to arrive. I’d also have to prepay, but that is true for *all* POD books ordered from a B&N counter, regardless of discount rate.
Incidentally, however, I can get her books via Amazon on the same free two-day shipping (I have Prime) as every other book they sell. Estimated arrival date is the same.
So it sounds to me like neither B&N nor Amazon treat 20% discount books any differently from any other POD book.
****
OK, what about getting books into bookstores? Not talking about for a Hocking-class standout, either.
Is it a myth that you can’t? I thought you’d said yourself here that is tended to be prohibitively expensive, beyond maybe a deal you set up with a local indie bookstore to shelf a few of your books.
My understanding of this process is pretty weak because as far as I know there aren’t many if any indies doing it, and no one is really talking about it. =/ But what I gather is you need to:
- Offer returns, which by themselves are often prohibitively expensive.
- Sell the vendors on purchasing your book. Somehow. Through some arcane process I don’t know and haven’t seen anyone demonstrating.
Not sure if you can do POD either – if you have to print copies up front, that’s another huge expense.
But yes – if you can sell more than twice as many copies in brick bookstores around the country as you sell via Amazon and B&N.com, then you should seriously be looking at a standard retailer discount, not the 20% rate. I just haven’t seen or heard of a single self publisher doing this. Have you? If so, how?? I’d love to learn this, if it’s doable.
First of all, thanks for another great article that proved to be quite thought provoking.
That said, I have a question. I understand the value of looking at the new world of publishing as a Long-Term picture and not the Short-Term of Produce. I understand that we, as writers, need to be responsible for our own careers and part of that is taking money and finances into account.
Still, is there another reason to do a Profit-Loss projection on a project?
For example, I’ve just finished a short story that took me 11 hours to finish. By your math, that means if I give myself an hourly wage of $20 (I can dream, right?), I need to make $220 from this story to be worth it. Which means at $.30 per story sold, I need to sell around 735 stories to break even and that’s just accounting for time spent.
I work part time and then I write. My bills are paid for by my wife and my part time job. Writing money will be gravy until I make enough that I can A) quit my part time job or B) let my wife quit hers.
But what happens if my story doesn’t ever sell 800 copies? What happens if it sells 10,000 copies? I can’t predict it and I certainly can’t change it. The story is already written – I’ll never get that time back, regardless of the story’s future.
So, is there a reason to do the Profit-Loss on a project? What am I missing?
Thanks in advance,
Erik
Erik, you’ve said your goal is to have your writing earn enough to let you quit your part time job – maybe let your wife quit hers.
That’s a goal.
The point of accounting is to track your progress toward that goal. If you’re not reaching it, then you know you need to change elements (write more stories to have them up for sale, for instance, or continue practicing so that more people will enjoy your stories, or pay less in money or hours spent for each work you publish).
P&L can’t change what you have already done. But it can tell you how what you have done is performing compared to your expectations and goals – which can then be used to inform your future efforts, and perhaps to modify your future goals.
Accounting can also help you avoid stupid expenses and bad business finance errors. If you’re not tracking expenses, then it’s easy to just browse the internet “researching” without considering how that is adding to your investment in the writing – and therefore, to the debit side of the ledger. If you’re not tracking expenses, then it’s easier to get coerced into paying too much for some element of your writing. When you’re tracking every hour spent, and every dollar paid out for some service, against future earnings and hoping to wind up in the black, then you’re much less likely to make horribly bad calls.
Erik, what Kevin said exactly. Also, having a long term plan and a knowledge when you will be paid in full for a piece of work, at least in theory, will keep you from just looking at something that hasn’t sold in two weeks and doing a panic thing. Long term P&L planning, and that’s all it is is planning, help you stay focused.
And if you want to have a certain income and then do a P&L and realize that the income you want doesn’t match any reality, then you can make planning changes as Kevin said. All businesses do them in one form or another, either as yearly budgets or as project P&L projections.
Erik- I don’t know if this will answer your question, but when I did the math on my books and stories, I found out that novellas were actually the length that would earn back the quickest. That surprised me, because I’d thought that novels would probably have the quickest break-even point (given the numbers of copies I’m currently selling on things). But it appears that, again given the numbers of copies I’m selling now which isn’t many, novella-length fiction might be a better investment of my time at the moment. So that was one good thing that came out of doing this math for me.
Plus, while you can’t get the time back (that you’ve already spent), it’s good to know what is going on with your business and where your money and time are going as well as how money is coming in. And having numbers to help set goals is good as well.
What Annie said as well. Helps in all aspects of planning.
And note: If your 5 year P&L projection comes true in three years or seven years, it’s still good because after that, baring major other issues, you are into passive income, meaning the money coming in is clear profit, no expenses placed against it and no more work needed to be done. Passive income in writing (like selling a book overseas that has already been paid for by a traditional publisher, or having income come in after a book has earned out in electronic publishing) is a wonderful thing about this business.
(Alastair! Nice call on AnthologyBuilder. It’s like they read my mind…)
I’m relieved to hear you say you’re wary of LightningSource re: extra/hidden costs, because I was beginning to think I was crazy when everybody else was so gung ho. I kept running across a new “fee” while reading the FAQs/manuals. I got the feeling that I wouldn’t want to try LightningSource using my typical “Learn by Doing” method.
Whereas CreateSpace was much more reassuring (and clear), but I still need to do more research. I think I’ve got most of the POD widgets floating around in my brain now, though, so I suspect that I’ve done sufficient pre-search for your upcoming POD post to string them together so I can put together the system and run a plan through it.
Oh, got that right, David. Don’t even think of trying LighteningSource until you have your book and layouts down perfectly. I’m getting pretty good at it and I wouldn’t try it yet because I’m just not that rich paying $40-50 for every mistake. And I make mistakes. As you all have noticed. (grin)
I talked to another bookstore owner tonight and he just laughed when I asked him if he would ever buy short discounted books. He said the last time he ordered a book short discount was from me at Pulphouse for a book that never got published and I had to refund him his money. (I know what book he was talking about, he got his refund, and I am saying no more on that. (grin)
Would someone who is on LighteningSource run some numbers for me?
A 300 page book, trim 6 x 9. Trade paper. $13.99 at 40% discount. What is the cost of the book past the up front money? Meaning what does a publisher get in the final accounting per sale? I would do it, but can’t seem to find the page that give me all the per page and per book costs above the discount. Thanks! Also, what can a publisher buy copies of their own book for?
On CreateSpace, the calculations for that are as follows:
.85 cents per book plus $3.60 total page charge for 300 pages under the pro plan at .012 per page. Total under the pro plan before discounting to stores is $4.45. That is also how much a publisher can order the book for. No extra cost except shipping.
So Create Space for a $13.99 book at 40% discount is $8.39 minus the $4.45 is $3.94 profit to publisher. $39.00 plus proof costs of $4.45 and shipping to set up. Got to sell about 12-13 to get up front costs back.
Appreciate the help here. Just trying to understand the differences clearly. Thanks.
Really looking forward to that post, Dean. And thanks for taking the time to share your results with us. If there’s a way to get books into B&Ns and indie stores around the country – on the shelves – that could have *enormous* impact on sales, and would be worth a lot of extra hoops to achieve.
Re: LSI charges. Print costs are 90 cents plus $0.013 per page. That plus shipping is the publisher’s copy costs. So for your example book, it’s $4.80 print costs per book, a bit more than CS. So LSI for a $13.99 book at 40% discount is $8.39 minus the $4.80 is $3.59 to the publisher.
Also about $75 set up – which you have to pay each time you make changes (what Dean’s talking about when he says “don’t make mistakes”!). Assuming you get it right on the first go, you have to sell about 21 copies to break even.
There’s no doubt – zero doubt at all – that if you’re going with the 40% discount that CS is a better deal. The math there is undeniable. But if you’re not stocking the books on bookstore shelves, if you’re just selling on Amazon and B&N.com, then using the 40% discount makes no sense financially.
With the same book, the 20% discount increases publisher profit to $6.39, which takes the same 11 or 12 sales to make back, BUT for each sale after breakeven, you’re earning $2.80 more on the LSI book than you would on the CS book.
Again, unless you are not only stocking bookstore shelves, but selling more than twice as many copies at bookstores as you are at Amazon/B&N.com, you’ll make more money losing every bookstore sale and going with the short discount. Looking just at income as a factor, if more than about 2/3 of your sales come from off the shelf purchases at bookstores, CS makes more sense. Otherwise, LSI makes you more money.
Thanks, Kevin, for figuring the LSI charges on that book.
I’m just never going to agree that I can see for any reason to cut off a ton of your markets by short discounting. If a writer is that worried about making a certain amount, just raise the price to $15.99, still a normal price on the same book and make a large part of the extra back and have all markets open. For me, so far, if I’m going to spend the extra money to get a book into LSI, and take the risks of spending even more by making a simple mistake, I’m going to use their entire service, all their catalogs, and everything.
And the $4.80 per book vs the $4.35 per book publisher costs is pretty large, actually, when selling directly to bookstores. That’s an extra 45 cents per copy in pure profit that way and I have a hunch I’m going to be selling a ton more direct to bookstores than I ever will across Amazon. But again, that’s just me.
Here’s is how I look at it in a nutshell. If I’m going to take the time and effort to do a POD, especially with the learning curve and dangers of extra costs with LSI, which I will do for hardbacks, I am going to try to have the entire English speaking world as my market. I’m not going to cut off anything, anywhere. To my business mind, that makes no sense for a slight bit of extra profit per copy sold in a more limited market.
Again, still looking and I sure will know more when I do the first hardback through LSI. But right now, I’m staying with the open market of CreateSpace and when I do go to LSI, I will us all their open markets as well. Short discounting just makes no logical sense to me as a publisher now and former publisher back when.
That said, I’m with David. Createspace is a HECK of a lot easier to use, easier to manage, easier to play with things. It’s designed for the casual user, designed for someone who has no clue what printing is, doesn’t understand what CMYK stands for, doesn’t know how to build a cover to take bleeding into account, doesn’t really know anything about print production or publishing.
For the newbie, CS is a decent option simply because you’re going to get a good education in a very hand-held sort of way.
It’s also a good deal if you’re just sticking a toe in the water, and are unsure if your book is good enough to make many sales. LSI costs more – about twice as much to get rolling. If you’re going to choose between burning $50 on a book that doesn’t sell and burning $100 on a book that doesn’t sell, most folks would prefer the cheaper option. For the new writer who’s “daring to be bad” and trying to see if they’ve got what it takes, CS is an inexpensive way to stick that proverbial toe into the H2O.
Dean —
Was wondering if you (or anyone here) have any experience with Espresso Book Machines network? Investigating them and (if it proves feasible) getting my catalog listed with their POD network is on my March agenda.
-Dan
Dan, got to go through Barnes & Noble, usually through LighteningSource. Beyond that, I have no idea either. Anyone?
Dean, related but different question… Ebooks are shrinking the size of a “viable” book. Lots of folks are out there selling books at 60k, 50k, 40k, even as low as 20k words as ebooks. But I think for print, there’s still a certain expectation of size.
About where do you think the cutoff would be for that? At about what point do you see as a minimum length for a print version, below which you should be looking at omnibus editions of shorter works instead?
Kevin, I don’t see any minimum size of a print version, to be honest. But the price of the book needs to come down with the size of the product. Most of these places print chapbooks. I wouldn’t use them for a chapbook because you can do it yourself with a decent printer and an extended arm stapler, but they do it.
Great post Dean – that’s kinda the way I’m thinking.
When you look more at POD, are you planning to investigate “foreign” sales? As a UK-based author, I’m frustrated by Createspace’s America-centric distribution (and don’t even talk about only paying me by cheque (check) in dollars!).
I’ve just published my latest book in a combination of Lulu & CS to try to touch all bases. But I’m thinking about trying Lightning Source next time and seeing how that works out. Like you, I am wary of up-front charges as I’m a bit of a mistake maker. But, then, CS charges me $25 to ship a $5 proof book, so maybe it’ll be worth it.
There are 66 million people on this little island (it’s a wonder we don’t sink), not to mention the populations of other places like Australia – that’s a pretty big market. I would be interested in your thoughts about reaching these markets.
Jane,
I like LighteningSource for it’s potential overseas distribution of physical books. CreateSpace no so much. So I agree with you there. Lulu, again, just seems much more difficult and pushes the publisher model vs the POD model, and just as I had trouble figuring out costs with LSI, and potential costs, Lulu has me just flat baffled. Now granted, I haven’t dug very deep. But wow, until you get into their process, I think it’s a crap shoot. And I also like their claims of overseas sales.
So physical books overseas is becoming an interesting factor, one that I’m not sure is going to be a huge factor in five years, to be honest. The electronic books are really getting into markets that are almost impossible to get into by physical product. As a person who played on eBay for a number of years, trust me, shipping physical products between countries is just a pain and also not really trustworthy. So for you, Jane, in England, you would be better to try to stay with Lulu and get through their issues. For those of us in the states, talking about physical books only, CreateSpace is how to start because it’s cheap and easy and then expand into LSI once you get better at laying out books and for special products and to get some overseas penetration.
However, no one has yet given me a logical reason to cut off many sales channels to make a few extra bucks through a few sales channels. Short discounting to me is still a head-shaker. If someone is that concerned about making a couple extra bucks, bump the book cover price two bucks.
Well, that’s cool. =) I’d really like to do print versions, but have a 42k word work that I wasn’t sure if it would make sense to do as a stand alone, or if an omnibus made more sense.
With the CS system, I could get it up for $7.99 and still make about $2.30 a book, and make $0.70 on extended distro stuff via bookstores and B&N. (LS would be about $3.60 profit per copy at that price, which would let me potentially drop it lower, but I’m inclined to think $7.99 is a decent price for a 5×8 or 6×9 short novel…?).
No logical reason…
One more shot at that, then. The numbers Robin posted to her blog show her selling about 500 copies @ $13.99 on Amazon, and about 75 copies via all other distribution.
Now first off, she didn’t say how many of those 75 were B&N.com sales. My guess is most, if not all of those are from B&N.com, which also accepts the 20% discount, which means she’d lose zero sales by going that route.
But suppose they all are, and she loses 75 sales a month completely, losing the $86 a month average that would make via Createspace entirely (13.99 – 8.40 – 4.45 = 1.17 * 75 = $85.50). In return, the 500 Amazon sales she makes sell for (13.99 – 2.80 – 4.80 = $6.39) a copy via LSI, a boost of $2.80 per book for a total of $1400 a month more income. Subtracting the $86 from lost sales, Robin would still looking at an extra $15,768 a year by going LSI over CS.
That’s HER math, for HER situation. Someone else’s milage may vary. But I think it’s very worth doing the math, to know what the other option would provide.
Kevin, so much of the print versions depend on your layout, your margins, your font, your spacing, and trim size. Kris has a collection up on CreateSpace that is five short stories, about 21,000 words, comes out at 144 pages, 5 1/2 x 8 1/2 trim, and it’s selling at $7.99, which makes some nice money per copy.
Sorry, Kevin, I’ve just been around publishing too long, been around bookstores owners, owned my own bookstore, sold books in dealer’s rooms of conventions, been to major book conferences how books are sold, and you are just not going to convince me to cut out bookstores by short discounting. I think it’s pretty silly and short-sighted and just haven’t seen an reason to do so. But it is an impossible argument to make, since someone like Robin, who is short discounting is making nice money. But what kind of money would she be making if she wasn’t short discounting, if she was allowing the books to go full distribution? Any book that can sell 500 copies per month has some legs, and she’s making the horse walk on 2 1/2 legs. Sure, 500 is nice, but what is she missing out on? No way of knowing. And that’s my point exactly.
In this world it would be silly for me to cut off the markets that LSI offers just because I’m afraid of the fee structure up front costing too much. So I’m not doing that. I’m going to use both as books demand it. And in the same vein, I’m going to use ALL distribution systems that are offered and not cut off any.
But again, just my opinion. Short discounting differences can be made up for the most part by simply adjusting cover price of the book, if it is that critical to the author. Book prices are not frozen. The same person who is short discounting a book and cutting off sales, but making more per sale, will be the same person who is selling a book for 99 cents and only making 35% instead of 70%. Sorry, neither make sense to me except in special cases.
So let me be clear here. I think short discounting through LSI is a bad practice. And if that’s the only reason you are going to LSI, I think you are making a bad decision. LSI has some wonderful features, much better on distribution than CreateSpace, and international attempted distribution. Those are the reasons to go to LSI. Not short discounting.
I think what you missed, Dean, is that Robin is *not* short discounting. In fact, she didn’t know she could… So even her LSI books are not short discounted (she has some LSI, some CS, none are short discounted).
Despite that, she’s only making 75 sales a month in all non-Amazon venues. Which means she is losing almost $1400 a month compared to what she’d be earning on short discounts at Amazon/B&N.com only.
She’s obviously not selling much, if anything, to bookstores (I still strongly suspect most of her 75 a month non-Amazon books are sold on B&N.com). And…that’s pretty typical from what I have seen of indie books. The Amazon ebook top 100 bestsellers is 39% indie right now, which is incredible. But indie books are still not except in rare cases getting onto bookstore shelves.
For instance, I’ve studied the indie market really intensely for the last six months, but I have no idea how I’d go about getting B&N to stock my books on their shelves. I don’t think most folks do. If we can do that – if we can breach that barrier, and get on those shelves – then obviously short discounting makes no sense. But if we can’t get there *anyway*, then why lose $2-6 per online sale trying to set discounts to get into a market where we can’t sell?
So I guess that’s the crux of it: how does a small publisher get books onto bookstore shelves?
(And thank for the further advice on print setup/pricing, much appreciated!)
Uh, Kevin, there are a ton more bookstores than B&N. And you can even get to B&N with a decent company, meaning your own publishing company has to be acting like a company, not a self-published writer.
All their instructions on how to get your book looked at by their buyers are on their web site. But don’t bother if you only have two or three products and those products aren’t professional and you aren’t in the returns program.
I have been talking about all the other stores out there, and distributors, and everything else. B&N is large, sure, but there are other stores. Honest.
Folks…how do you get to a regular bookstore with your books?
First off, act like a publisher. Have a publisher name, a publisher business account, and so on.
Secondly, act like a publisher, meaning actually do catalogs and set publishing lists and when you are going to bring out a book or books.
Thirdly, act like a publisher, which means put together flyers on the books and catalogs and send out ARC to bookstores with a real discount schedule. You know, a discount schedule something along the lines of 1-5 copies 40% discount plus shipping. 6-10 copies 45% discount plus shipping. Over ten copies 45% discount free freight. All orders paid in advance. And then set up your book pricing so that when the bookstore places an order with you, and pays you up front, you can go to your POD publisher, buy the books, and tell your POD publisher to ship the books to the bookstore address.
Fourth, act like a publisher, meaning send out new updates and catalogs to stores regularly, keep the stores on your mailing lists, both paper and electronic. Don’t send any bookstore the trash that writers send them that will get tossed like bookmarks and such. Have a publication catalog, real book flyers, discount schedules, and then be regular.
Indie publishers, meaning an author with one book that they are trying to push, won’t get into bookstores except through the POD channels for special orders. But trust me, by this summer you will see WMG books in stores. Why? Because WMG is a publisher, a real one, a building one (web site still under construction) and knows how to act like one.
And short discounting just isn’t a way to act like a real publisher. If you are that greedy for a few more bucks per sale, up the price of the book.
So anyway, that’s just my opinion. Do what you want, folks. It’s your publishing company.
Of course, now you’ve got me out *studying*. Sheesh.
Interesting link:
http://bookweb.org/files/open/pdf/pubpartner/PPPGuideBook2011.pdf
Am I on the right track here? ABA is a big name org for the indie bookstores out there. Being a partnered publisher means access to those stores in a credible manner, from the looks of it. It’s also $350 a year and you need to be publishing 5+ books a year, but that seems manageable. Trick then is to make enough sales to make back that $350.
Worth looking at. And maybe worth keeping discounts up for.
Thanks for the link. Yup, the ABA program is pretty nifty and often worth the dues. It’s been around for a while now. Just the access four times a year to all their member bookstores mailing list is a nice feature. Also, one of the stores here in our small town has been a member and he checks the boxes every month for the ARCs he’s interested in getting free from the publishers in the program, and then shares them with the writers at our Sunday lunches after he’s looked at them. We’ve all seen some horrid books and some really nifty ones where we became fans or the press or the author. So many of the bookstores pay close attention to the program and pay attention to the monthly box that comes in. One of the many programs out there.
You know there are also small distributors with some pretty nifty plans as well, including distributors that only specialize in small and specialty publishers.
And I bet the indie online writers/publishers thought they invented a lot of this basic stuff, huh? (grin) But there really is a way to access all these thousands and thousands and thousands of bookstores where the billions in sales are made by traditional publishers. But, alas, it means acting like a publisher, which means knowing business, and as I have said in many of these discussions and agent discussions, writers don’t want to learn business, sadly.
For a start, here is a list done fairly recently of some of the top distributors of varied types of books. Also, at the bottom of the list, you can buy for $40 a list of 700 of the top indie bookstores with addresses that buy from small publishers. And for the same amount a list of overseas distributors.
http://www.bookmarket.com/distributors.htm
Great post, Dean.
Would you post on how to approach indy publishing as a publisher? I’m picking up a few things here, but I’m so ignorant that I’m not sure what I’m missing. I don’t even know what questions to ask.
DeAnna, a coming chapter in this series. Shortly, actually.
Dean,
First of all, thank you very much for the great posts on this blog, both the New World of Publishing and Writing Myths series, all of which have made for great, eye-opening reads over the past few months. Your wisdom – especially regarding writing fast, rewriting and daring to be bad – have kicked me out of a rut in my writing that had lasted for almost a year and a half.
My question on this post is the following:
Should a writer who is just starting out (ie. me, who will have their first work up a month from now) already start doing profit and loss projections, setting up business names, separate bank accounts, etc.
Or should I start by getting my work up there, seeing how things progress and then setting up the business side of things? I don’t want to put the cart before the horses, as it were, when I should be concentrating on writing and getting more and more work up.
Thank you again for these great posts!
James
James, here is just my opinion. I honestly don’t think there is a “correct” answer to your question that would fit all writers. But my answer is this:
Writing comes first. Daily or as often as you can carve out the time with the real world pounding in. Producing product and enjoying the work is the first and most important thing.
I’m going to be doing a post soon on how to be a publisher and also next fall Scott William Carter and I will do a workshop called “How to be a Publisher” which will not only include how to launch books electronically and layout books on POD, but how to set up a publishing company, what levels to take it, and so much more on those kinds of details. But I honestly think that once a writer is thinking of starting to indie publish, it’s a very easy step to set up a publisher name and do some basic business calculations. You most likely will be wrong with the numbers, but remember every book published by New York is just a guessing game as well. No one really knows what books will sell and which ones won’t. But I think the earlier you can treat the publishing and writing as a business, and think like a business (when not writing), the better off you will be.
The key is to pretend you have two hats. You put on your artist hat and write what you want to write, what makes you passionate, what you enjoy. Then when you are done with the artist hat, you put that hat on the hook and put on your business hat to sell and market the product you (as artist) has produced. Keep the two very, very separate and you’ll save yourself a ton of problems.
@ James Monaghan
I was in your position about four months ago … and boy do I wish I had all my ducks in a row back then. Most importantly –
1) Keep your blog separate from your publisher. I didn’t do this, and it’s been awful annoying. Plan to fix it this summer.
2) Get a separate checking account. Doing that this week; wish it was done four months ago.
3) Start a file and keep track of where you get the pictures of ALL your book covers.
Those are the three big mistakes I made I wish I hadn’t.
Basically, be a professional from the FIRST MOMENT you start down this road. Makes things easier. Much easier.
@ Dean: Thank you for the opinion. So far this year I’ve managed to get the daily writing bit down, 60k so far this month, with two novellas and a couple of short stories finished, and I’m enjoying the fast writing method once again.
I’ll definitely try to put into practice the two hats idea. I’m also looking at how all of this advice applies for non-US writers – I’m in France, so I’m not sure how things like setting up a business, etc. works over here.
Thanks again, and I look forward to your future posts on how to be a publisher.
@ Jeff: Nice to get the input from a fellow newb who is not too far further along the road. All of your suggestions seem very clear and logical. I’ll certainly be putting them all into practice. Thanks again.