Book Pricing For Dummies
February 23, 2010
There's been some furor and backlash and general whining about the latest stink between MacMillan and Amazon over the price of e-books. I was interested to get a grip on how much it actually costs to publish a book, and although there are a fair number of articles about it, the numbers vary. So I'm going to add to the mix with some information as well, which we might call "Hardcover Pricing From 20,000 Feet."
My new novel, THE FALLEN, is priced at $25.95 in hardcover. First, let me say that I am pleased to be published in hardcover, and I had ZERO, let me repeat, ZERO, say in pricing (or what format it was published in).
These are very, very, very general breakdowns based on my reading about book breakdowns. That doesn't mean they necessarily apply to THE FALLEN or to any books from Oceanview Publishing or any other publisher in terms of specifics, but generally, these are in range. And I'll try to, in business-speak, drill down and give you some granularity, as well.
$25.95--book price minus any retail discounts. For instance, should I suddenly become a New York Times bestseller (oy vey, my lips to God's ears!), the chain stores will start discounting the book by anywhere from 20-40%. But it seems likely that if you should trot into your local Borders, B&N, or into your favorite indie bookstore, THE FALLEN will cost you $25.95 plus tax.
Author royalties typically range from 8 to 15%, depending on format (e-books are a different animal), how big a name you are, and how many books you actually sell. But for a hardcover, a 10% royalty is fairly typical and an easy enough figure to work with.
$25.95 (list price)
-$2.595 (10% author royalty)
Distributors, that is to say, Ingram, Baker & Taylor, and all the others, take about 10%.
$23.355 (list price - author royalty)
-$2.595 (10% for distributor)
Retailers, so I'm told, take about 40% off the list price. That is, if they're not discounting your book by 10-40%. In fact, it makes one raise the ol' eyebrows trying to figure out how Borders et al. makes a profit on a bestselling novel they discount by 40%. This piece also will not break down retailer expenses, such as shipping, returns, overhead, etc.
$20.76 (list price-author royalty-distributor)
-$10.38 (40% for retailers without discounts)
Book publishers typically claim 40-50% of a book's price on costs. For this we'll say 40%.
$10.38 (list price-author royalty-distributor-retailer)
-$10.38 (40% for publisher costs)
Okay, now. For a little bit of granularity, let's look at a publisher's costs. We're going to work some numbers out of that $10.38, which is 40% of a retailers cost per book. These are really, really fuzzy numbers. The percentages come out of the $25.95 list price, but I'll be subtracting them from the $10.38 figure, which is 40% of the list price.
$10.38 (40% of list price, or publishers cut of the list price)
Preproduction costs, which I assume means editing and layout and maybe even cover art, book design, etc., is around 12.7%. 12.7% of $25.95 is $3.29565 (and no, I'm not rounding).
$10.38 (publisher's 40%)
-$3.29565 (pre-production costs, or 12.7% of list price)
=$7.08435 (or, about $7.08 per copy of the book)
Printing costs around about 10.125%, or $2.6274375
$7.08435 (publisher's costs-pre-production costs)
-$2.6274375 (printing costs, or 10.125%)
= $4.4569125 ( or about $4.46 per book)
Marketing. I love this figure, because I bet it varies all over the board. If you're a big author, it's higher. If you're a nobody, it's practically zero. But from my sourcing, let's say 7.15%, which is $1.85857.
$4.4569125 (publisher's costs-pre-prod-printing)
-$1.85857 (marketing costs)
= $2.5983425 (or $2.60 per book is left over and might be considered publisher's profit)
Okay. Let's just say, on a $25.95 book, the author gets $2.60 per copy sold.
So, if the book sells 1000 copies, author gets $2600. (If you have an agent, the agent gets 15% of that, and the government gets about 30% of what's left over, but that's a different article for a different day). If your book goes totally stratospheric and sells 100,000 copies in hardcover, the author gets $260,000. I'm not doing the breakdown for a million copies sold in hardcover, that's so rare as to be in the Winning The Lottery category. Even 100,000 copies in hardcover is unusual. (And if you're in mass market paperback, and your book sells for $7.99 and your royalty is 8%, and you sell 100,000, you get $63,920, minus agent's 15% and the government's 30%, etc.).
Now, I wish I had more granularity here, because it's not clear to me where things like warehousing books falls. Is that part of the 10% for printing, distribution, or does it come out of the publisher's profits. I don't know. What about shipping? This is a hairball for bookstores and publishers, and the only winner that I can see is UPS. The books get shipped from a warehouse (run by a distributor?) to the bookstore. The bookstore presumably pays for that out of their so-called 40% profit. If they don't sell all the books, they can return them to the publisher (ie., distributor) and I don't know how that breaks down. Who pays for the UPS return shipping? If it's paperbacks, at least mass market, usually the covers are returned but the books are dumped in the trash. If it's hardcovers, the books are returned and the retailer presumably loses at least a little bit of money on the deal (although I don't know), but somebody gets hosed.
Here are a couple things I know. I know that the guy who did the cover art for THE FALLEN is a freelancer and if his rates on his website are accurate, the cover art costs my publisher about $3000-$3500.
My publisher did not spend much money on the author advance.
Although I don't believe they've actually told me this, they have said in at least one article I read about my publisher, that they keep aside $3000 for marketing. That number, of course, will vary greatly from publisher to publisher.
But you can see right from the start, that for my book, initial expenses before layout, printing, editing, mailings, catalogue, etc., is somewhere in the range of $7000-$8000.
How many copies will THE FALLEN need to sell to earn back just those initial costs? Well, go back to the $2.60 figure as profit and say 3,076 copies sold to earn back $8,000.
Okay, that's not quite right, is it. Go back to 40% figure, which is $10.38. About 770 copies, a very modest figure. But that's just to break even on initial costs.
Of course, I spent a couple hundred hours writing the thing, so what's my hourly rate? Oh, let's not even go there.