Think Like a Publisher 2012: Chapter 2: Expected Costs

Here we go with Chapter Two.

It’s been some time since I wrote the first version of Think Like a Publisher. Since I wrote those first chapters, Scott William Carter and I have taught three workshops by the same name, plus an advanced workshop helping indie writers make more money from their books. This fall I will be teaching a POD workshop on all the aspects of designing and selling paper books. (Watch for the announcement.)

And during those workshops and from comments and from hundreds of sources I learned a ton more information.

Plus the publishing company I helped start (WMG Publishing) now has a full-time employee and has published over 240 different book titles.

And the overall publishing business has changed as well. Amazing numbers of changes, actually.

As traditional publishers grab for more rights and become even more difficult to work with, more and more writers are moving to indie publishing. As they make the jump, they ask basic questions on how to do it, how to be treated with respect as a publisher, and even how to do simple things like setting up a publishing business.

An indie publisher is still a publisher, the same as any traditional publisher.

Think Like a Publisher 2012 is an updated version of the book from over a year ago, including some of what has changed and what I have learned over the last year or more. I’m sure in another two years I’ll do a third edition. Some things are changing that fast.

Every three or four days I will post a chapter for free here with a link under the tab above. But the entire 2012 edition is now available in both trade paper and electronic editions in all electronic bookstores (Kindle, B&N, Smashwords and so on) if you want to jump ahead of these posts. (B&N link also has the paper version through Barnes & Make sure you get the green cover. The red cover is the first edition.

Comments on each chapter are welcome and help us all learn, but keep the comments focused on the topic of the chapter, please.

I hope these chapters help you get a jump on learning how to be a publisher.

And on finding an audience for your writing.

Chapter Two:

Expected Costs 

The first chapter was “The Early Decisions” which included picking a business name, setting up checking accounts, and so on. There were no real costs at all in those early steps unless your state had a small fee for registering a business name. Checking accounts are free, so are PayPal accounts, and so on.

So, the question on this second basic business-planning chapter is: “What are your expected costs?”

For those of you with a basic understanding of business, you can now see the structure of how I am setting up these chapters. Before starting into a business, there are certain things that need to be figured. Set-up costs, projected production and business costs, and projected income.  You have no real data on the costs or the income, at least not accurate data, but anyone with a lick of sense who is starting a business will sit down and try to figure these factors out to some degree.

It would seem that expected costs should be tough to figure. But actually, in this business, they are not. At least for most levels. It just will take a little homework is all.

So, let me first divide this discussion into three major areas.

Cost in Money.

Cost in Time.

Set Costs.

All three areas are critical to figuring overall expected costs of producing a product.

In the first two categories I’ll divide the discussion down into three major ways of running your company: 1) Do All Work Yourself. 2) Do Some Work Yourself, and 3) Hire all work done.

And, of course, the categories cross over. If you find your time more valuable than your money, then hiring things done will be more of an option. And so on.

Cost in Money 

1) Do It All Yourself: For Electronic Publishing

No costs. None, zero, zip. No actual costs that I can see at all if you want to do everything yourself, and I do mean everything. You lay out the book in some free program, lay out the cover in some free program, find free art at public domain sites or free photos or take your own electronic photos with a camera given to you as a gift at Christmas on a computer given to you for your birthday.

There is no cost at all to upload a file to Kindle, B&N, and Smashwords (which then gets your story out to Apple, Kobo, Sony and others). Use the free ISBN feature on Smashwords and use the free tracking numbers (which are like ISBNs) for Kindle and B&N.

So, do all the work yourself and there are no real expense costs per project.

However, most of us buy our own computers, some of us have bought software we use to format books, and so on. There are all kinds of accounting tricks depending on how you set up your business (see Chapter One) to get some of that early expense money back when you start making money. Talk to an accountant for help with business taxes if you do not understand taxes. But for this discussion, let’s just assume you had the computer and the software before you formed this business and can use that equipment at no real cost to the business.

So, bottom line, there are basically no direct costs if you do all the work yourself and put everything up electronic publishing. (I am not counting overhead at the moment, so accountants, stop shouting. I’m trying to be real basic here.)

2) Do Some Work Yourself: For Electronic Publishing

A few large warnings in this area that we have talked about in the New World of Publishing series. If you are going to hire help, do it the way you would hire day labor. Simply put, if you want to have a hedge on your property trimmed, but you don’t feel you have the time or the knowledge or the equipment, so you hire a gardener and pay him or her for the job. A one-time fee. That’s day labor.

Never give anyone a percentage of your property for a single task. Your copyright is a property (basically), so giving someone a percentage to do a simply job such as doing a cover would be like giving that gardener part ownership in your home for trimming a hedge one afternoon. When put that way, it sounds too stupid for any writer to do, right? Well, the stupidity of writers never ceases to amaze me when it comes to business, which is why I am saying this bluntly right here.

If you pay for a task to be done, pay a set price. Period. There are lots of new start-up businesses that offer a menu of tasks for set prices.

But let me also say this clearly right now. If you are worried about money, spend the time to learn how to do this yourself and have no real costs. This is not rocket science. At WMG Publishing, we offer a four-day class in which we will teach you how to do it all yourself, easily. And so much more. You would be better served coming to one of those classes (for information, go to and then doing it yourself than paying to have someone else do every cover or every conversion.

But that said, now that I have been clear, there are some tasks you might not have the equipment to do. For example, I have a bunch of old books and short stories that at some point I will want to republish electronically or in POD form. But I do not have a good scanner and software to scan the book. I can clean it up afterward to a degree, but I will pay someone to do the scanning for me on a one-time fee per story or novel. (And don’t offer. Thanks, but I already know whom I will hire.)

So sit down, do the research (the homework I mentioned before), find the people, the businesses who can do what you need for a single fee, then compare prices, shop around, and mark the price down.

3) Hire All Work Done: For Electronic Publishing

In this area you have a lot of work to do to find someone or some other business to do all the work for you. (Giving a percentage of your property is again just silly. It may sound good, but it is too stupid for words.)

But if you do plan on hiring everything, do your homework, find the costs out, and then get the costs totaled and written down for all size projects you might do. You will need that number for the profit-and-loss statement you will be doing later on.

Print On Demand (Trade Paper)

1) Do Everything Yourself: Print on Demand (POD) Publishing

When we get into POD publishing, we start running into some costs and projected project costs. First off, just the POD publishers have some basic per project costs. CreateSpace is by far the cheapest to start and learn. CreateSpace is pretty much a flat fee of $25.00 plus cost of proof and shipping the proof. WMG Publishing usually gets a book done and approved for under $60.00 per book. LightningSource has “mistake fees” that can mount up. And their per-book charge is higher. So do your research on the two to determine what you need and then decide.

As far as software and computers, you can do it yourself on any number of programs as readers have made clear in the comments sections of The New World of Publishing. WMG Publishing has gone ahead and invested in a top-line Mac computer, InDesign, and Photoshop for me to help out on. And I am learning slowly. Plus with new programs there is the $25.00 per month fee for to learn the programs.

Again, talk to an accountant (which will cost as well) for how to figure in the capital expenditures of buying computers and such. But for per-project figuring of a POD book, the costs can range between $60.00 at CreateSpace to hundreds at LightningSource.  Estimate and research before you start to know which way you would like to go.

2) Hiring Some Help and 3) Hiring it Done Completely: POD Publishing. Do your homework. Get estimates. Then make sure you have those figures handy for figuring out a profit and loss calculation later on.

Cost in Time

1) Do It All Yourself: Cost of Time For Electronic Publishing

Wow, is this going to be tough for you to figure. Unless you already have book design skills and some cover skills, the learning curve will be painful and frustrating at times. Again, this is not rocket science, but there is a learning curve, and learning not only takes time, but feels uncomfortable.

(Note: If you are not willing to spend the time to learn, stop now. The learning takes time, but once you get ten or fifteen books under your belt, the times gets to be almost nothing. Just don’t complain to me that you haven’t taken the time to learn.)

The early books and stories will take the longest amount of time. And you will make a lot of mistakes. But the book can always be changed later. That’s one of the values of electronic publishing.

As you learn, the time spent on each project will be less and less. Honest, it will. But how do you figure your time? That’s a calculation you will need to figure out.

As I have said before, I like Mike Resnick’s saying. “If you aren’t earning $500 per day, you are not having a good day.”  Since I work over ten hours per day, I just divide the $500 by 10 and get $50.00 per hour. That’s the number I use in my calculations and on any profit and loss calculation. It works for me. And I can tell you that some of those early stories I put up for WMG Publishing will never earn out my wage because I was in major learning curve mode. Expect that.

However, I have another way of looking at this:

Your early projects are just school.

You don’t expect to get a direct return on an hourly basis from going to class or college to learn a skill. Think of the early books as learning classes and don’t charge your time against them. WMG Publishing had a meeting and decided that we all needed to develop skills, so we only did short stories for the first six months, just practicing, as if we were in school. Now the novels and other real projects are going up and they look a ton better. And we are making some money on those practice projects as well, but wow do some of them need to be switched out. We’ll get around to that over the summer of 2012.

And a side note: WMG Publishing does some basic workshops in publishing. For example, this fall we will be doing a POD workshop. And if you want a hand going through the electronic and web design and such, this summer Scott and I will be again doing “Think Like a Publisher” four day workshop. If you want a jump-start into all this, check out the workshop schedule and write me.

2) Hiring Partial Help and 3) Hiring it all Done: Cost of Time for POD Publishing.

This is where you as a publisher need to balance your available money with your available time. My suggestion to you is hold off on POD if you don’t have the money to hire help until you have the electronic sales earning money for you. And also, by then, you’ll be more comfortable with book production and can do it yourself.

But if you have enough money, again do your homework. Expect help on POD layout and covers to cost more because it takes longer. Get quotes per job and shop around. And then try to figure out how much time it will take you for each project, even with someone else doing some or all of the work. Each project will be different.

Set Costs

Set costs are expenses set by your work situation. Your computer connection fee, your electric bill, your office rent, and so on.

Best way to figure these costs if you are set up at home is set up a room or area in your home only for publishing. Then figure what percentage square foot of your house your office is. (Example: 1,200 square foot home. 200 square feet of dedicated office space. So 1/6th of all your home expenses are office expenses.)

Do not ignore these set costs. They mount up and should be calculated.

At first, these costs will be tough to figure in a per-project basis. But you need to try. For example how many projects can you get up per month? If your set costs are say $300 per month and you can manage 3 projects per month, than you need to put $100.00 in set costs against each project.

Given time you’ll catch the hang of all this. It doesn’t have to be to the penny, but do count set costs to act like a real publisher. And if you do, you’ll save money in taxes and such.

My Suggestions About Expenses

Back in 1987, Kris and I started Pulphouse Publishing because it seemed like a good idea at the time. And I was in a hurry, so instead of making sure I had the money first, I went out and borrowed enough money to get the business off the ground. And from that moment forward Pulphouse seemed to always have higher expenses than it had income.

Let me simply say: NEVER AGAIN!

So my suggestions from the school of hard knocks are:

1… Do it yourself.

If you can’t do it yourself, wait and keep learning until you can do it yourself. (I think this is the most important suggestion I will ever give you.)

2… Don’t spend one extra buck you don’t need to spend.

All successful business people are cheap.

3… Don’t put money pressures or expectations on the business and the sales of any project.

Sleeping is a lot more fun and you won’t sleep if you are constantly worrying about what you are doing wrong or trying to sell as many copies as some other writer.

4… Do Not borrow money to start this up.

Too much pressure. Let the money build slowly in the business account and only spend what you have available and then only after careful thought. WMG Publishing now has a full-time employee in an office. But we waited, even though we needed a ton of help, to hire the full-time person until we had a full year’s expenses in the bank.

5… Remember, if you do this yourself completely, this is a production business that has no real project costs beyond set costs.

Sure, as a writer, you have time and writing costs and office costs and such, and all that needs to be figured in. But you have no real production costs per book sold through your online stores. And you can make up to 70% of retail. Let the money build. There is no other business I know like this one.

6… Do Not get in a hurry.

Sure, I know this feels like a gold rush and that if you don’t jump in with everything all at once, you will miss out. But hogwash. Stop reading the Kindle Boards. This is no gold rush.  Books do not spoil and readers do not vanish. In fact, in six months there will be more electronic readers than now, and even more a year from now. You have the time to learn.

7… Think of the early projects as a form of school or class.

They are practice. Figure a profit and loss for them as well as practice, but don’t sweat that they might not make a profit until 2015. Call them practice.

8… Keep learning everything you can about publishing and business.

I’m afraid this does not mean listening to the other beginners on the Kindle Boards. It means talking to real business people who are running successful real-world business. Talk to them, ask them questions, ask them about bookkeeping and how they keep track of set costs and so on. Find people, not just publishing people, who run a successful business in your area and pick their brains. You will be stunned at how much you will learn.

One Final Reminder:

Keep having fun. If this isn’t fun, if writing isn’t fun, what is the point? But just today, as I put up this second chapter, I got the proof in the mail for the new Poker Boy collection “Poker Boy vs The Silicon Suckers.” Even after all these years, that was a thrill.

Have fun.


Copyright © 2012 Dean Wesley Smith

Cover Photo by Edward Fielding/


This chapter is now part of my inventory in my Magic Bakery.  I’ve talked about the Magic Bakery a few times in various posts, but just think of this column as a pie and I am allowing samples of the pie here. Understanding the Magic Bakery is critical to making good money as a publisher. So I will talk about it in these chapters coming up as well.

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!

Tip Jar: Go To Paypal



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24 Responses to Think Like a Publisher 2012: Chapter 2: Expected Costs

  1. Vera Soroka says:

    Great learning post. My biggest challenge is the formatting to put on Amazon and Smashwords. I think sometimes I have it and then not, so I think I will have have someone take me through it once and then maybe it won’t be so scary.
    Another expense for me would be the hiring of an editor. I’m a newbie and don’t have any proofreaders to turn to.

    • dwsmith says:


      Mark Coker at Smashwords has a pretty straight-forward directions on how to format for them. And it’s free. But in reality, if you have Word, it’s very simple. So best thing to do is read Mark Coker’s how-to book on formatting.

      And have fun. Feeling scared of something means you are learning and that’s a good thing.

  2. Dean, thanks for updating the series. I read it last year, and it gave me the courage to strike out into this unknown territory of self-publishing.

    I’m almost ready to publish my first novel (still a little editing to be done), to join my short stories that have been up beginning in June of last year. I still have a long way to go in my writing career, and I don’t know if I would have been able to have started without you.

    So, thanks again, and keep ’em coming!

  3. Cyn Bagley says:

    I bought the book this time so that I could read it on my e-reader.

    Thanks so much for the effort you put into it.


  4. Kristi says:

    Dean, thanks so much for taking the time to go through these steps. Your advice (and Kristine’s) have been invaluable as I work through the process of self-publishing. It has been a roller coaster ride of impatience, terror and frustration, but what you’ve been saying finally coalesced last night while I was assembling furniture: Trust the process. I have to trust that, if I go through this thoughtfully and carefully, I will eventually have a publishable book. How I get there may be different from anyone else, or it could be exactly the same, but I will get there, as long as I keep moving forward. It’s simple, straightforward advice, and that’s why it can be hard to follow in practice.

    For the record, I now have a writing desk, and I had to back up and redo steps only twice. (I’m blaming those on the furry cat behind planted on the instruction booklet, not on any genetic incapabilities to translate 2-dimensional drawings into 3-dimensional components.)

    • dwsmith says:

      LOL, Kristi. Great way of looking at this process. Step-by-step forward. Sometimes things work out, sometimes we miss a part. But with work we build something and it is out there and lasts. I just got a proof on a new Poker Boy paperback today and it felt wonderful to hold the finished product. Just wonderful. And two other paper books were approved and I have proofs on order heading this way. Great fun.

  5. E. R. Paskey says:

    Thanks for this, Dean. Just picked up a Kindle copy of the whole enchilada so I can read ahead. *grin* I’ve been looking forward to your updated 2012 version of “Think Like a Publisher”.

    My dad has a one-man law firm (and I work for him as his secretary/receptionist), so I’m familiar with most of the ways a small business operates, but I must admit I needed to hear #3, #6, and #7 from the School of Hard Knocks again. Especially #6. With just one book under my belt, I’ve been dealing with feeling like I just can’t do everything FAST enough–write, edit, learn software, ect–and this is another reminder that I need to take a step back and enjoy the process.

    Thanks for revolutionizing my life as a writer. I’ve been following you and Kris for a little over a year now and the road ahead looks a lot less depressing than it did before.

  6. C.E. Petit says:

    This is more a humorous reinforcing aside to one of Our Gracious Host’s recommendations than anything else.

    One of the other reasons not to borrow money for a publishing venture is that you can’t do so at competitive rates — the Small Business Administration will kick you right out the door as soon as you say that you want the money for a publishing venture (and you weren’t going to commit fraud on a federally insured financial institution by lying on the forms about the business purpose, were you? good). Thus, you’ll be stuck getting financing at credit-card-and-higher rates, instead of being able to get the same low rates with default guarantees available to that start-up hardware store.

    Believe it or not, this is a consequence of the First Amendment. Remember, if an SBA borrower defaults, the SBA — part of the US government — seizes all of the remaining assets of that business and tries to sell them off. That, however, creates a problem for publishing assets: It results in the government “owning” publishing assets, even though it has no intention of trying to continue exploiting them, and established legal doctrine says that can only be done through the Government Printing Office… which is restricted to selling its wares at cost.

    So, ironically, the First Amendment that makes publishing really possible in this country simultaneously makes it harder to get financing for publishing…

  7. “Think of the early projects as a form of school or class”

    I think this may be the best thing I’ve learned from this site over the last year; the world isn’t going to end if your book isn’t properly formatted or you upload a book and no-one buys it, but you’re not going to learn much if you don’t finish stories and upload them.

    I learned more from knocking an old novel into shape, going through it with beta readers and uploading it as an e-book than I had from years of writing before. It hasn’t made much money, but it long ago paid off the $2 the cover cost and has bought a few coffees since (or will do when I finally make $100 on Amazon and they send me a check :)).

  8. Carradee says:

    And Vera, once you have the Smashwords file, it’s pretty easy to save that in a way that works for Kindle format. Pretty much:

    1. Change the license note from “Smashwords” to “Kindle”

    2. Add the following bookmarks to your Word DOC: “cover” to the start of the cover page (if included); “toc” to the start of the table of contents; and “start” to where your story begins.

    3. “Save as” in this format: HTML (Filtered)

    4. Upload to KDP.

    If you did the Smashwords file right, those steps should produce an acceptable Kindle file.

    There are other methods, too, but that’s a fairly straightforward one.

  9. Carradee says:

    Hey Dean,

    Thanks for the redone post and book and all! ^_^ Quite handy.

    Is there a reason you didn’t mention the possibility of crowdsourcing funds?

    • dwsmith says:

      Carradee, I have nothing wrong with kickstarter or places like that, but not in the early days of start-up, which is what I am talking about in this chapter. Plus, I said never borrow month, and crowdsourcing is a form of borrowing money. Sure, you promise a book in return or some such thing, but it is a form of borrowing money and my belief is that with this indie publishing and the low sales that everyone starts with, it’s better if you are not in debt in any fashion.

      In other words, do the work yourself and if you can’t afford something, save for it. Yeah, I know sort of out-there in thinking in the last twenty years of everyone feeling like they deserve to be handed success and deserve to be taken care of. But honestly, if you are going to build a business, don’t borrow money to start it. Build it from the ground up. If you have to borrow money after the business is established in one form or another, fine. But if at all possible, avoid borrowing money to start an indie press.

      As C.E. put so well below about this, there is no logical business reason why anyone would lend a publishing company money. It’s like lending a craps player money to go play craps. Yeah, that’s always a good idea.

  10. Cora says:

    Thanks again for this series, Dean. The original edition of the series was enormously helpful in getting my little publishing venture off the ground last year. I started in July 2012 and have 15 short stories and novelettes available as e-books now with number 16 coming in the next few days.

    I do everything myself, proofing, formatting, cover design, etc… I even shoot my own cover photos. So far, the only costs I paid upfront were the domain registration and webhosting costs for the Pegasus Pulp website and 5 Euros plus a bar of chocolate as a thank you for a cover model.

    There’s definitely a learning curve in the beginning. Formatting that first novelette (and of course I had to start with a novelette, not a short story) just about killed me, but now I can get it done in very little time. My covers are much better than when I started, too.

  11. J.A. Marlow says:

    One quick note about Createspace. Once a book is approved and out in Expanded Distribution, there is a fee now for changes in the interior files and/or covers:

    “If you need to change the cover or interior files for your book for any reason, we can accommodate your request; however, there will be a $25 book update fee for each new file change request. This fee only applies to changes made for any title enrolled in Expanded Distribution.”

    They have a title wrong on one of my books, and I’m trying to get them to correct it. The agreement for Expanded Distribution is worded so that they have the right to charge for other changes requiring Createspace customer service, but I’m hoping they’ll wave it for this. Right now the title is just a mess.

    So, perhaps free for correcting mistakes if using only Amazon distribution, but not necessarily so anymore for Expanded Distribution.

    • dwsmith says:

      J.A., you are right, once you approve the book and put it into circulation. But you can make ten corrections in the proof stages without cost. It’s only once you put it out that the $25.00 fee comes into play.

  12. Carradee says:

    Hi Dean,

    I follow now. ^_^ I was conflating the concepts of crowdsourcing to start a project and crowdsourcing to start a business.

    Your reasoning makes sense.

    • dwsmith says:

      Exactly, Carradee. Nothing at all wrong on certain types of projects to get some help with crowdsourcing. Just not to start the original business.

  13. Carradee says:

    (Regarding my previous comment, I meant your reasoning makes sense to me. *facepalm* I just realized how that came out. Sorry.)

    Wouldn’t want to be obligated to folks for something that you never manage to actually get off the ground.

  14. J S says:

    “WMG Publishing has gone ahead and invested in a top-line Mac computer, InDesign, and Photoshop for me to help out on. And I am learning slowly…”

    Dean .. for other that might need to learn the software anyway these are the free/low cost options that replace the $2,000 – $3,000 software stack. (“Word”, “Excel” and “Powerpoint”), (“Photoshop”), (“Indesign”), (“illustrator”)

    These run on a 3-7 year old used computer just fine and all run on windows and probably mac as well. Extra points for using,, or even avlinux operating systems (avlinux has all the other tools to make those book trailers).

  15. Could you say more about free ISBNs? I’ve seen you recommend them before, and I’m wondering whether there’s any advantage to being able to control the metadata of one’s e-books at Bowker, through buying the ISBNs from them.

    • dwsmith says:

      Dusk, I think it’s worth it if you become a larger publisher, with hundreds of titles, to spend the $1,000 to get 1,000 of them. WMG is not there yet and we have 240 titles plus out. But otherwise, nope, no reason to do it that I can see. The tracking numbers are needed inside of each system to keep track of books. Past that, they make little if any difference.

  16. allynh says:

    ” J S on 27 Apr 2012 at 3:29 pm (“Word”, “Excel” and “Powerpoint”), (“Photoshop”), (“Indesign”), (“illustrator”)”

    I have three of those, did not know about “scribus”, awesome! Now I can rule the universe!

    On LibreOffice add the Drawing option which is equal to “Microsoft Visio”. You have the ability to have a white board to brainstorm, diagram, etc.. Even the database option will come in handy over time, once I learn how to use it. HA!

    And that is your point. With these free programs you can come up to speed without spending the bucks.

    From this point on, we should be able to do all of this with free, or next to free(under $100) software.

    Not to mention if you have an iPad and buy the $4.99 garageband to generate real music, or $4.99 for _SketchBook Pro for iPad_ to literally finger paint. Yikes!

    Look at the demos on YouTube for “garageband ipad”, “drawing on ipad”, to have your brain explode. HA!

  17. Thanks for using my image for your book cover. It fits the subject perfectly! — Edward “peanutroaster” Fielding

    • dwsmith says:

      No, I have to thank you, Edward, for putting your art up in systems like Dreamstime. Wonderful stuff and well done and it does the fit the subject perfectly. So thanks for letting me buy it. Keep up the great work.

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