The first of a series of articles in which Valley Press founder Jamie McGarry reveals his tried-and-tested formula for making a living as a self-employed literary publisher. This week: where the money goes when a book is sold, and how to hang on to as much of it as possible.
Within the community of small press book publishers, there’s one comment I hear over and over again — ‘I love what I’m doing, but I don’t make any money’. Alternatively: ‘we break even, so long as I don’t pay myself a salary.’
That’s absolutely fine of course; you have another source of income, and are publishing out of pure love of literature, or better still, you have a chunky grant in your pocket and are running a subsidised press, safe (for now) from the wolf at the door. But a part of me always wonders if I’m talking to someone who would like to make a living from their publishing, and just needs the tiniest nudge in the right direction.
It’s for those people that I’ve decided to write this series of articles, sharing some of the economic science that underwrites everything I do at Valley Press. If I started a new publishing house tomorrow, these articles would be the first five pages of my business plan; the rest of it, you’ll have to figure out yourself.
The basic unit of publishing is the sale of a single book to a single reader (or ‘end user’); these are the humble bricks from which a publishing house is built (see what I did there?) So that seems a sensible place to start. The chart below shows the most typical transaction I can think of — an £8.99 paperback, sold through a third-party at full price — and breaks down that £8.99 into sections, so we can see where the money actually goes.
In five years of professional publishing, I’ve found this model is almost impossible to escape from; there are variations, but all things considered, this is more or less the best you can do in 2016. By giving generous discounts to the bookshops or distributors, you can do a lot worse, but if you want to make a living from publishing, the model illustrated above needs to be your starting point. Let’s go through the sections in detail.
20% / £1.80 to the final seller (e.g. Waterstones, Foyles, Amazon at a push)
This money is earned essentially by being the ‘point of sale’ — someone has to stand at the Waterstones till and take the money for your book, so this pays their wages, as well as the overheads for that business. Even if you’re selling at a book fair or event (one of my favourite methods), you still have to pay yourself to stand at the stall — we’re doing this as a living, remember?
In the case of online sales, I like to think of this as going to the person who puts the book into an envelope and ships it out — though that’s pure fantasy where Amazon is concerned. They probably have a robot doing that now anyway, in which case I guess it goes to the guy who maintains the robot? Or just straight to Jeff Bezos. No wonder he’s so rich!
I say ‘Amazon at a push’ as they have various schemes to get hold of the rest of the £8.99 too; be very careful what you sign up to. In my first year of publishing I ended up giving Amazon 60% of the RRP, and still posting copies out one by one. Don’t do that.
20% / £1.80 to the distributor (e.g. Bertrams, Gardners)
There are lots of other distributors, but those two are the biggest in the UK. Their job, at its simplest, is to supply the books to the point of sale; you sell the books in bulk to them at 60% of the cover price, they then sell them on to the final sellers at 80%.
Of course, it’s a touch more complicated than that in reality — and we’ll not get into the difference between wholesalers and distributors, except to say if a sale goes through both of those businesses on its way to the end user, you’ll make hardly any money from it.
What about our book fair sales, or if we are able to sell direct to consumers through the post? You still lose this £1.80 on travel and table fees (at the fair), or on postage and packaging (through the post).
6% / 60p to the author, at 10% net receipts (sorry folks!)
This may be the most contentious part of this article (hence the apology), but it represents the reality of the industry for authors at the moment. 8% net receipts is also common (and is Valley’s standard offer for a new author), so we’re actually being generous in this example.
‘Net receipts’, if you’ve not come across this term before, refers to the actual amount of money a publisher receives from the sale of a book; so in the example, the author gets 10% of the 60% we sell to the distributor for. (Are you still with me?)
You may be wondering why the author gets such a small cut compared to the other parties. There’s a conversation to be had about this, but I think there are two answers:
1) Supply and demand: historically, of 1000 manuscripts received by Valley Press, I have turned down 994. There’s a lot of writing out there.
2) The fact that most writers write for pleasure, whereas no-one else in the supply chain will do their job for free. I wrote a book myself, before I started publishing (now available from The Emma Press), and I can tell you with 100% certainty, money did not come into my mind once while writing it. And I’m as tight-fisted as they come (as you’re discovering!)
If an author would like to make more than their 6%, they can either self-publish (and keep the green 33% for themselves), or buy copies from the publisher and re-sell them (thus keeping the orange and blue segments of the graph). But if they don’t, although their cut will be small, it will be a source of ‘passive income’ — like interest on a bank account — which is a really excellent kind of income.
33% / £3.00 to the publisher (inc. editor, designer, marketer etc.)
This £3 will be broken down in detail for the next article in this series; suffice to say for now, this is what your entire business hangs on. Guard this £3.00 with your life, if you want to make a living from small press publishing.
20% / £1.79 to the printer (estimated cost)
This is one of the easiest figures to change: the more books you have printed, the cheaper each one is — but you can literally destroy your business by printing too many books at once, so tread carefully. I’ll discuss that problem (the economics of printing) in a future article; for now, just note that £1.79 is a sensible price for 200+ copies of a 160 page book, which is the highest page count you should go to at £8.99 (as a new small press).
So that’s our starting point: £3 per book, three words from which we can build an empire. If you have any questions about the above, or just want to discuss the small press lifestyle in general, please use the comments section below — I really want this series of articles to turn into a spirited debate. I won’t be offended at all if you rip my theory to shreds; I pay my rent with that £3 per book, so if there are any holes in my thinking, I need to know about them!
Note: In the week following this article, some people asked for more info, so I wrote an addendum, ‘part 1A’, about negotiating discounts, which is here. There’s an excellent explanation of the various types of distributors (the ‘blue bit’) by Sheila Bounford here, and part two of my series is here.