Deb Simpson : Your Book's Bottom Line – Tracking and Totals
Your Book's Bottom Line
Tracking and Totals
By Deb Simpson
The first three installments of this four part series "Your Book's Bottom Line", focused on book development costs, marketing costs, and publication costs. In this final article, the focus will be on tying it all together. First, an example of a simple way to track book distribution and sales, including proof copies, consignment sales, and books provided at no cost to the receiver (book reviews, etc.). This example is taken from the sale and distribution of the first edition of Pink Place & Blue Blaze, a Special Edition.
Example: Distribution and Sales Costs for Pink Place
With 100 books sold with a resulting profit of $107.06, the result is a profit of $1.07 for each book, before deducting our other book-related expenses. I used the first 100 books sold in this example as it represents the "worst case" due to the proof copies, free copies provided to reviewers, etc. For most self-published books, average sales volume is 100 books or less. Additionally, I used the first 100 books in each of our other examples, thus providing a common factor for determining your book's bottom line.
However, there is one more factor to consider: business overhead. This is best defined as the operating cost for the business itself. In a traditional retail business, this might include rent, utilities, payroll, etc., and is used to cover the cost of running the business itself in the overall product profit or loss.
I use my home office for writing, and I am not taking the cost of my existing computer, printer, utilities, etc. into consideration. As a result, my overhead becomes only the direct cost of the "business" of being an author. This includes the website I maintain which costs $12.95 per month (hosting fees), as well as business cards @ a cost of $15.95 per year, and subscriptions to writers magazines @ a cost of $45.95 per year. Total annual overhead: $217.30.
With four titles currently on the market, this equates to $54.33 per book per year. I am going to assume (for this example) that 100 books were sold during the first year (Pink Place & Blue Blaze, a Special Edition) thus making the overhead costs $0.54 per book.
We can now use the examples from all four articles in this series, to tally up the sales, expenses, etc., and determine the final outcome, following the sale of 100 books.
As you can see, the cost of development, marketing and publication exceeded the book's profits. Using the same costs, with sales of 1000 books in the first year, the outcome is much better, as shown below:
Example: Tally for 1000 Books (click for larger view):
This approach can now be used to determine your book's bottom line.
I hope you found this 4-part series informative and helpful. If you have any questions or comments, or would like to receive a copy of the Excel spreadsheet format that I use to track my book costs and sales, please email me to request it (Web site info is below).
Thank you for reading these articles. I wish you success with your future publications and look forward to seeing your work in print! Happy Writing! •
Please Note: I recommend that you obtain the services of a small business accountant to assist you in setting up/reviewing the finances related to your books and business. I am not an accountant and cannot provide financial advice.
© 2011 Deb Simpson. All rights reserved.
Deb Simpson writes fiction, nonfiction, and poetry. She's been employed in the healthcare industry for more than twenty years and holds a degree in Business Management. More »