P&Ls and how books make (or don't) money

[alg]

Profit & Loss/Profitability & Liability: How Books Make (or Don't Make!) Money

A basic outline of what happens when an editor buys a book and wants to publish it. This is very much a basic look at publishing and publishing finance, with some explanation of terms commonly used by the marketing and sales departments.

Comments

[kristine-smith.livejournal.com]

I memoried this. Thanks!

Um... me too.

[(Anonymous)]

Yeah, I memorized it too. Ok, not really. But I read it thoroughly. And got scared. And then not so scared when I remembered, "um $12,500 is still $12,500 more than I had before even if I never make that much again," and plus I can always write Blaze novels and revitalize my career. Yays.

Very educational.

Sonja
http://sonjafoust.blogspot.com

[forodwaith.livejournal.com]

Fascinating. I wish I'd learned more about publishing as a business in library school (though I suppose it made more sense for them to fill our heads with useful stuff like, y'know, research techniques).

A couple of years later, though, she starts writing Blaze novels under a pseud., hits a bunch of in-store bestseller lists, and revitalizes her career.

Phew! You had me worried about Aeryn for a while there.

[alg.livejournal.com]

Awww, no. I love Aeryn! She just needed to find the right niche to write in.

My sister is in library school right now. Her main complaint is that they aren't learning anything about the "real" world -- they're learning how to build websites and do basic things in Excel. Poor kid.

[tharain.livejournal.com]

Crichton is an Idiot

I got no further, and snarfed Diet Coke up my nose.

[alg.livejournal.com]

*wins*

[aberrantvirtue.livejournal.com]

Does the mass-market failure ever turn into a hit years later? IE- If Aeryn Sun started writing Blaze novels under the name Kara Thrace, is there any chance of Crichton is an Idiot being re-released with a thingy saying "Written by Aeryn Sun, aka Kara Thrace" (I know they don't really say that), or does this original P&L pretty much doom it to never coming back?

[casacorona.livejournal.com]

No. Crighton is an Idiot will go out of print within the year, and never be heard from again, except possibly as a POD book put out by a small press after the author becomes a big hit.

[chickwriter.livejournal.com]

no one pays until they have to

As someone who's been in the biz as a bookseller (worked at an indy for a couple of years); as a book buyer and now as an author, I thought I knew a LOT about the business and knew what I was getting into. Finding out the above now that I am published was the thing that I didn't know. It was a shocker.

It's a weird, scary, fascinating business - for all sides of the equation.

Thanks for the scoop!

[alg.livejournal.com]

You're welcome!

[pir8fancier.livejournal.com]

Fascinating. I write for a small mystery publisher, and I don't think they have the same woes, but I have heard the same woeful tales from other editors. Another key thing which no one realizes is distribution. The evil "d" word. Interesting that amazon actually orders its own books.

[alg.livejournal.com]

Small press works very differently!

[elvesforeyes.livejournal.com]

In Crichton is an Idiot, does the main character fall in love with a male/female dinosaur and make sweet, lizardy babies? I'd buy it. I'd read it. I'd sleep next to it.

[alg.livejournal.com]

Haha, you are soooo lucky that I am not chiding people for putting Farscape spoilers in my comments anymore!

[elizawrites.livejournal.com]

*fear*

This is the stuff that, as a writer, I need to know, yet I would rather hide my head in the sand like a big ol ostrich. But thank you, again, for demistfying. I never understood why the whole business had to be SECRET.

[alg.livejournal.com]

It's not a secret. We don't keep it a secret. It's just very complicated, and it takes a while to explain -- I have seriously been writing this for more than a month! Plus, it's math. Everyone is afraid of math.

[andsaca369.livejournal.com]

This is exactly the sort of thing I love reading about- forewarned is forearmed, and all that. Is there a particular method for sorting out how much a first-time author's advance will be, as it relates to the P&L? You touched on it above but I'm not clear on how that's calculated. Apologies if you've addressed this elsewhere; if you *have*, I'll happily accept the rolled-up newspaper and a directive to go and hunt.

[alg.livejournal.com]

Multiply the royalty by the number of copies we project that we will sell.

For example, if we think First Time Author X will sell a total of 15,000 copies of her first novel (meaning that we will print 45,000 copies), and we're going to charge $6.00 even for each copy, the very most we can pay her without accounting bouncing our deal memo back is $7200. A conservative company would pay $3500 - 4500. A not so conservative company might pay $4500 - $6500.

Does that make sense?

Thank you

[jamiekswriter.livejournal.com]

This is very informative (and really entertaining!). I'm looking forward to part 2.

Re: Thank you

[alg.livejournal.com]

You're welcome!

[barbarienne.livejournal.com]

And it was slowly accreting this knowledge over 12 years (I'm a Production Fairy, so I don't see P&Ls as much as I am asked for the numbers that go into them) that kept me from being eager about submitting my writing anywhere.

Just like politics and sausage. Maybe it's best not to know how it's made.

Fortunately, I have moved beyond the a desire to disenchant those wannabe writers who think it is a matter of writing a book, letting a publisher have the priviledge of publishing it, and then living fat off their royalties. 'Cause you know, they don't really want to know.

[alg.livejournal.com]

Just like politics and sausage. Maybe it's best not to know how it's made.

This is one of the reasons we discourage wannabe writers from working in the business at all. Go and do something not publishing related!, we tell them. Often we are ignored, which is too bad.

[christianaellis.livejournal.com]

Wow, this was fantastic! Thank you for taking the time to go into such detail. I've always had this vague understanding of the publishing industry as being more complicated than "Step 1: Collect manuscripts, Step 3: Profit!", but I have only recently begun trying to penetrate the fog.

Now, it's still vague, but slightly less so. Thanks! ^_^

[alg.livejournal.com]

You're welcome!

[cynthia1960.livejournal.com]

Interesting stuff, and I approve of your choice of fictional authors ;).

[alg.livejournal.com]

Hee. Thanks. :)

[iagor.livejournal.com]

Wooo, this is my second article on profit today. Combined lesson learned by self: go write good stuff, so the publishing house doesn't lose too much money.

On a serious note, thank you. Very informative and very well explained.

[alg.livejournal.com]

Unfortunately, as we are so often shown, it is rarely the very good stuff that makes money.

[shadawyn.livejournal.com]

That was incredibly informative. Thank you!

[alg.livejournal.com]

you're welcome!

[gjules.livejournal.com]

Okay, this is probably a stupid question, but I'm curious. What would have happened to this author if, say, the editor hadn't been as much of a cheerleader? If, say, she'd gone with the stock art to start ($4,500 less in expenses) and kept the advance down to $5,000 ($7,500 less in expenses)? Assuming the same print run and sell-through (maybe not likely) the book would have lost $9,528.60. Would that have been bad enough to sink the author's career, or would she still have a shot at a second book with the house?

And a follow-up: Is there any evidence that bookmarks, postcards, and the like actually sell books? I imagine the method of bookmark deployment makes a lot of difference....

[ashnistrike.livejournal.com]

That's what I've been wondering. Is it actually in the author's long-term interest to try and get a smaller advance the first time, increasing the odds of earning out?

[authorm.livejournal.com]

...

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.........


*ohhowiwishthiswasstillasecrettome*

[alg.livejournal.com]

Some part of you had to want to know -- you did click on the cut tag!!

[aulus-poliutos.livejournal.com]

With those numbers tight as they are, does a book with a gay MC even stand a chance since it will lose WalMart and the WalMart associated chain stores?

[alg.livejournal.com]

How many books with gay main characters are on the shelves right now? Plenty. Losing Wal Mart doesn't mean losing everything -- heck, 90% of all SF and fantasy titles never see a WalMart shelf. They're packaged in a different way and sold to a different audience. As I said in the post -- this is just one example of one publishing model.

Thanks for the insight!

[(Anonymous)]

Now I completely understand and appreciate why it's so much easier to get published with epress and why a book from a new author has to be letter perfect before it can be considered by a NY publisher. I don't blame the poor editor who gets burned then is hesitant to sign on any more new authors.

On the other hand I am even more scared to submit my story to a regular pub. Yikes!!! Poor editor, poor Aeryn Sun. Is it ever really worth it?

And at $5K, how much advertising does that buy the new author. Yes writing is an art, but self-promotion is part of today's business.

[alg.livejournal.com]

It's easier to get published by an e-press for a lot of reasons.

Whether it's worth it or not is something you'll have to judge for yourself!

$5000 buys you a good deal of promotion if you spend that money wisely -- target readers, rather than booksellers. Build a good website, get a good mailing list going... or don't do anything at all. Self-promotion is important, but if your books suck, nothing is gonna help that.

[burger-eater.livejournal.com]

I'm embarrassed to admit how far into this post I had to read before I realized Crichton is an idiot was about John Crichton. I was thinking "A romance about global warming? Okay."

Thanks for this post.

[alg.livejournal.com]

HAH.

You're welcome. :)

[stillsostrange.livejournal.com]

This is helpful, and mildly scary. (Everything is scarier with math.)

Thanks.

[alg.livejournal.com]

The math isn't so bad when you realize it's just very very basic algebra!

You're welcome. :)

[julesjones]

Thanks, for this and other posts. It is useful to me, and it is a useful resource for me to point other people at, and I greatly appreciate it on both counts.

And am I a bad girl if I look at "hc/mm" in a demystifying publishing post, and read "hurt/comfort slash" for a second before the sensible part of my brain takes over?

[alg.livejournal.com]

"hc/mm" in a demystifying publishing post, and read "hurt/comfort slash"

hahahahahaa!!!!!!!! omg.

[celisnebula.livejournal.com]

Holy Hockey, that's a lot of money to shell out for a no-name nobody!
At least your break down makes me feel less guilty for spending over 100 bucks a month on books now (though I am still antsy about buying new authors).

[alg.livejournal.com]

If you think this theoretical amount is a lot, check out this:

http://www.usatoday.com/life/books/reviews/2006-03-29-how-opal-mehta_x.htm

How Opal Mehta Got Kissed, Got Wild and Got a Life by Kaavya Viswanathan -- $250,000 advance.

[joannemerriam.livejournal.com]

Unlike every other writer in the world, I love math, so I was practically drooling here. I'm glad my book is with a very small press; if I'm doing the math right, I will be a success if I sell 100 copies this year. (It's poetry.)

Makes the economics of printing banking products seem downright simple. I thought we were being dumb not to charge the banks until we ship their items (we hold them in inventory, sometimes for a year, for free! boggles the mind - apparently it's a selling point) but at least we know we'll get paid for everything we print, eventually.

I've got to think editing Aeryn Sun is much more interesting than editing monthly billing statements, though.

[alg.livejournal.com]

I hope you sell waaaay more than 100 copies! GOOD LUCK!!

Sell thru vs. print run

[(Anonymous)]

In one of your responses you said (paraphrasing) that it would be worse for an author to have a print run of 40k, vs having a sell thru of 40k (wasn't clear if you meant 40k out of 200k, meaning a 25% sell thru.) Which confuses me.

A friend of mine with a low print run on her first trio of s.t. books book but a fabulous sell-thru on all 3 is hitting a wall trying to sell elsewhere. Though her books' average initial sell thru was in the 65-70% range, because the print run was low (40k'ish) nobody else will touch her. And the explanation she has been getting is the high sell-thru doesn't outweigh the low print run.

Can you explain a little more about why it's better to sell 1 out of 3 books with a print run of 120k, rather than 2 out of 3 books with a print run of 40k?

Thanks, this has been fabulous!!
Leslie

Re: Sell thru vs. print run

[alg.livejournal.com]

I don't think I said that. I think what I said is:

+ A 40,000 copy print run isn't good if you're at a house chopping midlist authors (unless you are at a small press, in which case you are their bestseller),

+ but a 40,000 copy print run isn't that freaking bad, especially if you have a good sell through,

+ and a 40,000 copy sell through is pretty good unless you are printing 200,000 copies. If you are printing 200,000 copies, and selling 40,000 copies, your sell through is at 20%, and that sucks.