Wednesday, October 5, 2011

Choosing the Right Self-Publisher

I had a conversation with a fellow writer, Sally*, who was discouraged about self-publishing her next work.  She had made so little money on the first novel and didn't feel it was worth risking the start-up costs on a second.  Sally's quarterly royalty checks were only coming in for a dollar or two--when they came at all.  I agreed to look at her publishing contract (yes, self-publishers have those, too), and, right off the bat, I highlighted all her problems.

There are several points to look for in a self-publishing contract, if you're allowing them to handle all the pre-publishing (designing your cover, formatting, editing, royalties, etc.)  Some sites, like Lulu, don't charge you to upload your work if you'd like to handle the formatting and cover design yourself.  But most indie authors who want to have print books as well as e-books like the benefits that come with pre-publishing, and there are definitely some pitfalls you can avoid if you know where to look.
All self-publishers have a standard theme of offers: creative control, retention of exclusive rights to your book and its copyright, and print on demand distribution.  Certain points are industry standard; when you compare the standard packages at each company, there are certain aspects of production each publisher provides--like your book's ISBN.  However, there are several points to consider: printing costs, price setting, and start-up costs.  The variation in these few points will dictate how much money you make on your book--or if you make none at all.

Low printing cost = big profits
It's a common reaction to look for the self-publisher who's making you the cheapest start-up offer.  When their website is screaming, "Publish your book for $599!", you can't help but reply, "Well, sign me up!"  But cheaper isn't always better.  That $599 sounds great, and who wouldn't want to make good on that?  But if that $599 also means never making a cent on your book, then maybe you'd like to look again.  The first thing you want to know is the price of printing.  The formula usually looks something like this, and varies based on your print options: per unit cost + cents/per page.  For example: at Publisher A, the cost for printing a paperback book without color inserts costs $2.00 per unit + $0.02 per page.  If your book is 300 pages after formatting for print size (5x8, 6x9, etc), then $2.00 + (0.02 x 300) = $8.00.  This is how much it's going to cost you each time Publisher A prints your book.  Each publisher's price varies.  Maybe Publisher B is offering $1.50 per unit + $0.02/pg.  You just saved 50 cents.  Or maybe Publisher C is offering $2.25 per unit + $0.017/per pg.  Do the math; is Publisher C cheaper?

Why does this matter?  Well, your printing costs dictate your book's retail price.  And your retail price dictates how much you make in the long run.  Be very leery of a publisher that is unwilling to tell you their printing cost formula.  Setting the right retail price for your book will be based primarily on your printing costs, so know that root number.  Most self-publishers offer distribution on the major online networks (ex. Amazon, Barnes&Noble).  These networks generally take 40% of standard book sales and 30% on ebook sales.  Now, a customer goes to one of these online sites and purchases your book.  The retailer takes 40% (of the retail price), your publisher takes their printing cost per book, and what's left is considered author royalties.  If you fail to price your book sufficiently, you will make little, if anything, off your standard book sales.  Generally, you want the retail price of your paperback to be 2.5 times the printing cost of your book.

Do the math
Say we went with Publisher C; each book costs us $7.35 to print.  Two and a half times that brings our retail price to roughly $18.40.  The online retailer takes 40% (18.40-7.36), your publisher takes the printing costs (11.04-7.35), and you're left with $3.69--a decent amount to make per book.  If you sell 20 books in your first quarter (a quarter is roughly three months), you just made about $74.  Now, for the down side.  Say you feel $18 is just too high to charge for your little 300-pager.  Perhaps you decide to charge $12 a book.  The retailer takes 40% (12.00-4.80), the publisher takes the printing costs (7.20-7.35), and...uh oh!  You owe your publisher 15 cents.  Say you sold the same 20 books that quarter; you won't get a check because your publisher is showing a red $3 deficit on your account.  Sure, $3 doesn't sound like much in this scenario, but imagine that happens every quarter.  That $3 will stack up, and you just spent start-up costs on a book that's making you absolutely no money.  Because of this, make sure your contract allows you to stipulate the retail price.  If the publisher dictates the retail price and sets it too low, you'll be owing them every time a customer purchases a print copy of your book from a retailer.  And no amount of sales or promotion will erase that hole, because every purchase of your printed book is putting you further into debt.  (You might make it up in e-book sales, but that's a topic for another day.)

Be sure your chosen publisher has a fair direct rate as well.  Direct rates are the price you, the author, pay to the publisher to order your book directly from them.  Ideally, the direct rate per book should be the pre-determined printing costs only (this doesn't include shipping).  Anything more than that, and you're essentially paying retail (even if it's discounted retail) on your own book.  This is also why it's so important to establish an online presence.  If you can purchase your book for a flat direct rate from the publisher, you can set your own, cheaper price on your website of choice; selling your book at any price above your printing costs equals profit for you.  In this way, you can undercut the set retail price and still make a profit per book.  Now, mind you, if your set retail price causes a deficit of payment to your publisher with each purchase, you'll have to pay those arrears before your publisher will sell you anything directly.

Compare packages feature-by-feature
Now that you've compared each potential publisher's printing costs and price settings, you can start scrutinizing start-up costs and features.  How much are they giving you for your money?  For example: is e-book formatting standard or extra?  How much promotion do you want the company to do for you, and is their marketing package reasonably priced?  If you wanted to use their editing services, how much does it cost and how long will it take?  What's their rate of speed for production (industry standard for pre-publishing is about 3-4 months)?  Decide early what you have to have in your production package and what you can live without (or can do cheaper or free elsewhere).  Then, based on printing costs, price settings, and package pricing, decide which company is best for you.  I will warn you that self-publishers with super low package prices are generally the companies that make their money elsewhere (like in printing costs and direct rates) so make sure you do your homework before you jump on the cheapest price.

As I said in my So You Want to Write a Novel series, writing a book is an investment if nothing else, so invest wisely!  If you do, your pockets will most assuredly thank you.

*Sally is a fictitious name for a real acquaintance whose publishing troubles inspired this post.

3 comments:

  1. This is really good info! More authors should know this!

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  2. If you're able to set your own price with your publisher, you can decide to down grade your retailers' gratuity. Instead of sticking with the 40%, you can allow for only 30 or even 20 to guarantee yourself a royalty on hard-bound copy that is often more expensive to print.

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  3. @DennisLewis: you're absolutely right, Dennis. But BEWARE THE EASY FIX. Sure, you can decrease the retailers' gratuity, but remember that gratuity also applies to what major bookstores would expect to make on your book if they carry it in their stores. I'm sure many major retailers will be increasingly daunted by a 20% gratuity, especially on an "untried, indie newcomer".

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