Potential to Make Money as an Author – Part 2: Independent Publishing

Make Money Selling BooksDo you have a book inside that is waiting to be written?  Have you already finished writing your book?  Have you explored publishing options? Finally, do you want to make money selling what you have written?

This blog post is going to cover the income potential of independently publishing your book. What is independent publishing? It’s the best of both self-publishing and traditional publishing. The independent publisher will encourage you to take your book through all production steps that would be required by a traditional publisher.  That means professional editing, proofing, interior and exterior layout and design, and printing (offset printing not print-on-demand).  You, the author, are responsible for all costs associated with the publishing and printing of your book.  However, you also retain all your book’s rights such as copyright and distribution in addition to being entitled to all income earned from book sales.

The financial cost of publishing your book frightens many authors but it shouldn’t.  If you want to make money as a writer then it is imperative to treat your writing like a business.  And like all businesses, to stay in business your writing business needs to earn money. Therefore, if you don’t intend on making money selling your book then your writing is really just a hobby.

***Disclaimer: Before reviewing the financial assumptions from my last article which focused on the potential to make money via traditional publishing, I need to make you aware that the rest of this blog post is going to use a lot of numbers and is quite long. If you’re serious about making money from your writing take the time to learn and understand the math behind your writing business.  It is vital to the success of your writing career. Also this is just an example and does not reflect what your costs are going to be and does not promise how much money you will earn.  Many books cost far less to produce then what is being used for this example.***

Using very conservative numbers from my last blog post a first-time traditionally published author is going to receive an advance of approximately $2,500 and will have production costs of $8,000-$16,000. Assuming a royalty of 8% and a retail sales price of $10, the royalty earned from each book sale is $.80. That requires selling 13,125 – 23,125 books just to break even.

This example will assume the author sells a total of 25,000 books and that for traditional publishing it required selling 20,000 books to break even. Selling 25,000 books will gross the author the following: $2,500 advance plus $4,000 in royalties (5,000 books x $.80/book royalty).  The total the author earns is sum of the advance and the royalties is $6,500.

How much would you earn if you independently published your book and sold the same 25,000 copies?

First we need to cover the expenses. I stated above that the production costs for the traditionally published book are $8,000 – $16,000. Let’s split the difference and use $12,000 as the production costs for the independently published book.  The production costs are editing, proofing, interior layout and design, and cover design.  They do not cover printing. We are assuming you, the author, will sell 25,000 copies. But the first time you go to print you’re not sure how well your book will sell so your initial printing is only for 1000 books. The cost to print 1000 copies of a 225 page book is about $3.25 a book or $3,250.  Added to the production costs of $12,000, the total to print the first 1,000 books is $15,250.

If you sell all 1,000 copies for $10 you gross $10,000. After the first thousand books you have earned $10,000 but have spent $15,250. You are still negative $5,250.

Even though you still haven’t broken even you are totally excited by selling out of your first printing! This time you decide to print 2500.  This second printing is going to cost about $2.50/book for a total print price of $6,250.  When the books arrive you sell all 2500 copies for $10.  Your gross is $25,000.  Where are you now?

First Printing: -$5,250

Second Printing: $25,000 revenue – $6,250 printing = $18,750

Total after second printing: $18,750 (second Printing) – $5,250 (first printing) = $13,500

After two printings you have net revenue of $13,500. Congratulations! Now you’re getting exciting and this time print 5,000 books with a cost of $2.00/book. Your third printing will cost $10,000.

Selling all 5,000 books will yield $50,000 in gross revenue.  After the printing cost you are left with $40,000 from the third printing.

After three printings you have sold a total of 8,500 books and have earned gross revenue of $85,000.  The total costs so far are $31,500.  That leaves you a net of $53,000.

Quickly on to 25,000 books. You print the remaining 16,500 books for $2.00/book.  Total printing cost $33,000. Now you sell all 16,500 books.  Your gross revenue would be $165,000. After the printing cost of $33,000 your net revenue is $132,000.

To summarize you printed 25,000 books for a total cost of $64,500. You earned a total of $250,000. After expenses, you have a net income of $185,500.

To now compare the two:

  • Traditional Publishing = $6,500
  • Independent Publishing = $185,000

It’s easy to see how Independent Publishing your book can earn you significantly more money than traditionally publishing your book assuming total book sales of 25,000.

This is not necessarily how it will work for you. The traditional publishing example used a royalty based off the retail price of $10. In reality the royalty paid would most likely be off of wholesale (about $5.00/book) and not retail. The end result is a royalty paid of $.40 instead of $.80.  Using the same assumption that it takes 20,000 books to break even the remaining 5,000 books would pay a royalty of $2,000.  Total earned would be $4,500.

In the independent publishing example all calculations were based on the author selling all 25,000 books for $10 and not incurring any additional expenses. That is not realistic. If the author sold all 25,000 copies from his/her own website using PayPal there would be credit card transaction fees of about 2.9% plus $.30 for each transaction.

Using a site like Simplie Indie to sell all 25,000 books the author would receive 70% of the $10 sales price.  That results in the author receiving payment of $175,000.  After expenses the author is left with $110,500.  If the author sells all 25,000 on Amazon, he/she will receive about 50% of the gross sales price or $5.00/book. Selling all 25,000 books on Amazon yields the author $125,000.  After all production expenses, the author nets $60,500.

Using examples that take into account wholesale pricing and reduced royalty payouts the results are:

  • Traditional Publishing (royalty paid on wholesale price) = $4,500
  • Independent Publishing (All books sold on Simplie Indie) = $110,500
  • Independent Publishing (All books sold on Amazon) = $60,500

I know this is a lot of math and may be confusing but I felt it necessary to show my work so you can understand from where the numbers come. I think I have proved that there is far greater income earning potential using independent publishing to publish your book instead of traditional publishing.

The exception might be if you write the next Harry Potter or Twilight series. Most individuals do not have the resources to fulfill demand of 10 million books more.  If that happens and you’re offered a million dollar advance and $.80/book royalty take it and congratulations you’ve made it to the New York Times Bestseller list.

For the rest of you, selling 25,000 books are your own will bring you financial rewards and you still own all the rights to your book.

I wish you much success in your writing career.

Any questions or comments?

1 comment to Potential to Make Money as an Author – Part 2: Independent Publishing

  • Part 2: Independent Publishing looks good with your numbers. The problem I see is that the independent author might not know how to sell those 25,000 books in your example. I think a person who goes the independent route needs to have a reason greater than making $100,000. Money is nice, but it isn’t necessary for happiness or pride of accomplishment. Maybe only 500 people will buy the book, but if they love it, if it enriches their lives, then the world is better for its having been written. Independent publishing at least gets the book out in the public where it has the potential of being appreciated. An unpublished manuscript locked in a desk drawer is accomplishing nothing.