Crunching The Numbers: How It's Possible To Sell Every Copy Of Your Self-Published Book And Still Lose Money (And How To Avoid That Outcome)

This is a sample lesson I’ve written for a new Publetariat offshoot: Vault University. Vault University provides monthly lessons in self-publishing in all formats (print, ebook, podcast), author platform and book promotion. Enrollment in the curriculum of their choice is free of charge for authors who have a published book listing in the Publetariat Vault, and is offered on a subscription basis to all others.

I recently met a self-published author who seemed at first glance to be doing everything right and whose book is on track to sell 10,000 copies. The only problem is, by the time all those books are in the hands of buyers this author will have lost over US$32,200 and will have no idea how it happened. I’ve changed identifying details of the author and book for purposes of this lesson, but the pitfalls to which this author fell victim are still very clear.

The author, we’ll call him Jim, had an idea for a novel and decided to self-publish. Jim’s job gives him lots of exposure to consumers from all over the world, so he set up an online shopping cart early on and began pre-selling before the novel was even finished. He figured a typical book in a store sells for about US$20, so that’s where he set his retail price. Jim did a lot of community outreach as well as personal outreach, and by the time he was finished writing the book he’d pre-sold 5,000 copies. At US$20 a pop, that’s US$100K! Even after subtracting the online payment processor’s service fee of 3% ($3,000), he still stands to net $97K. Sounds terrific, right? There was only one problem: he’d not yet paid anything to have the book produced, printed or shipped to buyers.

Jim settled on a subsidy publisher I’ll refer to as Publisher X. Jim decided he wanted a top-quality book, so he opted for a hardcover publishing package. Publisher X charges a minimum of US$1000 for project setup on a hardcover book, plus US$12-25 per author copy (depending on quantity ordered). Jim wanted to get the maximum discount and already had 5,000 copies pre-sold, so he ordered 10,000 copies of his book at the author price of $12 each. Jim opted to pay an additional US$1000 for Publisher X’s add-on editing and interior layout/design service, and paid US$8500 for professional photography and design services for production of a wraparound, full-color dust jacket for the books. Jim’s total expense up to this point is US$130,500.

You’re probably thinking (as I’m sure Jim is) that when Jim sells those additional 5,000 copies, he’ll earn another US$97K and have US$66,500 in profit. Not so fast: Jim still has to pay to have those hardcovers shipped to him, then he must turn around and pay for packaging materials and shipping expense on every copy sold to get his books to his buyers. If Jim didn’t charge his presale customers sales tax on their orders, he must pay that government tax out of his own pocket too, but let’s cut Jim a break and assume he did charge for sales tax.

Hardcover books are heavy. If we assume Jim will pay about fifty cents per book—which is a lowball estimate, but let’s just go with it—to have them shipped from the publisher to his home, that’s US$5,000.

In order to ship the books to his buyers, he must package them in padded envelopes and pay for postage on each copy, and many of those copies are going overseas. If we assume Jim gets a bulk deal on padded envelopes so that they cost him just ten cents each, that’s still US$1000. But that’s nothing, it’s the shipping expense that’s going to kill any chance his book had of being profitable. Even if Jim uses book rate mail for shipping instead of first-class, he’ll pay US$6 per copy on average to ship the books domestically, and US$15 per copy on average for international shipping. Let’s assume only 1/3 of his buyers are international (3,300 of 10,000). The shipping and packaging expenses still work out to US$49,500 for international shipping and US$40,200 for the remaining 6,700 domestic shipments.

You should now be able to see why Jim’s book cannot possibly turn a profit. If he’s paying the publisher US$12 per copy to buy each book, plus fifty cents per book to have them shipped to his home, plus ten cents per book for padded envelopes and US$6-$15 to ship each book to his buyers, you don’t even have to take the US$10,500 he paid Publisher X into account to see he’s either just breaking even, or losing money, on every copy sold.

Let’s review all of Jim’s income and expenses on this book project.

Item Income/Expense
10,000 books sold at US$20 each, minus 3% proc. fee +  $194,000
Fees paid to Publisher X for setup, + add-on services –     $10,500
10,000 copies of book @ $12 per copy –   $120,000
Shipping from Publisher X –       $5,000
Padded envelopes –       $1,000
Shipping to international buyers, 3300 copies @ $15 ea. –     $49,500
Shipping to domestic buyers, 7500 copies @ $6 ea –     $40,200
Total –     $32,200

Remember, this is assuming he sells all 10,000 copies of his book; he’ll be out much more than $32,200 if he sells less. Had Jim done some number crunching ahead of time, he could have made better choices, spent his money more wisely and turned a profit.

To determine what it will really cost you to self-publish, and how much you stand to earn on a book, you must calculate all of the following—ideally, before you publish:

1. Upfront costs

2. Author copy costs

3. Net “Royalty” per copy sold

4. Break-even point

 

Read the rest of this free, sample lesson on Vault University (no signup required to read this full lesson) to learn how to calculate each of these items, how to compare costs among author and print service providers, how to set a retail price for your book that’s appealing to buyers while still netting you a worthwhile royalty, and how to tell when a given self-published book project cannot possibly be profitable. This content © 2009 Vault University.

Comments are closed.