Before we dive in, I have a short warning. What I’m about to share here is not a glowing, rose-colored-glasses view of being an author, but the sometimes-tough realities of the publishing business. If you’re living blissfully in denial—and that denial helps keep you motivated—keep doing that! Seriously, if not knowing the cold, hard numbers keeps you motivated, don’t read this newsletter. Sometimes denial and blissful ignorance can be helpful in that they let you dream big, even when things are hard.
But for some of us, it’s useful to understand the nuts and bolts of how things work, so I thought it might be useful to share a short primer on the publishing business. For some this subject may be review, but for others this may be completely new information. My hope is that it will help you make informed decisions about your own path to publishing, so you can build an author life that works for you.
Traditional vs. Indie Publishing
First things first: when folks talk about publishing, the conversation often breaks down into a debate between independent (indie) and traditional publishing. The truth is, there are certain factors that these two paths have in common. In both traditional and indie publishing, someone has to cover the upfront costs of producing the book. These costs include (but are not limited to) editing, cover design, book layout, marketing, and so forth. The main difference in these two models comes down to who covers those costs. In traditional publishing, all those costs are covered by the publisher, not the author. This is why the author usually makes a much smaller percentage from each copy of their book sold.
In indie publishing, on the other hand, the author gets a much larger percentage, but they also have to cover all of these upfront costs. On one hand, this means they have much more control over the final product, because as publisher, everything is under their purview. On the other hand, it does mean that indie publishing is an investment and author-publishers often have to spend some amount of money before seeing a nickel in royalties.
Think of it this way: indie publishing essentially means you have to take off your “author hat” and put on your “publisher hat” because now you are in charge of a publishing imprint of one author. That author just happens to be you. This means that an indie author has to juggle two separate roles. As publisher, they have to coordinate the production of the book, and as author, they have to manage the artistic side of creating a great story. For some authors, this approach is exciting and they love the idea of being completely in control of their book’s production. Other authors don’t want to juggle, so they prefer to go the traditional route and partner with a publisher.
When authors ask me for advice about whether they should pursue traditional or indie publishing, I always say the same thing. Indie publishing should not be treated as a second-best option. If you choose to indie publish, choose it proactively and with agency. Don’t default to it simply because you tried the traditional route and it didn’t work out. Indie publishing is a big commitment, and it deserves to be treated as a first-place option, not as the runner-up.
I will add that there’s also a third option called hybrid publishing, which falls in the gray area between traditional and indie publishing. Every hybrid publisher is different, so it’s hard to give an exact overview of how this works. In some cases, they provide certain services—like editing or cover design—a la carte. In other cases, the hybrid publisher splits the costs with the author in some way. The main things to consider with all three publishing models are twofold: (1) What percent of the profit does the author get? (2) Who retains what rights to the work? No matter which publishing path you choose, you need to be very clear about the answer to both of these questions.
Let’s Do Some Trad Pub Math
I think the best way to understand how different publishing models work is to put some numbers to it. First, let’s talk about traditional publishing. Some of the time (not always) the author receives an advance as part of their book deal. Let me make one thing very clear: the advance is not “free money,” it is simply the author being paid in advance for royalties they have not yet earned.
This means that in order for the author to start getting royalty checks for their book, they have to sell enough copies to pay back the advance they have already received. This is called “earning out” and only around 20-30% of books reach that milestone. This means that anywhere between 70-80% of books do not earn out their advance. In other words, the books did not sell enough copies for the author to pay back the advance they already received, meaning that the author gets no additional royalties on top of that advance.
The reason so many books don’t earn out is because a lot of traditional publishing operates in a manner akin to venture capital. For example, if a publisher acquires 10 books, they’re banking on maybe one of those books going through the roof and selling a bazillion copies. Another two might earn out, but maybe not by much. The rest of the books don’t earn out at all, but the book that sold the bazillion copies makes enough profit to cover the costs of producing those seven other books.
Because the publisher is not looking to make a huge profit on every single book, it does mean that some books—quieter or more niche books—still have a chance of getting published, even though their anticipated sales might not be super-high. Not earning out, however, does hurt the author’s chances of getting another book deal down the road. If an author’s last book didn’t earn out, it makes it that much harder for them to get their next book published because publishers may be concerned with their sales record.
Let’s get back to talking about advances (Note: these numbers are purely hypothetical.) Suppose you get a $1,000 advance, your book is priced at $10 per print copy, and your percentage is 10% of the list price. This means that for every print copy sold, you get $1, so you have to sell 1,000 books in order to earn out your advance. When you get to book 1,001, then and only then do you start seeing additional royalty checks.
Now, the numbers can get tricky pretty quick, because they depend on a lot of different factors. For example, if your royalties are based on net profit versus list price, your royalty comes from the profit the publisher makes after the costs have been factored in, rather than being a percentage of your book’s cover price. You might also have a variable royalty schedule, where your percentage grows once you hit certain sales numbers. (Like, you might make 10% for the first 1,000 copies, 12.5% for copies 1,001-3,000, 15% after that, etc.)
Keep in mind also that ebook sales have a different royalty rate—and a different price point—than print books. So, depending on the type of book, print books might be your primary source of sales, or it might be ebooks. Certain genres or categories tend to do better in one format over the other, so understand your market and get a good sense for where the bulk of your book earnings will come from.
What I always recommend writers do if they have a traditional book deal is to calculate their “magic number,” i.e. how many books they need to sell in order to earn out. Sit down, do the mathy-math, and figure out exactly how many books that is. When I got the DIY MFA book deal, I calculated my magic number and it gave me a manageable goal to aim for, so that within a year I had earned out my advance.
Indie Publishing Math Looks a Little Different
For indie publishing, the numbers work a little differently, but there’s still that same factor of the upfront costs. The main difference here is that the author covers those costs, because the author is also the publisher. In addition, unless you run a kickstarter or other crowdfunding campaign, you won’t get an advance, so the only money you make is after your book is already on the market. This means that the publication costs are an upfront investment and you’ll need to sell a certain number of books after the fact just to break even.
Here, again, you need to do the mathy-math. First, you have to calculate all your costs for producing the book. This includes all the editing costs (often for multiple rounds with more than one editor), as well as cover design and interior book layout. Depending on the type of book, you may be able to do some of the interior layout yourself using a tool like Atticus or Vellum, but in other cases—like if you have a lot of diagrams or illustrations—your book may require a more detailed layout and you may need to hire a designer to do it.
According to several sources, the average cost to indie publish a high-quality book is anywhere between $2,000-$4,000, but that amount can vary wildly depending on many factors. For example, some genres have higher costs. Nonfiction books require indexing which adds a whole other step to the publishing process and also increases the costs. Sci-Fi/Fantasy books are generally longer than novels in other genres, so the cost of printing will be higher as will the cost of editing. Historical Fiction novels require a lot of fact checking, and picture books have illustrations. All these costs can add up quickly.
Still, for the sake of an example, let’s suppose your book falls on the high end of that average range and all the publishing costs add up to somewhere in the neighborhood of $4,000. (Again, these numbers are hypothetical.) Your next step would be to figure out your “magic number,” which is the number of books you need to sell in order to break even and cover all of your production costs.
To calculate that number, first you need to figure out how much profit you will earn per copy of your book. Let’s say that number is $2. Then you just need to divide your total costs by the profit-per-book to get the total number of books you need to sell. In this case that would be 2,000 copies. Poof! You have your “magic number.”
Why the Numbers Are Important
The numbers make a huge difference when it comes to thinking about building a writing life and developing a sustainable career as a writer. Not only do you need to know your “magic number” so you can break even or earn out your advance, but you also need to consider what you need to earn in order to make a livable wage as a writer. For many writers, book writing by itself will not be sufficient to sustain a career. This is why so many writers write as a side hustle and have “day jobs” that pay the bills (or at the very least, jobs that provide health insurance).
The hard truth that most of us don’t want to admit is that it’s very difficult to make a living just by publishing books. Publishing one book is probably not going to be enough to sustain us. For most of us, we have to do something else that will supplement our writing.
In some cases, this means getting a regular 9-5 job, where you can clock in and clock out and spend the rest of your time writing. I know many people who write on their commutes. They have 30 or 45 minutes on a train each morning and evening, and instead of zoning out or listening to podcasts, they spend that time working on their books. Some writers teach writing as a way to supplement their incomes. For me, teaching has always been my primary work and writing has been something I do on the side, but for some writers it’s the other way around, and teaching is the thing they do to sustain their writing careers.
The truth is, unless you’re one of the lucky few, it’s very difficult to make a career as a writer doing nothing but writing.
Even if you’re one of the lucky ones and you get a big, splashy book deal, that still doesn’t add up quite as much when you consider how publishing works. Suppose for example, that you got an awesome $100,000 traditional book deal. Yay! Let’s do a happy dance!
Then let’s get down to reality and look at how the money gets parceled out. For starters, you’re not getting that $100,000 right up front. Most book contracts stipulate that the advance is delivered in parts, usually tied to specific deadlines. You might get one-third upon signing, another third when you’ve delivered your edits, and the last portion when your book finally gets published. It could be upwards of two years between when you first sign your contract and when your book is finally out in the world. This means that this advance could be spread out over three calendar years, amounting essentially to an income of $33,333 per year, a far cry from that original six figure number.
The math gets even stickier if it’s a multiple book contract. Imagine you got $100,000 for a two-book deal. This means you’re really only getting $50,000 per book, and that number will get divided up over multiple installments, as described above. This means you might be getting only around $15,000 per year while that publication journey plays out. Now, I don’t know about you, but while that’s a perfectly fine income bump, it’s not enough to sustain someone all by itself.
“But, but, but, Gabriela, what about all those indie authors who make tons of money every month and don’t do anything but write books? Can’t I be like them?” First off, let me be very clear, these authors are not just writing books. As indie authors, they are doing publishing-related activities, like getting their books edited and formatted, and they are also doing tons of marketing and promotion to build their network of readers. Many of these indie authors are also self-instructed experts at Facebook and Amazon ads and they spend as much of their time (or more!) building their brand as they do writing.
The other thing to keep in mind is that the authors who do well are also incredibly prolific, with many indie authors writing upwards of eight or nine books per year. These authors often have multiple series, each with several books already published, and it’s the cumulative sales of all these books (plus their new releases) that make them able to sustain a full-time writing career.
I share all this today not to be all doom and gloom, but because I think it’s important for writers to understand the realities of the business we’re operating in. For many writers, the key to career success is diversifying their revenue streams. This means having multiple irons in the fire and finding creative ways to bring in additional income. I know for me with DIY MFA, diversification has been an important part of our business strategy and it’s the reason why I’ve been able to do the work that I do.
So, to recap, you’ll first want to start by choosing the publishing path that most resonates with you. Next, don’t be afraid of the mathy-math. Get nerdy with those numbers and figure out exactly how many copies you need to sell either to earn out your advance or to cover your upfront costs. Finally, diversify your income streams so you’re not wholly dependent on only one thing. Basically, don’t put all your eggs in one publishing basket, but juggle a few different revenue streams.
Until next time, keep writing and keep being awesome!
P.S. For more info on Gabriela Pereira, the founder and instigator of DIY MFA, check out her profile page.
