I’m sure many of my frequent readers know these numbers by heart, but some of you are new around here. So, . . .
Let’s look at a typical non-fiction trade book. (Fiction makes less money, by the way, unless it “goes big.” And we all know that’s as rare as finding gold in the gravel.)
So, let’s say, for simplicity’s sake, that your hardback has a list price of $30. (Those greedy publishers!)
The bookstore buys that book for $18. Now, some of those books will be sold for less than $30, but not most. That means the bookstore has $12 (40% of list) to cover rent, salaries, utility bills, and so on and so forth. Given that they’re not selling all that many books on a given day, you can see why so many bookstores are going out of business.
The bookstore doesn’t buy from the publisher, all that often, though. They buy from a wholesaler. Why? Because there are 100,000 active publishers in the US alone. And they can’t afford to deal with even 1% of them as direct vendors.
The wholesaler takes 15% of the list price ($4.50) to cover their costs of operation. And that’s a very, very slim sum. Our net is now $13.50. Out of $30.
But wholesalers don’t deal with more than the top 1 or 2% of those 100,000 publishers. The rest need a distributor. That distributor takes roughly 15% of the list price in combined commissions and other fees. (Another $4.50 gone, leaving a princely $9.)
So, the publisher is getting $9. From that comes:
–Pre-publication preparation: (cover design, text design, structural editing, copyediting, proofreading, indexing, file preparation to meet e-book or printer standards, . . . ). This costs about $3,500 to 10,000 per title. And that tends to work out to $0.75 or $1 per copy for most mid-range books. (We’re netting $8.25, if you use the better number.)
–Printing: At a mid-range volume, that might be $3.25 per copy. (The net is now $5)
–Royalties. Non-fiction, hb, standard rates of 10% of list for the first 5,000 copies, 12.5% for the next 5,000 copies and 15% after 10,001. Let’s be conservative, and call it 10% of $30, or $3.00 per copy. (The net is now $2.)
–Marketing of 5% of revenue, or 0.05 * $9, or $0.45. The net is down to $1.55.
From that $1.55 (or 5.2% of the original $30) comes the salaries, utilities, rent and maybe, just maybe a few pennies of profit.
Now, there are other complications I didn’t treat. Sometimes bookstores buy directly from distributors or the larger publishers. That happens about 1/3 of the time, so you’d get back an average of 1/3 of the 15% that the wholesalers take. That raises your bottom line by another 5% of list, or $1.50.
BUT you also have to accept returns from anyone in the trade, in any condition, at any time. (Yeah, that’s not how the terms of trade on the invoices read, but it is what really happens.) Most of these books will have a 25 to 30% return rate. And that eats up your bottom line with books you printed but can’t sell. (It adds another $0..90 in cost, on a good day.) And then there are the copies you never quite manage to sell, and freight, and . . . .
In the end, a large publisher usually gets 2.5 or 3% of list through to the bottom line. A smaller one is lucky to break even.
And fiction? It’s worse!
You don’t go into this business for the money.
Last word: Publishing is addictive. If you haven’t get gotten hooked, do NOT start until you have consulted your accountant and therapist!