Is Your Book Worth It?

Yesterday I told you how book royalties work, so today I want to go further and explain a little more about the finances of publishing, this time from the publisher’s perspective.

One of the things that’s hard to remember is that the publisher makes a significant financial investment in each writer, with no guarantee that the book will sell. It’s one of the reasons publishers have to make such careful decisions. There’s so much competition out there, and each book costs a substantial amount of cash before your book ever hits the shelves and makes a dime.

But what does that mean? How much will a typical publisher spend on your book before they’ve sold a single copy?

Here’s a hypothetical overview. Keep in mind this is simply an example and the numbers vary WIDELY from book to book, and from publisher to publisher. This is to illustrate that even if a publisher doesn’t offer you a large advance (or any advance at all), they’re still spending a lot of money on your book, which they may or may not recoup.

Trade Paper:
Editorial: $6,000
Packaging (cover design & production): $4,000
Typeset & Interior layouts: $2000
Printing & binding: $13,000
Marketing: $8,000
Warehousing: $4,000
Sales: $6,000
Author royalty (a typical advance is calculated in this model): $15,000

TOTAL: $58,000

If the cover price is $14.99, and the net price (the amount the publisher actually receives for each book) is $6.75, then the breakeven point for the publisher to recoup their cost is around 8,600 copies sold. (Again, highly simplified for illustration purposes.) Any fewer than that—the publisher is losing money on your book.

Hardcover:
Editorial: $8,000
Packaging (cover design & production): $5,000
Typeset & Interior layouts: $3,000
Printing & binding: $18,000
Marketing: $15,000
Warehousing: $6,000
Sales: $10,000
Author royalty (a typical advance is calculated in this model): $25,000

TOTAL: $90,000

If the cover price is $25.00 and the net price is $11.25, then the breakeven point is around 8,000 copies.

Keep in mind that publishers couldn’t stay in business if all they ever did was break even. In fact, they break even on some books, and they lose money on others. You wonder why they’re always looking for a big NYT bestseller? Well, they’ve got to pay their bills somehow. Many publishers count on the success of a few big products to pay for all the others that don’t sell as well. To put it more personally (for those of you who complain that publishing is so commercial and everything’s about money, yada yada yada…) if you’re a first-time author, it’s possible those bestsellers are paying for YOUR book to be published, because it’s possible the publisher will lose money on your book.

Can you guarantee your book will sell enough copies to pay for itself? Are you committed to participating in marketing so that your book has a better chance of selling? Maybe this makes it easier to understand why it’s so crucial for publishers to choose books they think consumers will actually buy, and choose authors who will help sell.

→ These numbers, though they are hypothetical, apply to “mid list” books or those that have not received ginormous advances nor are expected to hit #1 on the bestseller list. The finances are quite different for books that receive larger advances. The marketing budget skyrockets, and more will be spent on all other aspects as well—editorial, design, printing, etc. So the breakeven point is a much higher number of copies.

→ The formula varies widely based on many factors. One of them is the initial print run, which will be determined by the pre-sales, i.e. the number of books ordered by retail outlets (or other entities) prior to printing. The initial print run for a book from a first-time author will typically fall in the 5,000 to 15,000 range, but could vary from that.

→ The royalty needs to be calculated, regardless of whether there’s an advance, because it will be part of the publisher’s cost. Obviously the royalty paid out is dependent on number of copies sold, so it can’t accurately be calculated ahead of time. For purposes of this hypothetical model, I chose a reasonable figure.

→ Production costs are MUCH higher for four-color illustrated books or any kind of special packaging.

So let’s put this in Shark Tank terms. When you’re pitching a publisher, you’re asking them to invest $50,000 to $90,000 in YOU and your product. Are you giving them something that will make them confident it’s a good investment?
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  • nightwriter

    >This makes perfect sense, Rachelle, but how can we convey in a query letter to an agent that we're more than willing to market our books? Agent blogs say it's premature to discuss sales & marketing plans in a query. If so, how can we convey our willingness and ability to market ourselves and our books *before* we get an offer? Is it OK to mention a PR/marketing background in a query or when is it appropriate? Please advise–thanks.

  • Anonymous

    >Please excuse if this is just bothersome. But this post brought it to mind: I have not informed a publisher nor an agent of this, but I have asked blog questions telling partial details; and I was amazed at the answers I recieved. I'm anon; so I'll be blunt.

    Parts of my writing have made the rounds. A president in the Southern Bapt. Con. read some and required all his subordiates to read it. On TV he made a public 180 turn because of my writing. A vice president of CBN read some and offered to put me on the 700 club tv show about my book. He called repeatedly. A director of a world wide facet of CBN and his wife read some and came to my house repeatedly; speading news of my forthcoming book to influencial people. A high positioned man in Campus Crusade for Christ called my book THE BOOK for today in America, and called me repeatedly about it. Several reputable people in aspects of publishing, with no alterior motives, said my book should sell a million easily. My list could go on. I am amazed if info like that would not be compelling to agents or publishers when I do approach them. I know agents want to see a good work…but doesn't that kind of info indicate a book is easily promotable? Actually, I'm only curious because of an answer I recieved before from someone.

  • Aimee LS

    >Thanks Rachelle, yet another practical and informative blog.

    That's an eye-opener!!!

  • karencollum

    >Thanks so much for this, Rachelle. It really clarifies the massive investment publishers make in their products. No wonder it's a cut-throat business. Each book is essentially a huge gamble and the publisher needs to hedge their bets. Helps me see things from the publisher's point of view. I certainly want to be one of those authors they can count on to help with marketing etc. And I have a new appreciation for those with best-sellers. :)

  • Anonymous

    >If they are investing this type of money into what is sitting on the shelves today, then I have second thoughts about whether the industry should die.

  • Katie Ganshert

    >All the more reason to strive to right a killer book! Each and every time. Wow. Insane how much money is involved in the process!

  • Author Sandra D. Bricker

    >I'm hit with a momentary flash of how completely ARROGANT we are as writers, asking our publishers to make that kind of investment in us. But then it passes … and I am giddy knowing that someone (anyone, really) has made that kind of leap of faith with me! So much to be grateful for this morning, Rachelle! Thank you for the reminder.

  • orangewave

    >"If the cover price is $25.00 and the net price is $11.25, then the breakeven point is around copies."

    How many?

    I calculate 8,000.

    Anon – you probably no longer have first publisher rights to sell, that makes it less interesting for publishers.

  • Robin

    >As always, a great and very informative post for those of us just getting started. Here is my question: how many publishers expect you to use your advance to pay for your own marketing, PR and/or book tours?

    I have heard various people on the internet talk about how much publishers are looking for authors to self-finance and self-promote. In your experience, how much of that is true?

  • Krista Phillips

    >That's a chunk of money! I guess I can't sit here and say, "I'm totally worth 50 grand…" but then we all work at jobs where we get paid that plus or minus for a year of work… and sometimes I scratch my head and say, "Wow, am I really worth THAT?" so it's not a whole lot different.

    So I think just as I put my whole heart into my day job to "earn my keep" I'd do the same with writing. IF they're willing to invest in me, then I'm willing to put my heart into it and do my very best too.

  • Sarah Forgrave

    >Wow, thanks for sharing these numbers. It made me sit up straighter this morning and realize how much responsibility I have in the process.

  • ginny martyn

    >Good morning, Harsh Reality- happy Wednesday.

    Incidentally, I have no way of knowing if my book is worth 50-90K. Perhaps I could throw in a Sham-Wow or a Snuggie to make everything worth while.

    Sincerely,
    Hopes and Dreams

  • Kelly Barnhill

    >Oh, man. My book comes out next year, and I thought I was nervous before…..Now I know why writers drink ;-) This is actually really helpful information, though, because it's instructive to get a sense of what kind of sales our publishers are anticipating – as well as the immense burden on us to make sure it happens.

  • wendy

    >Thanks for this info, Rachelle. I didn't realise that the investment was so high. Yes, it does make complete sense that publishers would be extremely choosey. It makes me want to give even more in my stories as perhaps the writer's who give the most to reader have the greatest success. Tolkien, for example, gave a world completely realised and a plot that was rich and complex.

    Sorry to keep making fantasy references on a blog where fantasy isn't a genre of interest. I'm here for the Christian aspect, but I love fantasy as well.

  • Jenni

    >Great post, Rachelle. I think it is very easy for us, as writers, to slip into a world of "me me me." This is MY story, MY characters, MY hard work, the most important thing in MY life. But there are so many other people involved and we all need to work on taking ourselves out of the equation sometimes so that our work is worthy and can stand on its own.

  • Sarah Templeton

    >Do you have a reference as to how these amounts change when one is looking at publishing in an ebook format? How much of an investment is it to put an author out there electronically? Thanks!

  • Tamara Hart Heiner

    >what I don't get is why publishers pay advances. It doesn't make sense to me. No where else do you get paid up front (unless you're a classy lawyer).

  • Krista Phillips

    >I have an "opinion" answer on the "why pay advances" thing. I mean, I know there's a ton of reasons, but for perspective, think of a, um, manufacturer (I know there will be holes in this analogy so bear with me!)

    They have to buy the materials to make the product. They also have to invest time/money in development, research, quality testing, and a ton of other things before they even begin making the product.

    I see authors as the "development, research, and the initial quality testing" of the product. We research and develop it (write the book)… and are guaranteed a payment for our time. AKA the advance. Our "pay" is based on how much the company thinks our work is worth (aka how many books they think they can sell.)

    The big difference is… if we end up being worth MORE than that… we get a chunk of the profits (aka royalty after you earn out the advance)

    And that, my friends, is profit-sharing.

  • Jenni

    >I've never really thought of an advance as upfront. They're paying you for time you've already put into writing the book as well as time you're spending on the edits they want. It's a paycheck like any other, at least as far as I'm concerned. Of course that might just be my way of preemptively justifying for when I don't get a huge one. :P

  • JDuncan

    >Anon, no matter how much good word you have on your book prior to submitting, that still doesn't guarantee the book will sell. Plenty of "sure things" have bombed for a variety of reasons. The point is, you can never know until a book does well, if it actually will.

    I recall reading somewhere that the average number of sales across all published books (don't think this includes ebooks) is somewhere between 5 and 6 thousand copies. So, on average publishers aren't even hitting break even. And we wonder why the count so heavily on the big sellers.

  • Marla Taviano

    >Super-informative, Rachelle. Thank you! One thing that shocked me a couple years ago was how much advertising costs the publisher. One of my books was in some catalog once, and the ad spot cost the publisher THOUSANDS of dollars. EEK!

  • writer jim

    >What I've noticed from reading this blog for a while, is that it seems writers have a similar chance of being published as do athletes making pro status. It makes me sad to see some writers working so hard for so long chasing a dream. That said, it seems to me those writers should make bigger efforts to realize a smaller dream first, like submitting numerous magazine articles, etcccc. That could help them in many ways; either from success or lack thereof.
    So my opinion is that we should all OBEY the Bible by DOING what it commands. Then God will see your good works…and HE may choose to help you toward your writing dreams.

  • Debbie (Nerd Goddess)

    >Wow, I guess I hadn't ever really thought about the investment of the publisher before.

    It always seem like authors are whining about how they aren't appreciated enough, how hard it is to break into the industry etc. but looking at it from this standpoint… it's simply not surprising.

    Love your blog!

  • Cindy

    >Thanks for the information, Rachelle. I hadn't realized quite how much it costs the publisher per book. Definitely a good reason to write the best book possible and do what you can to get the word out about it.

  • folksinmt

    >Wow. This was an eye opener. I had never thought of it as asking a for an investment of a large amount of money. That is a great perspective to have when querying. Everyone should read this!

  • Nicole

    >I've got a question. Many professionals in the industry have said the majority of their published books DON'T earn out their advances, and, as you pointed out, their big writers pay the way for their "little" writers. My question is this: doesn't that suggest the books the pros select either are niche market books (nothing wrong with that in my opinion)or that possibly they aren't the books people want to read? Or maybe the marketing schemes aren't effective?

  • T. Anne

    >I'd love the opportunity to become a marketing machine for my book. That's part of the process I'm looking forward to. I'm highly competitive by nature and I say bring it. I'll comply with whatever marketing the publisher provides but I plan on eclipsing whatever that may be. They shall know my velocity ;)

  • Ava Walker Jenkins

    >I so appreciate the cost breakdown. So eye-opening! I never realized what a gamble the publisher is actually taking on first time writers. Thanks for another point of view.

  • Anonymous

    >I'm surprised publishers admit they fail businesswise with the majority of the books. I would think they would have learned more how to choose books that do sell great: after 50 publishers rejected it.
    It is apparent there is a lot of arrogance with many in publishing; i guess it's because of the hoards of writers chasing them continuously. Yet it's good to see some in high positions that are humble.

  • Laura

    >"Are you committed to participating in marketing so that your book has a better chance of selling?"
    I'm committed to participating in marketing, but I am not a naturally aggressive or competitive person, nor am I really a "marketer" at heart.

    I've got a good quality novel that resonates with people in my target demographic (or at least that is what my online critique group says). I am trying to build my platform (through Facebook and my blog). I've worked hard at my craft and am actively submitting short stories to literary journals (one has been accepted).

    But I have become discouraged over the marketing aspect because my personality isn't a "get out there and sell, sell, sell" type, and I have limited energy due to chronic fatigue syndrome. Are publishers willing to work with someone like me?

  • writer jim

    >JDuncan,
    You are sooo right: "sure things" can be a flop. However, Astounding things also happen. I was golfing with a friend, and we were both 150 yards from the hole. One of us told the other, "we WILL both shoot a hole-in-one right now. Both balls, although not GOOD shots, went flying and into the hole. The odds were probably 500 million to 1. I have seen God do astounding things with odds of billions to one.
    So writers: Do things God's way; and put total trust in Him. HE will be aware of your obedience. And He will be there for you.

  • Anonymous

    >Yet another way publishers try to devalue an author and their work. Writers are just as valuable (if not more so) than a "classy lawyer." We're creating, developing and executing an idea, then marketing it ourselves. Geeez, we've all worked at regular and/or professional jobs before–why *shouldn't* we get paid well for doing a good job? We deliver a product they desperately need, and we're supposed to feel grateful and not ask for an advance? This is a business, not volunteer work.

  • PatriciaW

    >I've never seen it put in these terms, although I had some low-level consciousness about this.

    Fantastic post. Thanks, Rachelle.

  • Liberty Speidel

    >Thanks for the great input! I had a friend's daughter interview me about writing and publishing today, and on one of her questions, I referred her to yesterday's post. I hope she sees today's post too!

  • Kathryn Magendie

    >Having my debut novel published by a small press, I have learned a lot about the publishing and bookseller business — and in learning these things (asking questions, paying attention, visiting blogs such as this who post about publishing/agents/etc)….I feel honored to have been published . . . not that I felt entitled before because I did not, but, knowing how things work makes me feel 'lucky' (or maybe another word is better) indeed to have been picked up.

    The small press's costs are lower, but relatively speaking it is the same risks because they are small!

    thank you for a great post.

  • Lisa Jordan

    >Terrific post! Thanks for breaking it down for us.

  • Joanna Mallory

    >Thanks for sharing the numbers in this and the previous post. I'm curious what the numbers are like for mass-market paperbacks in the fiction area, and why in these times of cost-cutting and lower discretionary income for readers, the mass-market format hasn't been tried more in CBA fiction. Is it because of lower profit margins requiring a massive number of sales to break even?

  • Jen Chandler

    >I honestly never thought about how much it cost publishers to publish a book. I knew they had to put out money and that's why they were hesitant to sign just anyone. However, seeing the numbers and knowing the typical investment makes me want to produce quality work so that when the time comes, I can feel good about having a publisher invest that much money in me and my work. And yes, I am more than willing to help sell my book.

    Thank you for this insightful post.

    Jen

  • Dara

    >I knew they spent a lot but never had an idea of how much!

    I do wonder the same thing as Sarah Templeton did above: how much would this amount change for publishing eBooks?

  • Sharon Mayhew

    >Great post…I'm wondering who doesn't know that the publishing industry revolves around money. I guess it's the same group of people who put glitter in their query letters.

    Writing is wonderful. But be honest… Everyone who writes (if they look deep into their hearts) wants to be successful/published/read by many. When companies invest money into their employees they want/hope for/expect a return on their investment. Publishing is no different than any other industry. You have to get past the interview. You have to be good at your job. You have to work hard and want to be successful.

    One other thing I think you must be is…informed. Learn as much as you can.

    Here's my disclaimer: I am a "retired" teacher. I have been published once (so far) and do NOT send glitter in my queries. I work at my craft most days. I want everyone to be successful, but just like sports we won't all make it to the NBA.

    Rachelle, I'm not trying to be insensitive. Buisness is buisness. Good investments = good pay offs for all.

  • arawdog1

    >If its worth having, its worth going the extra mile or so to get it.One must believe in themself to become successful in life,"If your mind can concieve it, you can achieve it."

    To become a successful published writer,whether it's published by a major publisher or self-published,p.o.d., the first thing the writer must become aware of is that their job description takes on a meaning of its own.
    You are now the author, composer, writer,editor,printer,typesetter,financier,promoter,advertiser,warehouser,shipper,publisher,accoutant,business manager,decision maker, public relations,legal consultant,and whatever other leg work is required, etc, this is just to name a few hat that are 2b worn to become successful in the world of books.

    You provide a lot of good points to someone that walks into this type of business with open eyes.

    Thank you for you insight, To be aware of the steps you must take, will help the road you take be that much smoother. 'C' "If you don't know what you are up against, you can't know what to do about it." I will bookmark this,and pass it on to others seeking this type of knowledge, I know it helps me.

  • Jevon Oakman Bolden

    >Rachelle, I just found your blog yesterday (November 11, 2009) through Michael Hyatt's retweet of this story. I am a developmental editor with Strang Book Group and I found your article very good. This is something I think all new authors should be made aware of. It takes hard work and team work on both ends to make a book successful. Thank you for sharing this valuable information.

  • Anna Brakoniecka

    >We started with the book written by Amalia Angellinni "Lovefool". She is a student in Italy and tried to find a publisher and because of the economic crisis noone wanted to help her. She came to us and although we're not a publisher at all (we are a communication platform for Europeans and friends of Europe with innovative dialogue), we managed to publish her book and it sells. We hadn't previous experience in this area and we are stunned how good this book is taken by readers. We already translated this book into Polish (originally it is in English) and we intend to translate it in German soon (becuase of many requests). It is fascinating and great that young people have talent and that you can help young talents on their way. Now, we are looking for a co-partner who will help us to promote this book and sell it furthermore.
    Best wishes, Anna from Team Scholar Europa

  • Nick

    >So much has been said and I wish only to add new content to this discussion.

    I will repeat one thing though: "Business is Business." Writing is an art and there are two ways to look at it – as a business or as a hobby. If you get paid for a hobby, that's great, but unlikely.

    I'm a bit shocked at the distribution of the funds, but I can't argue with the price-tag Rachelle quoted.

    There is a reason that crappy celebrity books get picked up by publishers – people will buy them. In fact, it isn't even about good writing as to if a book will get published.

    Like any other profession, if you want to be successful you have to be good at what you do. Sadly many people have a passion for writing but are not very good at it and end up producing sub-par books that will never be published. This is the same with many artists (musicians, painters, etc), hence the "starving artist."

    Although, given the costs that go into a book, I'm still shocked that publishers are not exploring much better ways to bring a book to market.

    Great post Rachelle – Very informative!

  • Anonymous

    >@Tamara Hart Heiner

    Actually, you get paid 'upfront' for your work in *every* other business. You work; you get paid. Imagine a software developer being told that he will get paid a percentage of each program sold. Imagine a clerk in a store getting paid if the apples he stacks sell.

    Unions consistently fight against this compensation model. In no other business would someone put up with that, and even defend the people who do it.

    Writers should be paid for the rights to publish their work.

  • Anonymous

    >Anon 7:00
    Tamara is probably young and inexperienced, and that's why she made her her false info ststement.
    But the thing is: look how many people make false statements for the wrong reasons all the time. Everywhere.

  • A. S. Peterson

    >Or publishing it yourself (non-POD, non-subsidy, just shop around and do the contracting on your own):

    Editorial: $1500
    Packaging (cover design & production): $1500
    Typeset & Interior layouts: $0
    Printing & binding: $4000
    Marketing: $1000
    Warehousing: $0
    Sales: $0
    Author royalty (a typical advance is calculated in this model): $0

    Total: $8000

    The cover price is $14, and that pie gets divided into basically one slice. One. That will change, of course, if I decide to allow distribution.

    Break even point: 571 copies or just under a third of the initial print run.

    Not the right choice for everyone, no. I certainly saved some money by typesetting it myself (something I'm not new to), and I'm lucky enough to know people that do good work.

    Thanks to pre-sales and a tiered patronage plan, I'm halfway to breaking even and the book hasn't even gone on sale yet. A big risk, to be sure. But certainly feasible, certainly stressful, and certainly a lot of hard work and persistence.

    It's been a real joy, though, to be able to direct and control every facet of the book's production and there's is very little doubt that a publisher would have done better. Experience suggests they easily could have done worse, which was part of the reason for my taking the independent route in the first place. Feel free to check out the design and make your own judgement:

    Cover design

    Interior design

    Or check out this article on it at Curator Magazine

    Hope that didn't come off as trying to push the book, that's not my intent. I just wanted to provide a different perspective to Rachelle's post.

  • writingsister

    >This information puts things in a better light for me. I just completed my manuscript and trying to navigate the sites on self-publishing verses traditional is interesting to say the least. I am however determined to find that special agency who can feel and appreciate the creative entergy behind my first completed work. Thanks again for your informative blog

  • Bob

    >You almost sound apologetic. Publishers exist to publish books unless I'm mistaken. What about the author who spends a year of time writing the book? Where is the cost benefit analysis of that? I constantly hear agents and editors bemoaning how hard the business is, but they don't seem to take into account the writer who writes on spec, with no guarantee of any return– and if they do get a return the publisher earns money, the agent gets 15%. So perhaps we need to change the business paradigm?

  • Anonymous

    >No offense, but your math is way off. It's very feasible for a publisher to publish 3,000 copies of an original trade paperback for $6-7,000 (before any royalty advance). 3000 copies is typical is mid-list author geography. The publisher can give a $3K advance, bringing the total to $9-10K, and roll out a new mid-list author.

    If the publisher sells 1000-1200 copies, the rollout money is recouped, and that is before any monies are derived from Kindle, BN eBook, etc.

    If the number of books goes above 3,000, that means in almost all cases that the author has developed a track record and the increased projection has a basis.

  • Al Kalar

    >Good article Rachelle.

    @Anonymous. Sorry you're having so much trouble, but if everything you say is true and if you'd publish your name and contact info, perhaps Rachelle would take you on as a client. And publishers like me could court you (sounds like a project we'd like). Otherwise you're just crying in the dark.

    Everyone bear in mind: I just read an article by a NY Times best selling author and the "cut" she gets from her books (even the best-sellers) aren't enough to live off of, let alone in luxury. The market is tough and getting tougher. Books are being discounted at WallMart, Costco, etc. and that results in smaller royalties. Also, outfits like AKW Books, Amazon, B&N are publishing and selling eBooks at very competitive prices (but AKW pays a high royalty which helps a bit). So if you can get a $50k advance from a paper publisher, grab it. Most outfits can't afford that, but would rather make you a partner in marketing and sales (that's how we work).

    @Sarah: eBooks are a lot less expensive to publish. The editing, artwork, packaging, and marketing expenses are still comperable. But the printing, warehousing, and returns are nil (you just have to store a few electrons). For us, royalties are 50% of net (after discounts) sales.

    @Jim: Yes, your odds of being published are rough. If you can completely master your craft and come up with intriguing stories, your chances are much improved. Then you have to find a publisher who "gets it" as far as your story is concerned. Don't give up on the first rejection slip. Star Wars was shopped all over Hollywood before someone picked it up.

    @T.Anne & @Laura: If you have a knack for marketing (unusual in most writers), your chances of success will be greatly improved. If marketing terrifies you, you may never crawl out of the slush pile. You'll have to overcome your fear, study book marketing, and get all the advice you can (from your agent and publisher?).

    If your book will seriously bring more people to (or closer) to God, He may help you with your marketing. He worked through Moses who was slow of speech, why not you?

    As @A.S. Peterson said, If you want the lion's share of the profits, then perhaps self-publishing is for you (but be careful which outfit prints your book). You'll have to do EVERYTHING except the actual printing. If you mess up format, spelling, grammar, packaging, or whatever, then it will be YOUR problem, not the printer's.

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