Pub 101: The Economics of Publishing Part II

Okay, we’ve done the profit and loss statement, we’ve received our reasonable advance (which we will of course earn out), now what?

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Maybe let’s first rewind a bit. Why do advances seem much lower than say, ten years ago? For a couple of reasons. The obvious first answer is the recession. Most people in North America had a stronger motive to put their money towards their homes, if they could even keep them, than on a couple of hardbacks, no matter how pretty the cover.

For another, the hard costs of publishing have risen dramatically. It’s not just about paper and ink, but the distribution process itself isn’t that cheap. In order to get your book into a bookstore, publishing houses have to give it to the chain at something like a 40% discount of the cover price. Who makes that 40% back? The store. They make a KILLING off of books – not that they don’t have their own economic challenges, but holy cow. I mean… c’mon.

How many titles do they publish a year?

At Penguin Canada, one commissioning editor will average 10-15 titles a year in his or her portfolio. If you think about it, that doesn’t provide a ton of flexibility for a book to fail. If you publish 10 and 3 flop, that’s not a great success rate, given the tight margins that we’ve talked about.

What does this mean for the big publishers? It means that they are looking for 10-15 BIG books. They’re less likely to want to go out on a limb for something that could be risky. They want authors with brand equity. And what is a BIG book? A big book in Canada is 40,000 to 50,000 copies. A HUGE book is 150,000 Canadian copies. An AMAZING book is 500,000 Canadian copies or more (think Fault in Our Stars).

Having more titles stretch the inflexible annual budget and mean that the staff workload is both insane and stretched thinly. We talked above about the big publishers being less likely to want to take risks on quirky titles with debut authors. This is potentially where smaller publishers or in fact self-publishing could be better for the author. You have to weigh your options.

At the end of the day, I make how much?

Okay, I don’t have firm answers for you. My go-to is always IT DEPENDS. But, what I can say is that you need to look at the margins.

If you’re lucky, it looks something like this:

 Author – 10%

Agent – 15% of the 10% you just made up above

Bookstore – 40% (or they get to return unsold copies)

Publishing house – 50% (BUT, they pay ALL the costs)

So, there you have it. Financially, are you better off going to a traditional publisher or self-publishing your work? Look at your goals, your expectations, and that will help make your decision. For those interested in author earnings, I suggest heading to Hugh Howey’s website to get a graph-tastic idea month by month.

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