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Evaluating Self-Publishing Expenses

December 2, 2010 By Mark 7 Comments

During Cover Design Week I said this about self-publishing costs:

Unfortunately, what we have to spend says nothing about how we should spend it, and what things cost now says little or nothing about their total cost over time. The only thing we can say for sure is that if we don’t have [enough money] we’re out of luck. Other than that, even knowing the cost of the service does little to help validate the expense.

As regular readers know, I think the most important thing an independent artist can do is control costs. At some point, however, authors interested in writing professionally will have to confront publishing expenses (site hosting, POD fees, etc.), as well as consider a number of author services (proofreading, cover design, etc.).

To my mind the only useful way an independent author can assess such costs is to compare each outlay to potential revenue. That’s obviously Business 101, but it’s a mindset many independent authors fail to adopt. Instead, self-published writers often see expenses as worthwhile or necessary because they fund the physical production of a book: money gets spent and a book — your book! — springs to life. The problem with this approach is that it omits any relationship to sales or revenue, which means each expense is not a business decision so much as a purchasing decision, like buying fruit at the grocery store or a new pair of jeans.

If you’re trying to be a professional writer, implicit in that goal is doing what you can to avoid going broke. You don’t have to aspire to wild profits, and there are good reasons for not doing so, but at the very least your minimal goal should be recovering direct costs, if not also compensating yourself for your time. Even the ultimate goal of writing full time and living on one’s earnings demands similar analysis, because the realization of that lofty dream is directly related to your cost of living. The cheaper you’re willing to live, the longer you’ll be able to stay in business for any amount of generated revenue.

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Filed Under: Publishing Tagged With: CDW, cost, profit, Publishing

Price, Profit and Market Size

March 15, 2010 By Mark Leave a Comment

I am publishing a collection of short stories as an e-book. Continuing a series from last week, I’m trying to work through the relevant pricing issues and set a price for that content.

Assume for the moment you know beyond a shadow of a doubt that at least one person will buy your book no matter what the price is. What price would you set?

Obviously, $AllTheMoneyInTheWorld.

Unfortunately, history suggests a shifting relationship between price and demand (sales), meaning you may not always be able to employ this pricing strategy. As a fallback, it can help to imagine how the relationship between price and sales might play out for your product, given multiple variables. Unfortunately, doing so usually involves a great deal of market research, lots of wild guessing, and facility with a spreadsheet that I don’t have.

One thing I can say about the relationship between the price of my short story collection and sales of my short story collection is that my ability to maximize profit is not a pressing concern. To whatever extent I might be able to squeeze a few more dollars out of the market by endlessly worrying about price, I’m confident the variance between that maximum profit and the average profit is going to be fairly small, simply because the total number of people interested in the product will be small.

Thus liberated by my own limited appeal, it still seems valid to assume that setting a lower price will move more copies, while pricing the content at higher levels will decrease the number of people who buy the e-book. This is obviously why people advocate for the free/freemium pricing model: it promises that the price of your product will not negatively affect demand.  [ Read more ]

Filed Under: Publishing Tagged With: books, demand, e-books, price, profit