The fourth installment of a series 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: pricing books, print economics, and overheads.
This series began by explaining how a ‘small press publisher’ could make £3 from the sale of a single book priced at £8.99, and having reinforced that, went on to describe how to build a business around the £3 — by producing each new title in nine working days, and selling an average 200 copies of these titles to a growing ‘tribe’ of eager readers.
To do that, we’ve needed to assume all books can be priced at £8.99 and will cost exactly £1.79 to print (as in my now-famous diagram, below). This week — henceforth referred to as ‘the article when things got a bit dull’ — we’ll talk about variations on pricing, how these affect our printing costs, and how other ‘overheads’ factor into our business.
When I’m running a bookstall on behalf of Valley Press, I occasionally get comments like: ‘These books seem expensive! Nine quid, for a few pieces of paper?’ To which I would reply, smiling cheerfully: ‘Oh, I don’t think so! Anyway, how about two for twelve pounds?’ Such feedback doesn’t surprise me — though my prices are based on sound market research, we all have a different frame of reference, and it’s human nature to want a good deal.
What’s really bizarre though, and comforting, is that an almost-equal number of people say: ‘These books are priced too cheaply!’ That happened to me just a couple of days ago. Here’s my pricing structure, if you’re curious. (Note: these were correct when I wrote this article in 2016; have gone up by £1 each since then, and I shared some more comprehensive thoughts on pricing here.)
- 98–160 pages: £8.99
- 72–96 pages: £7.99
- 50–70 pages: £6.99
- 28–48 pages: £5.99
I don’t stick to that religiously, but as I said in part one, the information in these articles would be the first pages of my business plan if I was starting a new small press — which means they’re suggestions, not commandments. A bit of intuition is needed too, especially when a book is on the edge of a category; I occasionally find myself saying ‘this doesn’t feel like an £8.99 book.’ But it’s good to have a rough framework, and I find the above works.
One important exception is this: if a book contains poetry, I add a pound to those prices. This rule, a sort of ‘poetry tax’, makes no sense — but the leading poetry publishers add two pounds, at least (I’ve just checked), so if I don’t add at least one, my poetry titles would seem oddly cheap. The authors, in particular, would feel slighted; like they weren’t worth as much as a 64-page, £9.99 Faber poet or similar Picador/Cape/Carcanet/Bloodaxe examples. Whether this is healthy for poetry or not is a discussion for another time.
I’ve also not said what to do above 160 pages — I actually try to avoid such books, but as you’ll have noticed from the photograph at the top, this is another ‘suggestion’. It would be reasonable to add a pound for each additional hundred pages; just make sure you do the math, as it relates to time (as detailed in our nine days). Which brings me onto the most crucial point relating to pricing: in this business plan, each pound in the RRP pays for one day of the publisher’s time. For every pound you take off the £8.99 (nine pounds) RRP, you need to do a day’s less work on the book to make your salary. Fortunately, the books are getting shorter as the price drops.
These prices come from looking at what other publishers are doing, and also from regularly asking people what they think they should pay. When I decided to become a self-employed publisher, I started by gathering that information, then tried to make the costs fit my prices — which I assumed must be possible, or everyone would go out of business. That’s what we’ll discuss next.
The classic model for commercial printing was (and still is) to prints lots of copies, and get a cheap ‘price per unit’. That was all the world had until the 1990s, and made getting things published a significant expense. After the turn of the millennium, we had digital printing, and then ‘print on demand’ technology — the magical ability to print books one at a time, as they’re sold, which is behind popular self-publishing services like Lulu and CreateSpace.
One day it’ll be possible to print books that look as beautiful as anything in Waterstones, with flaps, foiling etc, one at a time, for the price of the materials alone — but we’re not there yet. When we are, that’ll be a great time to be a publisher (be sure to call me); but in the meantime, print on demand is still too expensive, and the books don’t have that lovely look and feel that makes a trip to a bookshop such a pleasure. (There is a place for POD, and ebooks of course, but I’ll discuss that in the next article — leave them for now.)
My solution for printing is to ask not how many copies we need to print, but what our budget is to spend on that part of the process. I have a formula for this (of course), and here it is:
Print budget = (p ÷ 5) × n
Factor ‘p’ is the price we’ve set for the book (the ‘recommended retail price’, or RRP), selected from my list above, based on page count (and rounded up, or things get silly). Factor ‘n’ is the number of copies we need to sell to make our salary, which as I’ve described previously, could be set at 200 to make a respectable full-time wage. This formula, and sticking to the resulting budget, ensures that we never spend more than 20% of the RRP on printing — it keeps the whole model afloat. A case study:
You are publishing a 160-page collection of short stories, the upper limit of the £8.99 price category. Using the formula above, you calculate your printing budget at £360. This allows you to order 220 bookshop-quality copies from a reputable UK-based digital printer. You eventually sell 200 of them at 60% of the RRP, which gives you a gross income of £1080. You give the author their 10%, leaving you with £972; you paid the printer £360, so you’re left with £612 — more than enough to pay your salary for publishing the book.
That’s acceptable, but things can be better. How about this:
You are publishing a 74-page poetry collection, the lower limit of the £7.99 price category — but you add the £1 ‘poetry tax’, making the RRP £8.99. This gives you the same printing budget as you had above: £360. With this, you can order 350 copies from the same digital printer, sell 200 as above and make your salary … but with 150 copies left in your stockroom, which you can keep selling without pressure. When those sell, with the print costs paid for, you’ll keep 53% of the RRP every time. You’ll soon have made more than £1000 from that book.
That’s more like it. Some readers might be thinking at this point: ‘hey, but what if I only printed 220 copies of the poetry collection?’ Your print spend would be £270-ish, so when you’d sold your 200, you’d be £90 richer than if you’d followed my formula. Which is great … but you’ll have missed out on around £700 you would eventually have made from those leftover copies, risk-free. (It might take years, but they will sell, so long as you’re still trading.)
Now you’re thinking: ‘if there’s only £90 difference between 220 copies and 350, those 130 copies only cost 70p each! This reminds me of the concept of “economies of scale” I’m always hearing about, and that “classic model” you mentioned at the start of this section. I think I’ll print lots, get a cheap unit price like the big guys, and make thousands of pounds every time.’
Let me first say — thank you for that extremely verbose and helpful thought! That occurred to me too, some years back. With traditional ‘lithographic’ printers, you pay a big set-up fee, then each 100 copies you have printed costs just a few pounds extra. It’s very tempting, but let’s look at what happens if you go down the ‘long run’ road before you’re ready:
You are publishing a 74-page poetry collection, which again has an RRP of £8.99. You are contacted by a extremely distinguished traditional printer who can offer you 100 copies for £30 … the only catch is, you first have to spend £360 to set up the machine. You note that the £360 falls within your print budget, and ponder how £30 actually isn’t that much money, for a HUNDRED books you can sell.
So you decide to go ahead, and you figure you may as well get 500, since the machine is all set up. So you pay the printer £510, and soon you’ve sold the 200 copies as usual. After the author’s cut, you made £972; so £462 profit after paying the printer.
That’s okay, right? You’re down £138 — and you have 300 books in your attic — but think of all the money you’ll eventually make. So you do it again.
You are publishing a 160-page collection of short stories, the upper limit of the £8.99 price category. Giddy with possibility, you print 500 with the traditional printer, which costs £464 in setup fees and £44 per 100 copies. As usual, you sell your 200 and make £972 after the author’s cut. You pay the printer £684; so are left with £288 profit from that book so far.
It’s still okay — you’ve only made £750 during the month you worked on those books, and you now have 600 leftover copies in your attic — but think of all the money you’ll make when those books eventually sell!
Three months later, you’ll have made £2,250 in wages (an annual salary of £9000), and there will now be 1200 books in your attic, and another 600 in your spare room. ‘It’s still okay though — think of all the money I’ll make when those books eventually sell!’ you shout to your spouse, as they drive away, never to return. Hmm. Maybe these long runs weren’t such a good idea.
One day you may be in a position to print using the ‘classic model’, but my point (if you couldn’t tell) is that you need a big ‘tribe’ before that can work, and some kind of warehouse (other than your spare room). The magic number is around 300; once you are completely sure you’ll sell 300 copies of each new book, it’s time to scale up — but I’ll talk about growing a publishing business in part 6. We’re still just getting started!
I want to end this article by touching on ‘overheads’; fixed costs that no business can escape. Things like jiffy bags and other stationery should be considered part of distribution costs (the blue 20%), but you will need ISBN numbers, maybe website hosting — and possibly even an office, if you haven’t got a quiet space at home.
My (slightly odd) recommendation is to factor these into your print costs, by figuring out how much each overhead costs per book, and adding it onto the print budget formula. Let’s imagine your only overheads are an office and ISBN numbers. Your office costs £140 a month (these exist, I promise!), so if you’re doing 24 books a year, the office costs each book £70. ISBNs can be bought 100 at a time for £350, so that’s £3.50 per book.
Our overheads, then, are £73.50 per book, so that makes our formula:
Print budget = ((p ÷ 5) × n) - 73.5
You’ll struggle to print enough books with overheads dragging you down, especially at the higher end of each price bracket, so think very carefully before taking on any additional expenses. I actually have a note on the wall by my desk saying: ‘every pound not spent is a pound earned’. That’s in black biro … but wasn’t enough, so I stuck another note saying in red felt-tip: ‘DO I NEED TO SPEND THIS?’ Making a profit requires a little ruthlessness, I find.
Apologies for all the maths in this article — the next one will be a lot more fun, I promise. And as ever, if you’ve spotted any errors, or want to add something, please do leave a comment below. This is turning into a big group project; each new article is heavily influenced by the comments to the one before, so a big thanks to everyone who has given feedback so far. Dubious thanks also go to my assistant for this piece, pictured below, whose heart (we have to assume) was in the right place: