A Math Lesson About Books

Dear Mister Crabbyapples:

I heartily suspect that the only thing you *really* wanted to hear from me was: I personally price these books the way I do because even though I’ve never met you, I don’t like you, and I don’t want you owning or reading my books. Also, I don’t believe in libraries. But I didn’t say that. Mostly because it isn’t at all true.

So. Since we didn’t see eye-to-eye on …well… anything (do they not believe in *bathing* on your planet?), here is a math lesson about books for you.

Excluding things like specialty publishing and some specific genre publishing, the standard contract a publisher makes with a writer is for the writer to receive around 10% on each book sold. Some publishers also provide a stipend/advance up front and a percentage (royalty) for any books sold *after* that amount has been reached (so you might be offered $1500 up front and 10% – 15% on any books sold after you’re paid out that first amount, which is also based on that ten to fifteen percent). So, for a book that costs, say, $10, the writer (who has put in weeks or years of unpaid labour to write the thing) gets a buck.

The publisher pays editors (copy editors, manuscript editors, proofreaders, production editors, etc.) to …well…EDIT the book. Manuscript editors generally are paid more than copy editors (if you’d like to know what those editors do, check out the Editors Association of Canada website), and while there is no *standard* rate, many editors do their work on a freelance basis at an hourly rate. Some publishers are fortunate enough to have in-house editors, who receive a salary. But let’s just say that most publishers in Canada do not have dedicated in-house editors, so they contract out the jobs, from rates ranging from $10/hour to $80/hour. Some editors read at 50 pages an hour. But reading isn’t the same as editing, so let’s just say an *average* editor spends 12 – 20 hours on a manuscript. The publisher might pay anywhere from $120 to $1600 on editorial contracts. While it’s difficult to assign a percentage from retail price for editorial work, let’s just round it off at 5%. Just for shits and giggles.

Next, you have designers. What do designers do?

Do you know how long it takes for a reader – a customer, client, patron, what-have-you to pick up a book off the shelf and decide to buy it? Probably less than a second. Designers make the book covers appealing. You could have the greatest novel EVER WRITTEN in your hands, but if the cover of the book looks like someone stuck a gelatin salad between their butt cheeks and shimmied after eating burritos all weekend, you’re probably not going to get those sales. Designers *also* make sure the *inside* of the book is a) readable (typesetters choose the font face, kerning, leading, etc. …the typographic decisions), b) attractive (designers choose whether to put any kind of graphics on the pages…many non-fiction books have internal design elements like photographs, headings, call-out boxes, etc.), c) attractive (are you going to use page headers? Will the page headers have chapter titles, or will it be the book’s title?). There are all KINDS of other decisions they make, which I have no idea about (because I am not a book designer) that publishers pay for. There is no going standard for designers, either, but in general, you get what you pay for with graphic designers. So let’s say there’s another 2% – 5% of the retail price of the book paid to designers.

Already we’re up to as much as 20% of the retail price of the book going to pre-production.

Now, let’s talk about printers.

Printing isn’t cheap. Canadian publishers are insisting, in higher and higher numbers, on recycled, post-consumer, non-ancient-forest paper. Many printers don’t carry this stock on the floor (although that’s changing because publishers are demanding a ‘greener’ product), and these papers are often more expensive than the 100% tree papers that are readily available. A two-hundred page book isn’t just a bunch of things laid out on a sheet of 8.5 x 11 paper and stapled together. There are many different kinds of bindings, too (saddle stitch, perfect bind, coil bind, sewn bind, etc.). So the printer has to take the electronic files from the publishers, lay it out on large sheets of paper, run the copy, bind it, trim it, and attach a cover. $20,000 is an EXTREMELY low rate for a print job of 2,000 copies. But. Let’s just say you don’t have a one-colour interior (black, or whatever) book with no photographs or charts or anything – it’s a book, say, of fiction, and you don’t need all that fancy stuff. But you’ll be paying more for the cover, of course, which is printed on different stock, with different treatments (matte, gloss, foil), each of which cost different amounts. IF you have a print run of 2,000 and your print job costs you $20,000, you’ll have to price your book at $10/copy *just to recoup your printing costs*. And that won’t pay the writer or the editors or the designers. So let’s say you bump up the price by 20% to cover those costs.

Now, you have 2,000 copies of a book in your warehouse (you’re lucky enough to have a warehouse that costs you NOTHING!? Excellent!), each of which is priced at $12, so that you can afford the printer, editor(s), designer(s), and writer, assuming you sell every single book in the warehouse. Whew.

Wait. In order to *sell* those books, they have to *go* somewhere. This isn’t any feel-good “if you build it, they will come” pipe dream. You have to get those books into bookstores, stat! Thank God there are distributors who do this for publishers!

Ohhh, wait. If you want to hire a distributor for your book, they want you to pay them a fee to represent your book. 14% of sales isn’t unreasonable. 10% is better for you, but the distributor is going to get antsy, especially if you don’t have a fine and distinguished reputation of selling thousands of books each year – millions of dollars of books each year. 7% would be FABULOUS. Um. But the distributor you’re talking about won’t represent you because your annual sales are, let’s be frank, kind of sad. Anything under a couple of million dollars a year, and you’re out of luck. Oh, and there ARE NO pan-Canadian distributors dedicated to prairie publishers. Lucky if you’re in Central Canada, though. Or BC. Let’s just say, though, that you’ve lucked out. You’ve found a distributor willing to take a risk on you, and they’re asking for 12% of sales. So that means this book you’ve just priced at $12 to recoup your print and pre-production costs is now actually losing you money, because you have to pay the distributor $2.40 for every book you sell through them.

Where do they distribute the books, anyway?

Right. Bookstores. Libraries. Schools.

Well, how do bookstores make their money? They don’t just buy books from publishers and sell them at retail cost. That would be ludicrous! Independent retailers ask publishers for a 40% discount on the retail price of the book. Your $12 book is now returning you $7.20, if you decided not to go with a distributor. If you *did* decide to go with a distributor, you could be making as little as $5.70 per book. Some bookstores and retailers ask for up to a 60% discount on retail price (particularly large chain stores. If you sell your books through WalMart or Costco or Indigo, for instance, and it’s *very* difficult sometimes to negotiate those deals without having a distributor; large chains don’t want to deal with individual suppliers).

Your poor Great Canadian Novel is now bringing in just under $5/copy. If you sell all 2,000 books, you’ll “make” just under $10,000 on that title. Which is probably far less than what you paid to have it printed.

Oh, and you had to pay for the printing up front, of course. But, you know, at least you have *some* kind of income…

…provided the merchants pay you on time. Or at all. And pr
ovided they don’t return 90% of the books they ordered. Because, you see, retailers don’t *buy* your books. They take your books on consignment. Some smaller independents might buy a few copies outright, but selling five copies of your $12 book to a local bookstore for a 40% discount isn’t going to pay your bills. And those big chains, they might order four hundred books, but if you want to negotiate a ‘non-returnable’ clause, you’re going to be giving them those big, deep discounts. And then they’ll be selling your books for three dollars each up the street from the independent retailer (who you want to support!) who is selling them for the suggested retail price. It’s like going to the barber and saying : “I’m going to give you twenty bucks to cut my hair, but I’m not going to look at the cut you give me for three months, so I really hope you do a good job.”

But there’s always schools and libraries, right? They only request a small discount – 20% – 40%! Again, if your educational distributor (who is a different person from your retail distributor) has managed to sell your books into a school or library system, you could make quite a few sales there. And it is very difficult to make it in that market.

And, you’re never guaranteed to sell 2,000 copies (which is a ‘bestseller’ in Canada).

So you’re asking, “why the hell would you be a publisher then? If you’re LOSING MONEY on every book you print, how can you stay in business?”

Well. This is where philosophy comes in. And some more math. We’ll deal with the math first.

What would happen if you’d priced that book at $29.95 instead of $12 when you sent it to the printer (who printed the price on the back of the book)? Then, you’d be making *almost* $12 on each book sold, even with a 60% discount. And that $12 you’d take in would cover your costs. But it wouldn’t make you a profit. If you priced that book at $32, you’d be making almost a whole dollar on each book sold.

Now. The philosophy.

Are books important?







4 responses to “A Math Lesson About Books”

  1. Melistress Avatar

    See! You CAN do the math! I’m proud of you. This model, in most cases, can be applied to many products that aren’t mass produced, with the exception of the consignment issue. It is funny how very little we value the hard work of the individual. Unless you have already gained massive popularity, the typical writer doesn’t make their money doing what they love but supplementing with something temporarily acceptable.

  2. Wade Avatar

    Now I am curious as to your thoughts on POD? There are certainly big limitations on it currently, but many of those limitations appear to be evaporating in the face of the march of technology. It certainly isn’t a cure-all for all problems, but it certainly takes a lot of the risk away in parts of the transaction. Now, you can save the consumer a lot of money by doing traditional printing, but for a lot of small press stuff really does rapidly approach the point where POD is the best option…

    I don’t necessarily think, by the way, that it is people undervalue the hard work of the individual. It is just that they also value the hard work *they* do to earn their money, and thus ultimately want as much out of it is as possible, whether or not reality will permit this. :)

  3. cenobyte Avatar

    Wade – POD has many uses. In particular, the scholarly/educational market is excited about POD – you can print your textbook at the bookstore; the publisher doesn’t have to make a huge print run, and the bookstore doesn’t have to stock stacks of books. It’s less expensive up front for the publisher, which also passes the saving on to the consumer (the student). There is an Espresso machine (a POD machine) at the University of Alberta, and it’s been well-received so far.

    There are also new technologies in traditional printing; Friesens Printers in Altona has a short-run press that will do up to 500 copies of a 6×9 manuscript with a separate cover, for much cheaper than a traditional offset press.

    That being said, there are *several* limitations to POD. One – access. The machines themselves are extremely expensive, and there aren’t a lot of booksellers who have the space or overhead to have a machine on their premesis – at least, not now. POD in terms of self-publishing is being used as well, and to date, the production values aren’t there. You just can’t compare a book done on a POD machine with one done on a traditional offset press.

    Another limitation is in paper choice, not to mention design issues. most POD machines print one-colour; some are four-colour systems, but if you have a book of photography or artwork, POD just doesn’t produce a very good product. These are all limitations which I’m sure will change in the next two years, however, currently, POD is not used much.

    Another issue with POD is – order fulfillment. Bookstores don’t want to order one-offs if a book is popular, and ultimately, most bookstores don’t want to deal directly with PUBLISHERS, much less with authors (they prefer to work through distributors). If you’re talking about direct-to-consumer sales, sure, POD makes a certain amount of sense. But then again, there are other concerns – if you have a super popular book and 20,000 people all order a copy, is the POD system going to handle the orders in a timely fashion? Most likely not.

    At least, not yet.

    It does ameliorate some of the risk. However, currently, it does so at the cost of professional production value. Most small presses aren’t currently using POD, but as technology changes they are looking more and more to the short print-run options available at traditional printers.

    Melistress – that’s the thing; books often *are* considered mass-produced. They don’t fit comfortably in any category.

  4. Anonymous Avatar

    I love it when you do math!

i make squee noises when you tell me stuff.

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