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What’s the TRUE Cost of Your Book?


People always ask how much my book cost to produce. Some want to use the intel as they consider self- publishing, and some just like knowing things, I guess.

Most people scratch their heads when I answer that the cost depends on how many I sell. Here’s where I tap my MBA to explain the importance of understanding that the total cost of your publishing effort includes fixed costs and variable costs.

 Total cost = fixed cost + variable costs

Fixed costs. If you’re an indie author who doesn’t hire a ghostwriter, you’ve still got to pay other creative professionals to help you produce a quality product. You may not need a cover artist/photographer and layout designer if you’re using a print-on-demand program, but please hire a copy editor.

Be sure to capture any travel costs, meals you picked up for people you interviewed, research materials/subscriptions, and so on. Are you planning a book tour? What about promotional materials? Revamping your website so you can sell them online? Cha ching…these are fixed costs.

Allocate these over the number of books you sell. For example, say the fixed costs are $5k and you print 1000 books–hit each book with a cost of $5. Allocate that same $5k across 20,000 copies and you’re down to $.25 per book.

Variable costs. In addition to the cost to print your books, you’ll have to pay taxes and shipping on them, plus the costs to distribute them to readers and/or retailers. Order your quantity wisely. You’ll be tempted to order a high quantity to get the lowest cost per book (unit cost), but if you don’t sell what you print, this strategy will backfire.

For example, if you can get your unit cost down from $5 at 1,000 copies by ordering 2,000 books at $4 you’d better have a plan to sell every one of them. The cost per book is $16 if you only sell 500 books ($4 x 2000 copies ordered = $8000/500 copies sold =$16).

There is another variable cost that I don’t have experience with, therefore no numbers to share, and that’s distribution. If you use a book distributor you will pay a setup charge of somewhere around $500 plus a monthly storage charge plus a cut of your sales.

Total cost. My fixed costs are upwards of $10,000 (photography, editing, design, travel, office supplies, promotional materials) and my book tour will run upwards of $10,000. If I print 1500 copies my total costs will run about $27,000, which means at a retail price of $25 I don’t break even until I’ve sold 1080 copies.

You can play with the numbers and say I shouldn’t charge the entire book tour to the book because I’ll use it to market my ghostwriting services and to gin up paid speaking engagements. Fine, back the total cost down to $17,000 and at $25 retail, I break even at 680 sold copies.

Caveat: Nowhere in this post have I discussed the numbers related to wholesaling and consigning your book to retailers. At this point you need spreadsheet skills (or someone with them) to determine the total profitability of your book publishing venture. If you, like I, will pursue a blended strategy of selling books yourself at full retail and through retailers, your break even number will be higher than if you sold them yourself. Retailers who sell your book on consignment will take 40% off your retail price and pay AFTER they’ve sold it, while those (few) who buy it outright will take a 50% cut.

Is this any way to make a living?

Being an independent author is not a viable way to feed yourself unless you sell a ton of books, but if you use the book as a marketing vehicle, a book can be priceless.  Compare a sunk pylon supporting a bridge to a book supporting your career. For many business professionals who want to speak at conferences and professional associations, a book credential is required before the organizers will consider your application. If your colleagues or competitors boast author credentials, your ante has been upped–get with it.

    

About Tamela M. Rich

From Charlotte, NC, Tamela writes books, articles, speeches and presentations for business professionals.From "the road" she writes about the people, places and experiences she discovers and the life lessons she learns from them. Invite her to share some of her lessons from the road at your next event!

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