The Return on Investment of a Book

A soft cover book, perhaps 6 x 9 inches or other industry standard size for a trade paperback would be priced retail anywhere from $12 to $30 for consumer distribution, up to $50 for a professional book, and even higher for a textbook. An add-on CD might be $20, and a book plus CD package might sell for $40 minimum.

Although this may sound like a small number, it is realistic to think in terms of selling 600 to 1,200 copies the first year (50 to 100 copies per month). Contrary to popular opinion, nonfiction books are perennials, and sales can build over time, leading to subsequent editions. Libraries are a great market for this type of book.

Plan for between 50 and 250 complimentary copies to send out to friends and clients and for review purposes. While some copies will be sold at retail many more will probably be sold at a discount which is something to consider in your retail pricing.

It might seem that if you worked with a traditional publisher who would bear some of the costs that you would get to break even on some of them faster. Ironically, this may not be true.

If you self-publish at $20 per book retail and you sell the book at one-third off on all copies, the price out the door becomes about $14. Assuming that your financial layout is $10,000, including your comp copies, you need to sell about 800 books to break even.

Alternately, let us assume you work with a traditional publisher. You will still incur some of the costs, so let us assume they would be $3,000 (book proposal coach or writer/editor/marketing efforts). A publisher will generally have to discount as much as 40 percent to 60 percent.

Optimistically, using the same one-third off on all copies, that is a price of $14 per book, the same as a self-published book. But your royalty (at 10 percent) gives you a little over $1 for each book sold. So in this case, you have to sell about 2,000 copies before you reach breakeven on your own expenditures.

As a side note, the publisher will have to sell 10,000 to 20,000 copies to reach its breakeven, which you might think would be an incentive to sell that many copies. Unfortunately, it is a regular part of the book publishing business model to expect 70 percent to 90 percent of titles not to get to breakeven. Their business model is to take a relatively small risk on very few new authors, not spend much money on those authors in marketing, and make their money with books by nationally known, well-established authors.

Making a Living as an Author
Using this model, you can see why it is difficult to make money selling books unless you sell a lot of them. Even leaving $2 a book, there are ongoing costs you have not covered (mostly marketing and publicity) that can easily eat up your profit margin.

Writing a book is a great way to boost a career or leave a legacy, but it is a tough way to make a living. Adequate pricing will ensure that you do not lose money on each book, but prices for books are so low, generally, that it is tough to make a sizable profit.

It is estimated that only a few thousand people are making a living solely on their writing in the United States. Authors who make a living at books sales usually have written a number of books that they earn money on over a period of time. Many have also often found ways to sell in quantity through educational institutions, corporations, and so forth.

Many authors run seminar businesses and incorporate their books into the price of a seminar. They may also be established speakers and sell books as well as other products, such as CDs and video tapes/DVDs, at the back of the room.

Making money as a writer often requires a considerable investment of time and money, but it is rewarding as a career.

Many famous people who have made money writing nonfiction have ensured book sales because they are already recognized experts and have constant media exposure.

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Comments

  • Javier Munoz  On May 17, 2009 at 4:05 am

    Did you mean 6000 copies instead of 600 in the second example? To recover the 8,000 USD in expenses with a little more than a 1.00 USD royalty payment, I suppose you would need about 6000 books sold.

Trackbacks

  • By Shack’s Comings and Goings » Sunday Wash-Up on June 20, 2009 at 2:23 pm

    [...] The Return on Investment of a Book Sobering stats from Jan B King, Know your industry if you are hoping to one day earn any significant amount. [...]

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