Hi, guys! Today’s post was written by book publishing consultant Marion Gropen. Marion has been in book publishing for more than 20 years, both as a financial executive in-house, and as a financial and management consultant. For the last few years, she has been offering advice and solutions on a By-The-Question basis, as well as ebooks and tools in the Profitable Publisher series. Find out more at http://www.GropenAssoc.com.

I read this as her response to a thread on Self-Publishing@yahoogroups.com about the stigma of self-publishing and someone complaining that everyone but the author gets money. So many people wonder where their money does (or will) go when producing and promoting their books. Here are Marion’s insights on this topic.

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Authors get more from most trade books than anyone else in the pipeline. You may not be aware of the typical figures for a mid-level trade book, but here’s how it breaks down:

Let’s take a novel, in trade paperback, with a list price of $14.95, which I will call $15 out of sheer laziness.

The bookstore buys it for $$9. Out of their $6, they may keep $0.60 in profit. If they’re doing well. The rest goes to pay the store clerks, rent, utilities, and so on and on. They may also need to discount the book in order to compete, if it’s a “big book.”

The wholesaler buys the book for $6.75, and resells it at $9. Out of that $2.25, they’re keeping something like $0.02 or at most, $0.05.

The distributor is paid a commission of about $2.25, and keeps about the same 2 to 5 cents. If they’re very lucky. (NB: large publishers have their distribution in-house, and save about 20 to 40 cents per copy on the deal.)

So, the publisher’s revenue, on a $15 book is $4.50.
From this comes:
PPB — about $1.50
Marketing — about $0.25
and Royalties — about $1.13 to $1.50 per copy.
After these per-copy costs are subtracted, there’s $1.62 to $1.25 per copy.

But wait!! Also coming from that revenue are the fixed costs of producing the book (those where the total isn’t related to the number of copies printed or sold). These include editing, line editing, copyediting, proofreading, layout of the text and design of the cover, and often many more.

The total for the fixed direct expenses usually runs between $3,500 and $5,000. To cover these costs, the publisher must sell a minimum of 2160 to 4,000 copies.

Oh, but we’re still not done. None of the overhead (rent, utilities, office supplies, salaries for back office staff, etc) has been covered!

Let’s say that the company is quite small. Say that the overhead runs a TINY $100,000 per year, and that the company is producing with that overhead, and ASTRONOMICAL 20 titles per year. Each one must cover another $5,000 in overhead before there’s a dime in profit.

Now it has to sell a total of 5,250 to 8,000 copies before it makes ANY profit.

So let’s say that this book sells a nice 12,000 copies. The author (and maybe agent) are making $15,000. The publisher is making at most, $10,940.

The staff are making less. Consider: an editor at a company like this is probably making $1,750 per book.

The cover designer is probably making $1,000.

The marketing director/publicist might make $2000 per title.

The agent probably made $2250, and the author got the rest of the $15k, or $12,750.

It’s easy to feel gypped when you realize that you’re getting a dollar and change out of the $15. But when you realize where the rest goes, you realize that it’s not that someone is ripping off authors, it’s that our society doesn’t value the mid-list very much, and we’re ALL doing this because we care.

Many of the bestsellers look like drek to most of us here because we’re all a little off the popular paths. But if they didn’t meet their readers’ needs, they wouldn’t sell well enough to BE bestsellers. And if the quirky, “interesting” books really were interesting to most people, then THOSE would be the bestsellers.

Bookselling isn’t a “push” industry. It’s a “pull” one. We can put drek on the shelves, or even literary gold, but it won’t move to the cash register, no matter what we do, unless we convince the readers that they’re going to be getting what they’re looking for from the time and money spent. And there are literally millions of other titles out there in direct, head-to-head competition for those eyeballs.

Unmet needs are harder to find than hens’ teeth.

That’s not to say that we’re in a perfect world, or that there aren’t opportunities. But if you’re going to compete with a mainstream publisher, you need to know what they’re putting into the books you’re taking on.

You need to come up with some strategy to make your books as easy to buy as the ones on the bookshelves (and no matter how big Amazon is, it’s still not most of the sales to be made, in most market segments).

Your investment in preparing the manuscript has to be at least as good as what those mainstream publishers are able to get for their $3,500 to 5,000.

And you need to think long and hard about why your readers will want your books, and how to show them that your books deliver the benefits that they’re trying to get. But that’s for another post.

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Thank you, Marion, for sharing!

Blessings,

Tami