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.

Flat | Top-Level Comments Only

We separate out our "manufacturing costs" from our PP&B costs. We do print about twice as many covers as we estimate that we're going to need, and sometimes we need even more than that and have to go back to press.

I'm sure the numbers look high to you, but they are real numbers that really exist. The way big NY publishing works, as I am sure you know, is really different from the way small press works.

And we don't outsource to India.

Oh, I believe you that you're presenting your real numbers. My question is more about **why** these are the real numbers. Of course small presses work different from the big NY companies (thank god!). But why? I don't think we're any smarter than you, but I do think that we approach our business with a very different -- and much more positive -- attitude.

Seems to me that the big NY companies try to have it both ways -- on one hand, you all talk about how hard it is to make money on a book. On the other hand, firms like yours do little or nothing to work efficiently. It's not easy for me to make money on a book either, but at least I'm confident that I'm spending my dollars wisely.

In fact, from where I sit (both as a bookseller and a publisher), it often seems like your firm and others similarly situated are going out of your way to spend money inefficiently and ineffectively, at every step of the process. The waste that I see here as a bookseller is especially appalling, especially in terms of sales and marketing.

Maybe this is the right way to ask the question: how much have these numbers changed in the last 5 or 10 years? To what extent have NY publishers taken advantage of all the advances in technology that make it easier and easier to produce a quality book at a much lower cost?

-- Jim

It seems to me you're trying to have a very different conversation than the one

alg volunteered for.

She's trying to convey some fiscal realism to aspiring writers. You're taking it as an opportunity to demand that she defend costs and practices from a side of the enterprise that she already said is outside her area of expertise.

It may well be that we're dumb old lumbering dinosaurs and your operation is one of the tiny mammals that will eat our eggs while we're "doing little or nothing to work efficiently." If that's the case, I expect we'll see evidence of it soon, as your operation, with its "positive attitude," quickly overtakes ours. Meanwhile, I think you're kind of off on the wrong foot with

alg, who didn't set out to explain why Everything In New York Publishing Is Just Exactly Perfect. You know?

Granted. My comments might be considered to be off-topic. But part of what's wrong with NY publishing is that there are certain "truisms" that really aren't all that true. The fact that something costs XX dollars isn't necessarily written in stone. That's my real point.

You can make fun of my attitude -- folks often do -- but I believe that it's a mistake to instruct new writers (or others in publishing) on the inevitably of losing money on most all titles published. As I've written elsewhere, I believe that the notion that a book might lose money has turned into a license to lose money. That's not a good thing, and it's not part of the "realism" that I hope aspiring writers learn.

I don't believe that people in publishing are "dumb." Most folks I know who work in publishing are both intelligent and committed to their work. It's also true that most folk I know in publishing are often scathing in their criticism of the way things are done -- even at their own companies. And, for the most part, feel unable to change the system.

-- Jim

In no place throughout any of my entries, this particular entries, or any comment thread do I tell anyone that it is inevitable that all or most titles lose money. Your comments seem to me to be reacting to something that is not in my text. I suggest you get a livejournal and blog about this yourself.

I may have misread this line: "And this is totally normal. This is an average book."

When you say that this P&L represents the "average" book, what exactly do you mean, then? Do these numbers (or something close to these numbers) apply to 10% of what Tor/Forge publishes in this format? 30%? 60%?

"She's trying to convey some fiscal realism to aspiring writers."

and, as an aspiring writer... she totally did. So, Jim. You are confusing me & a lot of new writers go for the big guys in NYC anyway, because we know we can trust them. I'd rather have the facts, and i don't see negatives here... but I think Anna's post is really positive and informative, ....information that is really helpful to a clueless newbie.

(as in clueless I can't seem to ever log in... this was me, and I promise to stop forgetting~!)

It's not my intention to confuse the issue, and if that's what I'm doing here, I apologize. I think it's probably time for me to bow out of this discussion here.

For a more complete -- and I hope less confusing -- expression of my point of view on all this including the advice I'd give to new writers, visit: http://statelyhuangmanor.com/essays/DSkeynote.htm

-- Jim

I too thought the covers looked expensive - why not just run-on - but you're saying you printed 70,000!? shurely i misundertand. We get run-on covers free in modest amounts.

So, an academic publisher speaks:

1. your cover design/art costs 10x what ours do. But you did say your covers were a major factor in your sales, I know.

2. you pay published price royalties, not on % of money received by the publisher?

3. co-op - we don't have that in the UK, that I know of.

4. print 35,000 and sell 8,400 you're going to lose money - the sums above all become irrelevant!

I especially agree with #4. It's astonishing that publishers do so little to maximize sell-through. In fact, most incentives offered to booksellers -- including co-op -- are designed to get us to over-order. Sometimes, there's a good reason for that and sometimes you do get good results from this. But more often than not, the result is more waste.

More books would be profitable if each copy sold didn't have to bear the costs of two unsold.

-- Jim

Indeed. I liked the line about 'production bumped it up to x print run to save money in case it was a best-seller'. But how many books are best-sellers? If you instead reduced every print run on principle, you would indeed be caught out by the rare best-seller, but so what. The reprint would be slightly more expensive than having some extra copies from the first printing, but you would have saved from all the other printings that didn't turn out to be bestsellers.

Ah, but the mroe copies you make, the mroe you sell, even if you don't seel them all.

suppose, as a very very simplistic model, there are three bookstores in the world, each of which has offered to stock 1 copy of the book. and suppose that there's a 1/3 chance at each store that the book will sell before they decide to "return" it.

so you print 3 copies, send one to each store, and sell 1 of them. ideally, you make enough to money to cover the cost of all 3 off the one sale.

sure, ti looks wasteful. but if you only printed 1 copy, you'd only be able to have 1 store stock it, and then you might well sell one at all.

Flat | Top-Level Comments Only

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

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