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?
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.