Monthly Archives: February 2015

Publishing Costs…

In my last blog I wrote about creating a profit and loss statement for a book. Let’s assume we are producing a children’s book in a 5 1/2 by 8 1/2 inch format with a black and white interior. The book is 150 pages after layout and has 15 illustrations in the interior. Finally, based on a survey of similar books, we conclude the price the book can be sold for is $8.95.

The above book can be printed for $3.15 using print-on-demand (POD). Dividing the printing cost by 0.60 gives $5.25 as the minimum price you need to charge to cover the printing costs and a 40% discount to retailers. This is less than the price we can charge for the book based on our research. So does this mean the book can be sold at a profit?

It depends.

The next step in the calculation is to estimate total net sales and costs. Because the average books sells about 500 copies I use this in my estimates. A forty percent retail discount off a list price of $8.95 leaves $5.37 per copy for the publisher, which will be your net sales for each book. Multiply this by 5oo books to get the total net sales of $2685.

Now compute your expected cost:

  • Your cost of printing is $3.15 times 500 books, or $1575.
  • If you are publishing someone else’s manuscript you need to pay royalties. We pay a 12.5% royalty on net sales, which in this case is $336.
  • Proof reading will cost $3 per page on average, while copy editing can cost $4 a page and content editing can cost $7.50 a page. For this estimate I’m going to assume $4 a page, or $600.
  • Illustrations can cost anywhere from $50 to $1000 an image, depending on the type of image (full color or black and white line art) and the amount of detail. For the children’s book I’m going to assume $750 for 15 interior black and white images and $200 for the cover.
  • Professional interior layout with a desktop publishing program can cost as much as editing, so let’s use $600 in this example.

This gives total costs for producing the book of $4061, which is $1376 more than the net sales for 500 copies. In this example you would need to sell 1387 copies of the book to cover your costs. Even if you are self-publishing (which means you are not paying royalties to another person) and leave out the interior art, your total costs are still $2975, which is more than the net sales of $2685.

If a book cannot be produced at a profit (where total net sales are greater than costs), a publisher will not move ahead with a project. If you are considering self-publishing and the above analysis shows you cannot produce the book at a profit then you should also consider whether to move ahead with the project.

The following is a simple formula to determine how many copies of a book you would need to sell to cover the costs of a self-publishing package:

Copies to sell = Cost of the package/(0.6 * list price – cost of printing)

If the cost of a self-publishing package is $3000 (including all of the above costs like editing), your book sells for $14.95, and the printing cost is $4.15 (which would be the cost of a 250-page book with a black and white interior), you would need to sell 623 copies to break even on the investment.

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Profit and Loss Statements…

People who visit our website know that we do not publish children’s books, yet every now and then we get one submitted. Recently, we received one my middle grade reviewer (and 11-year-old daughter) really liked. But calculating the production costs made it clear that we were not the right publisher because we could not produce the book at a profit. In publishing, this type of analysis is called creating a profit and loss statement. I want to walk everyone through this analysis, in that whether you are a publisher or about to self-publish your first book this is a useful tool. I will use a children’s book as my example.

Step 1 – What format should be used? Cookbooks are usually hardcover books for a reason; they stay open easier when on a countertop. Similarly, children’s books are usually hardcover books because they will withstand more “gentle reading” than a paperback. Figuring out what format your book should be in is the first step, because your printing costs will be determined by the format. Also consider how large the book should be: 6 by 9 inches is a standard format, but books in your genre may require a special size.

Step 2 – What will the book cost to print? A children’s book with color illustrations will need to be printed in full color, and an 80-page full color book will cost $11.88 per book if produced using POD technology on 70# paper (which is what most self-publishers have access to).

Step 3 – What can you sell the book for? The research I did suggested that on average an 80-page hardcover full-color children’s book will retail for about $14-$15, unless it’s a large (8 1/2 by 11 or larger) format.

Step 4 – Taking the discount into account, can you cover the printing costs? The discount to a retailer is usually 40%, meaning you get 60% of the list price. Thus, to figure out what the list price needs to be to cover your printing costs, divide the printing costs by 60% (0.60). For a book that costs $11.88 to print, the list price would need to be $19.80 to break even on the printing.

If the list price needed to cover the printing costs from step 4 is greater than what you can sell the book for STOP. You cannot produce the book at a profit. I know most people are thinking “Just charge $22.00 for the book.” Over-pricing a book for a given market (charging more than similar books) is a common mistake, and will result in very few sales.

If the above analysis shows you can cover the printing costs, the next step is to determine if you can cover your fixed costs (editing, illustrations, and cover art). I’ll cover computing these costs in my next blog.

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