The Profitable Publisher

I often refer people toMorris Rosenthal’s Graph of Sales Rank vs. Sales for Amazon. It’s the best I’ve found, and an admirable resource.

A commenter on Estimating Sales, Part III was having difficulty with the logarithmic nature of that graph. So, rather than answer the question in a very loooong comment, I’m adding it as a post.

Logarithmic graphs are used when a curve is complicated and hard to handle on a regular graph. We use them to straighten out the line, or remove one level of complexity from our attempt to get the formula for the line.

That’s the why of them, but the question was how do we use them. Our needs are simpler than a scientist or engineer’s.

To use the Amazon Sales Rank Graph, you need to know that each order of magnitude (1, 10, 100, and so on) starts with a large distance between one number and the next, and the lines get closer and closer together as you approach the next one.

The lines between 10 and 100 are 20, 30, 40, 50, 60, and so on, even though they’re never numbered. You can interpolate between those lines, using logs yourself, but we don’t want to do that.

Why don’t we? Because we’re estimating sales based upon historical data. The numbers aren’t very accurate in the first place. Our average sales rank isn’t. The implications of that rank aren’t (across years and seasons, and the vagaries of Amazon’s programmers).

So what do you do? Suppose that your book’s comparables are all in the range of 50,000 sales rank. Count forward from the line for 10,000 or back from the line for 100,000 (or both). Run down that line, and find where it crosses the red curve. As I write this, that point is also where curve crosses the horizontal line for 20 books per week. It’s actually not quite at the corner, but we’re not going to interpolate for further accuracy on the graph.

In fact, we’re not even going to multiply by 52 weeks per year to get annual sales. Just use 50. It’s close enough. (And better to be under than over!)

So, that’s how you duck the complexities of the log scales. If you are interested in more information about logarithmic graphs, I recommend the Wikipedia article on the subject.

I’m not really sure that I made myself clear above. If you have a question I didn’t clarify, please let me know in the comments, and I’ll take another try at it.

Most people reading this know that it’s very rare for publishers to deliberately shortchange their authors on royalties or other obligations. (NB: Mistakes do happen, but that’s different.)

And almost all of us are aware that it’s not only wrong, but also generally pointless, and extremely rare, for a publisher to “steal your idea.”

The thought that does gain traction, though, is that publishers take the lion’s share of the profits on the books they bring out. So let’s look at where the money goes.

Let’s assume a typical non-fiction trade book in trade paperback format. (That is: a larger-sized paperback, on a general interest topic like those you might find in a normal bookstore.)

Let’s say that the price is $15.95.

The retailer buys it for about $9.57, maybe a penny or two less. (They have $6.38 to cover any discounts they give, their rent, payroll, utilities, and so forth, as well as a smidge of profit. And that’s not usually enough, which is why so many of them are going out of business.)

The wholesaler (and there usually is one in the mix) buys it for $7.18. (That is, they get $0.80 per copy to be in the middle between the thousands of stores and the tens of thousands of publishers — and that’s very slim, which is why there are only a very few of these folks left standing . . .)

Now, there’s either a distributor, or the publisher is large enough to do this function in-house. Either way, it costs something like $1.60 to $2.40 per copy to handle the orders, the picking, packing and shipping of books out of the warehouse, the storage of books in the warehouse, receiving the books into the warehouse from the printer, insuring them, and so on and on.

So, the typical trade publisher is going to see something like $5.18 out of that $15.95. Well, that’s a lot more than the author gets, isn’t it?

Oh, but wait: we still haven’t printed the book, paid the author, or any of the rest.

So, the typical tradepaperback is going to cost something like $2 to print.

And, preparing the manuscript for the printer (cover design, text composition, editing, copyediting, proofreading, and such like) will cost at least $3,500, and maybe $5,000. Let’s suppose that this book sells 7500 copies. And it cost $3750 to prepare. That’s $0.50 per copy.

A typical trade non-fiction tradepaperback royalty is 7.5% of list price on the first 5,000 copies, 8.5% on copies 5,001 to 10,000, and 10% of list price thereafter. On 7500 copies, the author will earn $5,981.25 on the first 5,000 copies, and $3,389.38 on the next 2,500, for a total of $9370.63, or $1.25 per copy on average.

Marketing will have cost the publisher something like $0.26 per copy.

Total direct costs (and I’ve been pretty minimal here) are: $2+.50+$1.25+.26, or $4.01

So, before covering overhead (salaries, rent, etc.) or getting a penny of profit, the publisher has:
$5.18 – $4.01 = $1.17.
Note that a reasonable overhead might well be $1 per copy, so this publisher is making a princely $0.17 in profit on every $15.95 book.

Compare that to the author’s take: $1.25.

And realize that the publisher is not only contributing expertise and effort and all of that, but risking a minimum of $25,000 up front on this book. (Printing, prep, marketing and an author advance all have to be paid before the book is published, and aren’t refundable!)

I truly don’t think that this author has been ripped off.

What do you think?

By Michele DeFilippo, owner
1106 Design
www.1106design.com

Michele is a frequent contributor to many of the publishing lists and email groups, so, when I knew it was time to discuss design, I asked her to pitch in. Thank you, Michele!

We’ve heard the question many times, “Should I layout the interior of my book myself?” Seems like a no-brainer. You have word processing software. You know how to set margins and choose a typeface. You even know about books that describe the process (written by folks who are not trained in typography by the way). So why shouldn’t you layout your own book?

Of course you can and should use your word processing software to write your text, but interior design and formatting are best left to people who do this for a living. Why? Because there are a lot more details involved in page composition than you’d think.

For starters, word-processing software does not have the sophisticated hyphenation and justification controls that professional page layout software does. This results in tight and loose lines that are unsightly and that distract the reader. And even if you were to buy page layout software, there is a very steep learning curve. It’s a mistake to assume that no knowledge of typography or design is required to use it effectively. As the saying goes, “Owning a hammer does not make one a carpenter.”

There are several dozen conventions to be followed in book design that may not be perceptible to the reader, but when followed, they give your book a polished appearance. But it’s not only about knowing the rules, it’s knowing how and when to bend or break them on a case-by-case basis that makes the difference between an amateur layout and a professional one. These decisions must be made quite often when the words in the text don’t cooperate with the page geometry.

Quality typesetting has never been about the tools. Experienced typesetters rarely use software at the default settings. We adjust the settings for better results, sometimes paragraph by paragraph, line by line, and even word by word. Why? We were trained to see the difference between “so-so” type and great type.

For what it’s worth, only beginning self-publishers consider using a word processor for page layout. Established publishers wouldn’t think of producing the text in this way. They know that experienced book designers bring real value to the table, offering creativity and aesthetic judgment that only comes with training and experience.
When we show customers the difference between their attempt at book layout and our own, they are usually blown away. They’ll say something like, “Wow! I thought my layout was just fine. Now I see how bad it really is!”
Here’s a current before-and-after example. IC_Book_Orig.pdf is the client’s attempt at book layout, and IC_Book_Designed.pdf is our design. (You may want to open or print both PDFs to compare the pages side by side.) See the difference? In addition to a much better look and the elimination of giant spaces between words in the original, professional typesetting saved 5 pages from the original’s 19 (more than 25%), thus reducing the client’s printing costs significantly.

It’s been clinically proven that quality typography improves reading comprehension. More importantly, an amateur job won’t satisfy the distributors, reviewers, and book retailers, the “gatekeepers” of the book industry, who will immediately spot a beginner’s efforts and reject your book as “self-published.”

Many people think that converting a word-processed file to a PDF is all the printer needs. That’s true. But it’s not all that YOU need. Printers won’t turn away a PDF that was made from a word-processed document. They’ll print your book because that’s what they’re in business to do. Their success is measured in how many books they print. Your success, on the other hand, is measured in the number of books you sell.

Your book design, inside and out, establishes your credibility in the eyes of the buyer. Buyers may not be able to pinpoint exactly what is wrong, but without a professional interior design, your book will not measure up to those that are professionally prepared. For the success of your new publishing endeavor, we hope you’ll give this issue some serious thought, and choose an experienced book designer to give your book the professional look it deserves.