You've probably seen that today the UK minimum wage has increased to £6.31 (from £6.19), a below inflation increase. I'm not going to get into a debate on whether minimum wage is a good thing (and if it is, whether £6.31 is the right rate!) but I would like to think a little about the economics of writing for a living.
Most books take a long time to write. You all know us for our speed writing experience - two of us, writing ten hours a day, six days a week took seven weeks from blank page to post edit manuscript.
That's roughly 420 hours of work. I'd have liked to have spent more time, but when you've set yourself a speed writing challenge it's the time taken that matters.
If you go back to our first blog posts you'll see how we only set out to write "a book" rather than "the best possible book". As the saying goes, you can have something quick, something quality, or something cheap: Pick two!
Clearly there is an element of time is money to calculating the investment in a book. We spent frugally on edits, cover design, and publicity. Those numbers can all be seen, broken down, in early posts. But the biggest cost is our time. Our 420 hours is, in our opinion, a bare bones minimum. If we allow for thought time, extra rewrites, post release publicity and other connected activities (such as tax, licensing, soliciting reviews etc) then that quickly rises. For the sake of argument, let's assume we keep churning out books as fast as possible, never losing inspiration and we allow the books to sell without heavy advertising. Each book will therefore need to earn minimum wage (after costs, which may not be tax deductible / you may not have tax to deduct against if earning minimum wage).
Dan, as a minor, isn't entitled to minimum wage. He was sixteen at the time of writing Dead on Demand. In contrast, I have three degrees and professional expertise that you won't get for minimum wage. Rather than be convoluted and try to calculate what our time (as a chef / lawyer) is actually worth, we'll cheat and use minimum wage.
That gives us £6.31 an hour for 420 hours (between us), or £2650.20. For the eagle eyed out there, I'll make it clear we're ignoring Working Time Directive issues as well as working time limits for minors.
Throw in editing, cover design and marketing and that's roughly £3500 in cost.
To break even on the venture we have to take into account Amazon's cut, and the digital delivery fee. We have options in terms of pricing, but too high will just not sell.
As a quick guide on pricing (taking into account our filesize - which is pretty average for a novel not laden with pictures):
Price = Royalty
£0.75 (minimum price) = £0.26
£0.99 = £0.35
£1.49 = £1.04
£1.99 = £1.39£2.49 = £1.74
£2.99 = £2.09
£3.99 = £2.79
£4.99 = £3.49
Side note - see an older post here on pricing at 99c - and the HUGE volumes of sales required to live on that.
This is slightly complicated by the fact Amazon add 3% Luxemborg VAT to the price set - so if you choose £3.99 then you'll see a price of £4.19 appear on-site. We all like round numbers so authors usually take their price down a few pence to account for this. So for a £2.99 price we select £2.90 in KDP giving a royalty of £2.02 per copy.
In our experience, above £2.99 you see a big drop off in sales. There is simply too much competition - with so many authors going 99c or free, it's hard to compete.
But what is a fair price? We like £2.99.
To pay ourselves minimum wage, we'd have to sell (3500/ 2.02) or 1733 copies. That's pretty ambitious. If we drop to £1.99 then we need 2518 copies to sell. At 99p we'd need to sell a whopping 10,000 copies. At the minimum price of 75p that rises further to a HUGE 13,462!
Most authors sell only a hundred or so copies. Many sell less. Often a chunk of these are to friends and family. To get minimum wage is pretty hard. It requires capital investment on top of time. It doesn't necessarily pay off, and even when it does it might take YEARS to hit the magic 1733 copies needed at a fair £2.99 price. Royalties are a 'for life' investment. If we're lucky, Dead on Demand will still be selling in 50 years. Long term, it's not a bad bet. But who works for minimum wage? Even waiting tables comes with tips... and you'll get a consistent cheque each month. If we were to keep to a theoretical "book every 7 weeks" output then the sales rate should increase with the added exposure/ audience building and the fluctuations in earnings should be ironed out to some extent by having multiple books on the go (but - seasonal fluctuations will still occur!).
I love eBooks - and as a long term strategy I think it's worth the time (even adjusting the above for the rate I earn in my day job)... but for paying the bills now, it's pretty dire. We've had a fair few fan emails suggesting we drop the rate or give Dead on Demand away for free. We've already given away 55,000 copies (plus many thousands of copies of our other books too). While we love that you guys read our work, we've got to pay the bills too (and I live in London where the minimum wage really doesn't cut it). So for our next book, we're sticking at £2.90 and keeping our £2.02 a copy. We probably will do a free run, but please don't email us asking for a free copy: you wouldn't go into your newsagents and ask for a free paper, or ask Shell for free petrol. Authors really don't earn very much (except for the elite minority who hit the big lists/ sell movie rights etc). Digital may not have distribution costs, but production costs such as time take a very long time to be amortized into insignificance.