Finding Your Break-Even Point
Last week, the second episode of Concept to Shelf dropped, where we talked a bit about the math of publishing and how to price your book if you go into retail. Here’s the time: it’s slightly deceptive to leave it at that. The math has multiple facets, and that math says “here’s the ballpark for my book.”
We’ll start with the math from the episode. You don’t have to listen to the show to see the math breakdown; it’s in the show notes.
You’re selling a book at $20. At the three-tier consignment shop model detailed, you’re keeping 44%, or $8.80. In the episode and on the notes, we talk about the percent you have after remove your per-unit costs of your book.
Where This Math Works
This is a way to check and make sure that you’re actually bringing in money to cover expenses beyond the printing cost of the book. To say “make sure you have around 20%-25% of your cover price after accounting for the physical product’s cost” is a good way to make the numbers fit your head.
When I published Finis, my per-unit was around $6.50 and I initially sold it for $20. While that was find for direct sales (leaving me with $13.50 to cover other expenses and then ship the rest to charity), for retail sales it was harsh.Getting $8.80 for a book that cost $6.50 meant clearing only $2.30 per book, barely more than 10%. Ouch.
When I adjusted the price down to $15 to better reflect the fact that it was a small book in a market that doesn’t like to buy fiction…that was pretty bad. By then — hang on, I’m getting ahead of myself. (The topic of price adjustment is better as a future post.)
Where This Math Doesn’t
But the real world doesn’t work like that. You have to deal with up-front costs and periodic costs. It’s not like the printer is taking the single per-unit costs with each sale. You’re paying for that right away. That means we need to see the math differently: calculating your break-even point.
You’ve got your $20 book that brings you $8.80. Your initial print run is 300 copies. How much did it cost to make?
Your printer’s quote is for $1200 — $4/book. (You could always get a better rate by printing more, but that’s for later.) Add, say, $50 for shipping. Current total: $1250.
To break even at $1250, you need to sell ($1250 / $8.80 = 142.045) 142 copies. I’m rounding down because 0.045 is a small sliver of a book.
If that’s your only expense, then you’re in the red until you’ve sold 142 copies. Are you confident that you can sell that make copies?
Let’s add other expenses:
- $500 for art, including a decent cover and getting some stock art from the Internet. That $500 takes 57 books to recoup ($500 / $8.80 = 56.81). Current number of books you need to sell in order to break even: 199.
- $300 for developmental editing, along with some free proofing from friends and fans. That $300 takes 34 books to recoup ($300 / $8.80 = 34.09). Current number of books you need to sell in order to break even: 233
- Deciding to debut at Gen Con. Okay, that’s its own post, because fuck, that’s expensive.
With those expenses, you’re looking at getting return starting at book 234. That’s 77 books that are “profit.” That’s $677.60.
You won’t sell all of your books. Some will get lost in the math, or damaged and need replacing. Some will be comp copies you give to contributors or reviewers. For whatever reason, even if you sell your entire print run, you won’t see money for 100% of your books. But getting into this topic is also yet another post.
Your Numbers Will Vary
This gets more complicated when you have multiple methods of selling: direct sales, through consignment shops, at conventions, etc. That makes your break-even point defined as number of books fluid. But the dollar values you’ve already spent aren’t, so keep that in mind as you see checks come in for your book.
The Two Questions To Ask Yourself
Once you know your break-even point, you have to ask yourself two questions:
- Are you utterly confident that you can sell at least that many books?
- Are you happy with these numbers?
If you answer yes to those, sweet! Here’s a third question you really need to keep in mind:
- And how long do you think that’ll take? (In other words, how long will you be riding in the red?)
In the example above, I wouldn’t be happy. If it takes more than half of my print run to pay all my costs, I feel like I’m doing it wrong. (And honestly, for small runs I’d still rather it take a third, but sometimes that’s tough to float.)
If you’re happy with that answer, by all means push on. But if not, you need to rethink how you’re doing this. This could mean:
- Raising your cover price and hope you have enough customers buying it still. (And hope that they don’t bitch too much about the price, because that creates a negative emotional context for the book from the first moment. Suddenly, the book has to “justify” its high cost.)
- Finding a way to lower your expenses. Shop around for other printers. Do trade-for-work for your art or editing. Things like that.
- Seek out other ways to monetize. Like, say, PDF sales. (Which, as someone in Evil Hat, isn’t a path we take strongly, since all of our print products come with a free PDF. Still, some buy just the PDF since it’s cheaper.)
- Not selling into retail. Now, you will have fewer books sold this way, and less exposure, but if you can’t afford to sell into retail and you can’t change the numbers, selling into retail is a bad idea.
Another Perspective on Pricing
Please Tell Me If I’m Wrong
Hey, publishers doing this thing, am I off? Please leave comments calling me on bad math and other bullshit.
 This number is totally out of my ass here. I haven’t had to deal with shipping like this in years.
 Other numbers pulled out of thin air. Your numbers will vary greatly.
 Which is in scare quotes because, if you’re looking to continue making your book available, that’s capital being saved up for your next print run. If you can justify another print run, of course.