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

[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?

[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]

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. :)

[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.

[(Anonymous)]

Well, as a reseller of some TOR books to the school market, when we buy the books we're paying freight on a collect account.

Great explanation, I'm totally sending everyone who comes to me begging, "oh you're in publishing/the book business, here's my manuscript" over to your site... expect lots of hits.

--K