Big Publishers vs. Self-Publishing: Who Does It Right?

We all know that larger publishers spend tens of thousands of dollars launching a single title. Successful self-publishers spend far, far less.

Is this an indication that big publishers are doing something wrong? In general, no.

Will the successful self-publishers do better if they copy the big houses? Also generally not.

The apparent contradiction is actually easily resolved.

If your manuscript will never sell more than a moderately low number of copies, no matter what you do to it, that number will cap what you can invest in the book, and dictate that you distribute the book in the highest margin channels you can find.

If, on the other hand, the manuscript has “legs,” then investing more heavily in it, and distributing it in even low-margin channels, can make for a higher total profit, even at a lower profit per copy.

Let’s do an example, and you’ll see what I mean.

Suppose that you have a manuscript that could sell 5,000 copies as an ebook with a $500 cover image, a $300 copyedit, and a $4.99 price point, and a negligible number of copies POD. (You do the POD edition because it makes the ebook sell better, rather than to make money from its sales.)

Your revenue per sale is $3.50, for a total revenue of $17,500. You pay yourself as the author 25% of that as a royalty, $4,375, and your publishing work earns a contribution to profit and overhead of $12,325. Or, if you self-publish, you get to keep the $16,700.

Okay-ish, if you do enough of them, for a self-publishing author. Not good for a company with real overhead for rent, salaries, etc.

Now, suppose that if you can invest $30,000 in publishing the book with an offset run, investment in design, B2B marketing, etc, and you can sell 10,000 copies of the ebook at $7.99 per, and 10,000 copies in trade paperback, at $15.95 per copy.

Your revenues on the ebook will run $5.60 per, or $56,000. Your revenues on the print edition will run $7.66 per, or $76,600, for a total revenue of $132,600. After you pay the author his or her $14,000 for the ebook and $12,760 for the print edition (total royalties of $26,760), and recoup your $30,000 investment, your contribution to profit and overhead is $75,840.

It only works this way if you have the money to invest, if you can afford to lose all of it every so often (even the best publishers bet wrong with some regularity), and if the manuscript has the potential to appeal to that many readers. But if it does, and if your company and/or your author knows how to find those readers, then everyone benefits from the investment.

The author is getting almost $27k instead of almost $17k, has four times as many readers when it comes time to release the next book, and is probably doing a little less work. The publisher’s staff have (meager) paychecks for another few months, and the house chugs along just above the break-even point. Life is good.

Not every manuscript can be treated like this. In fact, most cannot. But that’s what acquisitions editors do — they decide which ones they can make work, and which they cannot.

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