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

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demystifying publishing

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

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.

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Well, listen, I have done this about a million times -- okay, realistically? I have done it at least a few hundred. Seriously. And I am still learning new bits and pieces. So expect to always have something new come out! THis is bare bones stuff -- the real P&L is a lot more complex.

Heeeeee. <3<3<3

You know, I can easily see where trying to "nail" this formula could become a personal challenge to someone having to deal with it daily. I'm not in this end of the business and I've already played a "what if " scenario with it. ;-)

Lol, so my naughty boys can have some fun. :)

It's not Romance, it's a subplot in a Historical Fiction novel, but an important one.

I asked because there's a discussion going on on Romancing the Blog (http://www.romancingtheblog.com/blog/?p=610#comments) whether WalMart politics influence writers and publishers.

People should write what they want to write. Let publishers sort out whether or not to publish it. And then if publishers decide not to, stick it on a shelf.

Having a major secondary character be gay certainly doesn't seem to have hurt the sales of Hunter's Moon or Moon's Web. Hell, the main character in the Kushiel books is bisexual.

After my first novel was published many years ago (not Tor), I wrote polite letters to the editor trying to find out how many copies had sold. I never got an answer and eventually gave up trying. As you might guess, I had no agent. To this day, I don't know for certain how many copies sold or if it earned back its advance. I'm assuming not.

Thanks so much for helping demystify this whole process! Had I been less intimidated by the publishing end, I would have understood some of the reasons WHY they couldn't give me a number.

If Aeryn Sun turns into Tami Hoag fifteen years later, then, yes, every scrap of old published work will come back into print with the author's name in very large type.

(We had a discussion in my company's editorial meeting this week about how Bantam is bringing back, just about simultaneously, three creaky old Loveswept novels by people like Hoag -- and two others whose name I forget -- as $15 hardcovers this summer.)

But the success level required for that is #5 New York Times bestseller or better. (And consistently.) I know that every writer assumes that level of success will inevitably happen for her, since she is smarter than the smarties and tougher than the toughies, but the odds of it actually happening makes Mega Millions look like a charity program.

Andrew Wheeler
Senior Editor, SF Book Club
http://antickmusings.blogspot.com

Not only the main character, lol.

Kushiel fan here.
Though there are moments when I want to shake Phèdre. Which puts her in good society with Gwendolen Harleth, Marianne Dashwood and several others. ;)

To this day, I don't know for certain how many copies sold or if it earned back its advance. I'm assuming not.

They are required by law and your contract to give you copies of your royalty statement, which should tell you exactly how many copies sold!

Word.

See my comment in this same thread with a similar notation.

Wow, Anna! Math scares the crap out of me, so I am hiding under the blankets. I love learning about all of this stuff you are telling us about publishing, and thank you for taking the time to do it! Let's say someday I or a friend or someone I knew (no agent, no nothing) was offered a contract. How dumb would it be to take the first offer if the author was just so happy to have an offer? I feel like I would jump all over any offer @ all. I agree with lepapillon. Those numbers are scary. Really scary.

Wow. What a read. Thanks. Extremely fascinating and informative.
I knew a little of this already (2 years in a bookstore teaches you some strange stuff) but a lot is new to me.

It would be really fascinating to see the P&L treatment for anthologies, since they're a different kettle of fish from the average paperback.

Please don't stop enlightening us now.

Anthologies are done the same -- it's just that the person compiling/editing the antho is told how much money they have to work with, and they have to figure out how much they can pay each person. Or it could be done completely differently -- ask around.

(I can't work it out either, but dude, I'd buy that!)

Nevertheless, I'm glad you're sharing this.

Writing is an art. Publishing is a business. Writers still need to have their heads out of their butts when it comes to the business part.

Good, this is the sort of thing I like to hear. :-)

I am currently not-working on updating my CV before sending it to someone. (The local second-hand bookshop, in fact.) And wondering how to say, in one short phrase, "I have had several books published by a Real Publisher, and yes I do know what that means and that it does not include operations like Publish America." For me that is *much* more brain-bending than the many-stepped but essentially simple maths that Anna has explained so clearly.

Thanks! This is great info. Aspiring authors often ask me questions like this and, while I knew the basic facts, I never factored in coop or magazine jobbers, different discounts, &c.

There are so many trade PB originals coming out in the next year -- will their numbers look more like MM or HB?

Oh, and on a slightly related note, what happens when a book is remaindered? I know why a book gets remaindered; I mean, what happens then, does the pub call it a wash as far as royalties are concerned?

I'm an author with an independent publisher... I get a very low advance (usually $1-2000), but am offered a slightly higher royalty than bigger publishers. It means that i have very little to sustain me at the beginning of the process (so i have a day job), but start getting royalty cheques in the first six months. I personally much prefer this system, as getting an advance is a bit scary, because you're getting paid for something you haven't done yet! Getting paid in royalties instead makes me feel like I really earned it.

It also means that my publisher has more money at the beginning to spend on the design of my book, which makes more people pick it up and buy it...

Man, I love you for doing this. If I'd had a blog when I was still editing, I don't know if I'd have had the patience or the motivation to do it, and I tell you, it's so helpful! Even to me! Explaining this stuff isn't easy, and you do it about a thousand times better than I've ever been able to do.

(Just ask my very confuzzled mother.)

ok, my other post didn't make much sense. small advances annon. answered more of what I wanted to ask. With all of the advance stuff, and the numbers you threw out there, it seems like there is a lot of shuffling. I guess this is where having an agent is a good idea so that they can explain what all of those numbers mean. I wonder if authors like a bigger advance or bigger royalties? I can't tell which would mean more. I never realized the advance was part of what the book is supposed to make after it hits the shelves. I love all of this info, Anna.

And people wonder why I'd rather work in advertising...

As an aspiring editor, this is ineffably informative (and sarcastic). Thank you.

Even a very modest advance won't help if your book didn't sell for beans.

There'll still be production costs, distribution costs, and that basic marketing and promotion that real publishers do for all their books no matter how small. There'll also be Contribution to Overhead, which is your book's fractional share of the cost of running the publishing house. If your book doesn't earn enough to cover those, you're still in the red no matter how tiny your advance.

Some years back, so long ago that alg (http://alg.livejournal.com/) was a cute little cartoon-watching moppet, there was grumbling about the very low advances being paid by one of the big trade houses.

As the authors and agents pointed out, if said publishing house honestly thought the book was only going to sell enough copies to earn out one of these pitiful advances, there was no way the book was going to cover its basic costs, and so they ought not be publishing it. But since they were publishing it, they obviously believed it would sell quite a few more copies than that -- and consequently they should have been offering higher advances.

o.O

I had never thought of that. Don't think I can (since I can read your stuff w/o the paid access) but... damn... that's hawt.

Thanks for this fascinating insight into how a book can be a good enough read, but not attractive to a publisher.

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