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

[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.

[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]

HAHAHAHAHAHA times a million!

[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.

[tharain.livejournal.com]

::grins::

I might not win, but I score. =D

Thank you

[jamiekswriter.livejournal.com]

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

[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?

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! ^_^

[andsaca369.livejournal.com]

Yes, thank you! And it should have been obvious; it clicked just now with one of those "way to be a moron" moments we all know and love.

It actually makes good sense, although I suppose looking at it from a business standpoint helps.

Any ideas where I can find information about shipping costs and how they're handled? (You mentioned above you didn't have much more information than the fact that Tor has recently started paying them.) I ask this purely out of curiosity- I work for a national trucking firm, and we ship a lot of books. I see Penguin and various subsidiaries a lot, and I've seen VonHoltzbrinck on a bunch of bills, particularly out of Virginia.

Boring TMI, probably. *g*

[alg.livejournal.com]

You're welcome!

[alg.livejournal.com]

I don't know *anything* about shipping costs, or how they work, and they aren't incorporated into our P&Ls, and I am being told to shhhhh and don't ask. *g* So unfortunately I don't know! I'm sorry! I will continue trying to find out, though. :)

[cynthia1960.livejournal.com]

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

[andsaca369.livejournal.com]

Hee! Shh and don't ask, if you are being told not to open that box; I don't need to know THAT badly. *g* It really is only idle curiosity, because I saw something that dovetails with what I do and went all OOH OOH THAT'S ME YAY.

Thank you for asking, though. :) I appreciate it.

[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]

Hee. Thanks. :)

[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!

[barbarienne.livejournal.com]

+1 South Park reference!

[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....

[authorm.livejournal.com]

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*ohhowiwishthiswasstillasecrettome*

[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?

[iagor.livejournal.com]

Yes, but "go write not so good stuff to make money" doesn't make a snazzy slogan :(