Tuesday, 21 August 2012

A question from the audience: "How profitable is POD?"

I had a question via email: "If I self publish in print, how much can I expect to make?"
In short , not much.
POD doesn't make a great deal per copy, and many self publishers think getting into print is the hard bit. It isn't. The hard bit is actually selling any significant volumes. Having a successful kindle edition helps; you can expect anywhere from 1% to 10% sales conversion from kindle to print (more for things like cookbooks and children's picture books).
Even in the world of instant gratification however the book store is still king (well, the supermarkets and other outlets are as well). Most print books are impulse purchases rather than sought out.
So a very basic reduction of the 'how much will I make?' question will look like this
Gross Profit = (Copies sold X margin per copy) - Costs.
If you've already got a workable manuscript (read: edited and formatted for Kindle) then you've got the bare bones of a print edition. All you need is to format it for print (which can be done via word templates for free) and a cover. Even the cover can be done for nothing if you use the Createspace cover creator.
Converting my Kindle cover into a wrap around cost £70.
I sell for $16.99 so I make:
·         $1.74 expanded distribution
·         $8.54 Createspace eStore
·         $5.14 Amazon.com
·         £2.29 in the UK
·         3.46 in the EU
You're probably thinking this looks pretty healthy as margins go.  The flaw with this is my price is pretty high. I'm pricing a trade paperback in a luxury price range. This is because I wanted to use expanded distribution and much lower makes me a loss. To break even on ED I'd need to price at $15 and then I'd make next to nothing.
Given my Kindle copies make nearly $3.50 per copy I don't really want a smaller margin thus the current pricing. I can salve any guilt with the knowledge that I have a cheaper option for those that just want a good read, and I've even got a free day coming up.
Now I could knock off ED and just go for Amazon.  At this point I could charge $10.99 making zero in the UK, 54c in EU and $1.54 on Amazon sales. I might sell a few more copies but I'd be making a lot less cash per copy.
Unfortunately most POD books sell sod all.  In 2006 the founder of Lulu.com stated in The Times that he wanted "to have a million authors selling 100 copies each, rather than 100 authors selling a million copies each."
These days 500 copies makes you a LuLu bestseller.
Competitor Xlibris (now bought out) had 23,000 authors with 23,500 titles selling 3m copies or around 127 titles.
The recently formed Author Solutions(which owns AuthorHouse, iUniverse and Xlibris) stated in the New York Times in 2009 that average sales were "around 150".
I think these days that the numbers are a bit higher but not much. The range is expanding. With the influx of would be authors there's more content than ever and the market only consumes so much.
There will be outliers. 4% of Xlibris books sold more than 1000 copies.
At iUniverse only 83 copies in 18,000 (according to the slightly biased publishers weekly) sold more than 500 in a year.
In contrast legacy sales are likely to be 400-5000 for a first run author not offered the Rolls Royce treatment by the big 6.
The same stats suggest 40% of these books are bought by the authors. The big problem with POD is distribution. As we outlined in a previous post getting stocked is a nightmare because you should be offering 55% off list as a discount, and you'll need a way to get there. At POD margins you just can't offer 55% off direct unless (as outlined extensively in a previous post) you go with LightningSource (as Createspace don't allow variable discounts). Even then that makes you available to order but not necessarily a good bet; and shops only have so much space even if they do know they can return stock that doesn't sell.
What that means is you'll probably sell most copies yourself. A few will go on the back of eBook sales. You should be able to convince one or two local stores to stock it but this is a very localised distribution.
You won't be in the big shops, and even if you do pull that off using a full discount you'll be hidden away spine out. Publishers buy the table space, and the front out space. They pay a premium for it. You can't do that.
So, assuming a 200 book sales run (above average, especially when you think about how much the outliers drag up the average) then you'll make something in the region of:
Gross profit = (200 x $1.74) - $105 costs
= $348 - $105
= $243
That's it. £162 back on a huge amount of work on average. You might beat the average, you might not. As gambles go it's a safe one due to the low margin, and you do get other benefits (print copies are great for promo, review acquisition and linking on Amazon to get an actual rather than estimated page count).
Is it great to hold your own book? Yes.
Is it going to make you rich? Probably not.

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