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

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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

[trixalicious.livejournal.com]

Absolutely fascinating. I have two final research papers due in the next nine hours or so, but I promise you that I learned more by procrastinating and reading this entry than I did "researching" my paper topics (which is only partly because I haven't really started my research yet).

Seriously. Gold star!

[agamisu.livejournal.com]

'Kay. This is nice stuff. Also so depressing.

[joannemerriam.livejournal.com]

Thanks!

[neutronjockey.livejournal.com]

Unlike every other writer in the world, I love math, so I was practically drooling here.

!?
Former Nuclear Mechanic.
Was doing Reimannian geometry in linear sets senior year in high school.
Wanna duel? :P
(Since you are from Murfreesboro, and I used to live on the corner of Shelby/Tipton Co... I'll let you slide on account that we were 'neighbors' once.)

-=Jeff=-

[lonp.livejournal.com]

This is fascinating stuff. Thanks for posting it. I was left wondering: What if any, significant differences arise on the YA side of the house?

For instance, often the books are shorter, so therefore probably cost less to print--is it enough less to affect marketing efforts/advances, etc.? I also suspect the distribution of buyers is skewed more heavily toward libraries and big chains than independents and general retailers. Do YA books tend to have a better sell-through, or the same?

Thanks again for such an educational post!

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

Returns - always bad?

[(Anonymous)]

This was great,

There's one area that's confusing to me regarding Aeryn’s career propects. 8,400 sales is bad, but only if you know that the publisher printed 25,400 copies. When her next publisher is looking at buying her books, don’t they only have access to sales (though Bookscan) not the print run? In other words, those 8,400 copies could be on a 10k print run, which would be great. How does the next publisher know that the book was unprofitable?

I ask because while it seems like returns can hurt the publisher, they shouldn't ruin an author's career, and cautioning away from pushing for larger print runs is problematic too, since print runs definitely affect the merchandising in the trade. If you don't print enough books, they can't put them in a display, etc.

It seems like authors (or agents, at least) should push for bigger print runs, hoping that the extra copies will result in better merchandising and get sales in the bank (bookscan) and let the publisher worry about the returns.

Or does that all just feed the vicious cycle?

[secco98.livejournal.com]

How much money does a book have to make to get an author a shot at another contract? Clearly, an author who (with the help of an editor...) costs a publisher $21,528.60 isn't going to get another contract. But what about a book that makes a small profit? Are publishers going to be happy that it made any profit at all, or will they take their chances that some other author can turn a bigger profit? I'm pretty sure the answer will be "That depends...", but I'm curious.

[vonandmoggy.livejournal.com]

Good, solid article. Having run a bookstore (www.perfectbooks.ca) here in Ottawa, Ontario for a number of years, it's always fascinating to see articles done from the publishing side of things. Most of it I knew (and I'm a BIG believer in P&L statements) but it's nice to see it posted regardless.

And now that I've left the bookstore to work on my graphic novel, it's all the more interesting (especially if I wind up self-publishing). The Direct Market (diamondcomics.com) operates on a non-returnable basis (all sales are final - yay! The discount you need to give is between 60%-65% off cover - boo!) so I'm trying to pay quite a bit of attention to the numbers side of things right now.

Good insights. Thanks!

Von

[heather-brewer.livejournal.com]

Fascinating stuff. Can't wait for part 2!

trade paperbacks

[(Anonymous)]

trade paperbacks are more popular than ever. After you do hardcover to mass market, please, please, please do an analysis if a trade paperback origina!

[godmoma.livejournal.com]

one would assume that, as with any other person making a living on some form of artistic talent, this is where having a good agent comes in handy :)

God knows I wish I could just sit and create all day and not have to deal with customers, rent, bills, and the likes ;)

[lilac-wine.livejournal.com]

Yeah, My sentiments exactly. Nervous titter.

P & L

[(Anonymous)]

Thanks, I think. As an author I appreciate the insight. I'm trying to decide if I should be happy, sad or frustrated.
:0)
Alice Wootson
www.alicewootson.net

Re: Now I understand

[alicebentley]

I would avoid spending lots of time finalizing a formula (unless you really like playing What If) because not only do the variables change for every single book, the industry influences that affect everything are also in flux.

Makes for all sorts of fun.

Re: Now I understand

[sarahmccarty.livejournal.com]

I know, but that's the hook. With so many variables, it could almost be a mental sport. Or the next mind game to sweep the nation....

[dr-pretentious.livejournal.com]

Now I absolutely have to read that book. I tutor several concurrent incarnations of Opal Mehta.

Thanks for the post!

Wow, this is amazing.

[sandycou.livejournal.com]

Thank you for going into so much detail! All I can think, as an aspiring writer is, "Well, I guess I'm not going to quit my day job any time soon!" I'm also eagerly awaiting Part 2 for the "good news". Also, if I write a single title romance, I'm going to get myself an experienced agent who knows how to negotiate the contract for me!

Re: Returns - always bad?

[(Anonymous)]

I'm not Anna, but this is what I think given what she said.

Why would a pub print only 10K if they think there's demand for more? The more they print, the cheaper per unit cost becomes:

[(fixed cost + variable cost) / (# of units printed)] = per unit cost

Since fixed cost is the same, and the variable will change depending on the number of copies printed, and since the per unit cost of printing will be much less if you print more, a publisher is most likely to print as many copies as it thinks it can sell.

So the fact that Aeryn sold 8,400 copies means (in my non-publishing expert's opinion):

1. The publisher printed a lot and she only sold 8,400 copies -- crappy sell-through

OR

2. The publisher couldn't print many copies because nobody really wanted to order her books that much (meaning B&N, Borders, Walden, and other retail outlets) and consequently she sold badly

Either way, poor Aeryn's screwed.

Anna -- please provide more enlightenment on this because I may have been completely wrong!

experienced agent??

[(Anonymous)]

I don't know, I think getting an agent is harder than getting published. How do you go about getting an experienced agent? Surely they're not going to tell you they're inexperienced. Hey, maybe Anna will share with us some of her more professional agents that she likes to deal with? And you know, she's just controversial enough that she may even name those to stay away from...those agents the publishing houses shudder when they hear the name. What do you say, Anna?

[the-lady-m.livejournal.com]

SO this is why every book has to be a best seller.

*SIGH*

Well ok then - on to best seller dom I go.

Anna - have you got any ideas what a home based cover artist could do?

I just started playing around with covers for friends - and I guess now is as good a time as any to ask that question. SOme of them are pretty good. So wanted to know what was available - -if you have any concept. (If you want to see them on your spare time they are over at http://ladymwrites.blogspot.com ) Starting in March...

But I kinda would like to know if there is ever a chance in hell that I might be able to break into that industry.

Many hugs - thanks for the info.

Lady M

Something that would be helpful

[deep-bluze.livejournal.com]

You emphasize several things that help a book, or hurt it. Among these things were blurbs from known authors, reviews, etc. What would be helpful to some of us would be somewhat of a breakdown of what sort of impact these things have, and a ranking of importance?

For instance, your Crichton is an Idiot author had one pity blurb, and their one good review was in RT (which I know you pretty much only get if you have a paid ad). The other review, in Booklist, was awful.

In your figuring of the P&L how much weight do blurbs carry? Unfortunately, until you've already been granted money to print the galleys, you won't get the reviews, but once you HAVE the good reviews, on an average, how much do they change the outcome?

I ask this as an author with solis A+ reviews from Publisher's Weekly, but on HC books out from smaller publishers. Blurbs good in both cases (and more available from best-selling authors) but there has been no interest thus far from larger publishers for either taking these books to mass market, or in subsequent books (also with the same good blurbs).

That leads to another question. Being with the smaller / medium level publisher, who does very very low print runs, does the fact that the print run is very low, and sells through count for anything, or is it only taken into account that a low number were sold?

I'm looking for a formula, I guess, to assign importance to different factors, as opposed to other factors, with an eye toward plugging all of the useful information you provided into a workable "plan".

DNW

Re: Something that would be helpful

[deep-bluze.livejournal.com]

(Sigh) SOLID A+ reviews, not Solis (not in typing, you see...the A+ is in writing)

Share the risk?

[(Anonymous)]

As an author who is more interested in getting published than getting a publisher to pay me money, I'd be willing to share the risk with the publisher: don't pay me any advance at all, but give me a bigger share of each sale. If it bombs, the publisher is not out any advance money, although clearly, they are still out the production and distribution costs. If it flies, we both make money. If it bombs and later I become famous, well, we still both make money.

I'm sure this is not an original thought, and I'm also likewise sure there are a lot of authors would would view this idea with horror. Which leads to the question: does any publisher do anything like this? Would they consider it?

Re: Returns - always bad?

[pnh.livejournal.com]

When her next publisher is looking at buying her books, don’t they only have access to sales (though Bookscan) not the print run?

Well, no. Because not only do we have access to Bookscan, we also have access to buyers for major chains and big wholesalers who remember all too well the extent to which the previous publisher pushed too many copies onto them.

It seems like authors (or agents, at least) should push for bigger print runs, hoping that the extra copies will result in better merchandising

Ah yes, the old "Push them into over-distributing it, then they'll have no choice but to spend lots of money marketing it" argument. There are many reasons this doesn't actually work, but the biggest is that "marketing" and "merchandising" dollars spent after an act of gross overdistribution are a lot less effective than you might think.

and get sales in the bank (bookscan) and let the publisher worry about the returns.

I'm having trouble making sense of this. Bookscan records cash-register sales, not the number of copies distributed. I.e., Bookscan sales are all copies that aren't going to be returned.