All the Numbers in Publishing That No One Talks About
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Episode Transcript
Hi, podcast listeners and YouTube watchers.
Welcome to the last episode for 2024 of The First Draft Club.
This is not the end of the season. We will be back in January, on January 8th, with more episodes for Season 8. But this is going to be the last one before we take a break for the holidays.
And before I dive in, I want to tell you about a bonus that we're doing right now, and only right now. If you join The Book Incubator between now and the end of December, you get the month of December free.
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We would love to give you extra time in The Book Incubator and to work with you on writing your book in 2025.
Now, let's dive in.
Today, we're going to be talking about actual numbers behind traditional publishing and self-publishing. Given how much of this discussion is opaque and how very little real data there is out there, this is one of those elusive topics that people can find very frustrating. People, including me.
I spent years trying to figure out what are really the numbers behind traditional publishing, what are really the numbers behind self-publishing in terms of what an author can realistically expect to take home.
And so I want to share with you in this episode the real data that is up to date and available and walk through the math with you.
This is going to be math-y. I know writers don't love math, but it's worth it.
So stick with me because I want you to be able to understand these different publishing paths and what there is potentially to be gained and lost in each of them.
Specifically, I'm going to share average advance size for traditionally published books from data that I collected in 2022. I'm going to share sales figures that came out of the Penguin Random House antitrust trial a couple of years ago. I'm going to share survey data about what self-published authors say they earn.
And then I'm going to share a method for estimating any author's sales, potential book sales, by looking at their Amazon reviews. It's a very loose back-of-the-napkin math method, but it is a method.
And we'll talk about how the business model is different for big traditional publishers versus a self publishing author and how you would want to factor this into your choice if you're considering the different publishing paths.
Okay? So let's go.
First, we want to get clear on definitions.
Traditional publishing means someone else is paying you for the right to publish your book. They're basically licensing the rights, the exclusive rights, to publish your book for a certain amount of time in a certain geographic location. It may be worldwide, it may be only in North America. They may pay you in advance. If it's a small publisher, they may not pay you in advance.
The contract may include your book in any format, audio rights, digital rights, doing an e-book, hard copy, or it may include only certain formats. There are all kinds of contracts out there.
But when I say traditional publishing, I mean someone who is not you, right? Another party is paying you for the right to publish your book.
Now, in traditional publishing, typically, at least with the bigger publishers, you are also going to be employing a literary agent. A lot of the biggest publishers, the Big Five they call them, only accept submissions, only accept manuscripts, from literary agents, which means in order to even get those deals, you have to have a literary agent.
The standard cost of a literary agent is 15% commission of what you are making. So that is a number that we will be factoring into the math for traditional publishing.
Self publishing is maybe obvious. It means you are covering everything yourself. You are your own publisher. You are covering your costs. You are covering marketing costs, distribution costs, production costs.
But you are going to tend to keep a much bigger percentage of each book sale that you make because you're the only one making the revenue.
There is also a third route called hybrid publishing, which I will talk a little bit more about in a future episode, but I'm not going to get into hybrid publishing here because then it does get really messy. There are as as many versions of hybrid publishing as there are people.
So for the sake of clarity, as we get into math, I want you to visualize two columns. Traditional Publishing on your left and Self Publishing on your right.
We're going to look at the numbers for traditional publishing first.
Based on all of the data available to me, and by the way, I have a free training and a blog post that break down advance structures in detail based on all the data available. You can find links to those in the show notes. They go into a lot more depth about advance sizes.
But based on that data, I have found that advance size for debut authors in the US typically range between $50,000 and $70,000. This is self-reported by a little over 1400 authors, and it was either 2020 or 2021. So $50,000 to $70,000 for people getting major book deals in the US. After the 15 % commission, that becomes $59,500. All right?
Now, a fascinating data point that came out during the Penguin Random House antitrust trial a couple of years ago is that fewer than 1% of the 3.2 million titles tracked by BookScan, which is the go-to source of book sale numbers, even for people in the industry, fewer than 1% of those three million-ish titles sold more than 5,000 copies. Fewer than 1% sold more than 5,000 copies.
What does this mean for you as an author?
It means that the advance that you get (minus the agent's 15%), despite being called an advance, is most likely going to be the only money you're making on this book
So for 99% of books, that advance you're getting will be the whole story. That is the money that you're making.
And I'm saying this repeatedly because I think it's very important to understand. Only authors who would get a very small advance are going to earn out that advance by selling fewer than 5,000 copies.
Now, you might get some foreign rights sales, you could get TV/film deals. This isn't factoring in those possibilities, which are very real possibilities. I have made money abroad on my books. My friends who are authors have made money abroad on their books. Some of them have made a lot of money in TV film. I'm just not including that in our math here because that's far from guaranteed income.
So in our traditional publishing column, we basically are going to have one number, and it's $59,000, okay? Again, we're going super general here. We are estimating. I just want to say that a million times over.
Self-publishing column, our second column. The Alliance of Independent Authors reported that, in April 2023, the median earning for self-published authors was $12,749. That was an annual earning, about $12,700.
We need to look at who was surveyed here to understand this number accurately. These are unlikely to be people who just threw a book that they wrote up on Amazon after they wrote it over a weekend.
These are authors who are in the Alliance of Independent Authors and responding to a survey. They are people who are likely to consider themselves career writers, in my view, and therefore, they are probably investing substantial time and effort into the books they're writing. They're probably writing pretty decent books. Otherwise, I don't know. We tend to give up if it's not going well.
And remember, this is a revenue, not profit. So we also have to consider that since these authors are also their own publishers, they have expenses coming out of that amount. So that $12,700 is not what they're taking home.
What expenses are expected and realistic for a self-publishing author? Well, I'm going to walk through them now. And I want to note here, I'm trying to be very realistic about what it would cost to professionally publish a book yourself as an author who wants to have a career.
If you just want to put a book on Amazon for your family to read or your friends, and it's fine with you if you sell 19 copies ever, great. I'm not talking to you, though, okay? That's not what we're talking about here.
We're talking about someone who is doing this as a professional endeavor. They want to have take home pay from their creative production. Based on my research and just reasonable expectation around having run a business myself, here's what we can realistically expect to be coming out of that median $12,749 revenue for a self-publishing author.
We are subtracting these from the $12,000 in our self-publishing column, okay? These are being subtracted.
Professional editing of the book can cost anywhere from $1,500 to $4,000, depending on the length of the manuscript, the number of words in it, the qualifications of the editor, the amount of editing required, and so forth.
Cover design, anywhere from $500 to $1,000. Marketing costs are often anywhere from 10% to 40% of your revenue. By marketing costs, I mean ads, book ads. The most successful self-publishing authors are buying ads. They're buying Amazon ads or Google ads or BookBub, I think they're called, ads. That's how people are finding their book.
Now, I know that 10% to 40% of revenue is a pretty big range, but I wanted it to be accurate, and it is going to vary a lot by book.
About $2,000 I'm allocating as a startup cost for a self-publishing author who needs to learn how it works. So needing to learn, how do you create an Amazon ad? How do you do a successful Amazon ad? How do you measure if your Amazon ad is working? How do you get an ISBN number? How do you copyright? How do you print on demand? What are your options for selling hard copies of your book and distributing them?
There was a learning curve for someone who wants to do this and wants to do it properly, and it should and does require investing in education to figure out what that that is, how that works.
Realistically, until you really know how book advertising works, you're probably going to spend a few thousand dollars in trial and error figuring out what works and what doesn't. And then you're going to spend a few hundred dollars a year on your website and email list management because any self-publishing author who is virtually their own business is going to want to be growing an email list, and you can't just do that with a Google account.
So if we factor all of these costs in, that $12,700 in revenue might only leave you with $5,000 to $6,000 profit at the end of the day, which is 50% profitability. A 50% margin is pretty good. That's actually quite good. But particularly for your first book, it's probably going to be less because of the startup costs that I mentioned.
All right, we have our two columns, and in one, we have $59,000, right? And in the other, we have $6,000, maybe less if it's the first time you've ever done any of this and have to invest in learning how to do it and experimentation. It looks right now like traditional publishing is winning, and I think in many cases, it will win.
But we need to unpack this a little further because there are situations in which self-publishing can win out. Something crucial to understand about how book sales work over time is that with traditional publishing, you typically see your strongest sales in the first few months after release.
Your publisher's marketing push is focused on your launch window. After that, sales usually drop pretty dramatically unless something unusual happens, like your book is made into a mini-series on Netflix or Apple TV, or it goes viral on TikTok.
Self-published books can follow a different pattern. They might start more slowly but build steadily over time with continued marketing effort that pays off and then pays off more, and you're snowballing and you're building an audience.
The most successful self-published authors aren't just thinking about one book. They're building a catalog, and they're building an audience. They're also publishing pretty consistently. It's typical for a successful self-publishing author to be putting out at least a book a year.
Back of the envelope math then can show us that it would take, based on our numbers of $59,000 in the traditionally published column and $6,000 in the self publishing column, about 10 years for the self-publishing author to make what the traditionally published author has made on the first book.
This is also not counting the fact that the traditional published could invest that $59,000 and watch it grow over 10 years, right? If the stock market remains the way it has been, anywhere from, I don't know, 7% to 10%.
So looking at it this way, self-publishing does not appear to be the best financial choice for someone planning to publish just one book. But, like I said a moment ago, there is a situation in which the numbers can lead to self-publishing being the quote-unquote winner for authors. And that is if someone wants to build a long term business and audience.
So let me show you what I mean. By looking at Amazon reviews, and this is not just true for self publishing authors, this is true for any author, you can actually estimate the sales of authors based on their number of Amazon reviews.
So say, for example, we're going to look at some of the most successful self publishing authors, who will have between 7,000 and 10,000 Amazon reviews. That's very high. I don't know what the stat is, but you're not going to find a lot of authors on Amazon who have that many reviews, no matter how they were published, traditionally or self.
But some of the most successful self-publishing authors, and what we're trying to do here is calculate what they might be making year over year once they've done this, once they've really built a body of work and an audience. They will have between 7,000 and 10,000 reviews. We can infer from this what their sale numbers might be.
Okay, I'm doing a little quick and dirty loose math here, so take it for what it is. But from looking at my books, some of my friends' books, I'm going to estimate sales by predicting that 10% to 12% of book buyers write reviews. That seems to be about how many reviews per book buyers. Very loose math here again, just giving that as a caveat.
But if we make this assumption, then we can estimate that an author with 10,000 reviews has sold about 100,000 copies.
On Kindle Unlimited, which many self-publishing authors are on, authors earn about 0.0045 cents per page read. I'm not going to ask you to do this math yourself or memorize that. I'm just going to tell you that that means for a 300-page book, that's about a dollar and 35 cents for every person who reads the book. Yes, you are paid by number of pages read, not number of copies sold or downloaded, which is interesting.
So if you sell 100,000 copies, that's potential revenue of $135,000 for that book. Now, that's revenue, not profit. An author with numbers like these is spending money on advertising. I virtually guarantee you that. But even with ad spend, my prediction is that it's still going to be a six-figure take home pay for that book, or or close to it.
Now, I don't know how many years those reviews were accrued over, and therefore that profit. The $135,000 could have been the lifetime value of the book over three or four years. It's not necessarily like they have made $135,000 in a year, but it's still quite a substantial amount of money.
To give you just a couple of real-story anecdote examples as well, I know someone who actually quit her job in publishing because she was making a substantial amount of money self-publishing.
But I also know multiple people who went into self-publishing expecting to make a lot of money and ended up losing money instead. Now, in their case, I think it's because they didn't understand the landscape of what I'm talking about here and the importance of knowing what is going to be entailed, both in terms of effort and financial spend going into it.
So here's what I want you to take from all of these numbers to wrap up here. Both paths can work, traditional publishing and self-publishing, but they are fundamentally different business models.
Traditional publishing is like getting a guaranteed paycheck. You know exactly what you're getting. And while you might not make more, you're not going to make less either, as long as you turn in the book and don't break your contract.
Self publishing is more like starting a business, because that really is what it is. It's starting a business. There's more risk, there's more upfront investment, but there's also potentially more upside if you're willing to treat it like a business, consistently producing books, probably a book a year, and that you're producing the books that you're audience comes to expect from you, right?
Because a lot of your profitability over time here is going to depend on building that audience that is hungry for what you have coming next. In other words, you're not going to get an audience that you've built for your romance books to get excited about your poetry collection. At least it's going to be hard.
The key, either way, whether you're going traditional or self-publishing, is to be savvy about it. Treat it like any other investment decision. The fact that you're listening to this is great. You now know roughly the landscape. So think about these numbers, understand them, do more research if you want, just know what you're getting into.
That's all for this week, and this is our last episode for 2024. I will be back in 2025 with more of Season 8 of The First Draft Club. I hope it's been helpful and that you have a wonderful holiday.
Ready to dive deeper into the numbers?
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