In our last post we discussed the pros and cons of traditional vs. self-publishing. Some of the biggest differences between the two options relate to cost and revenue. There is no upfront investment with traditional publishers whereas with self-publishing the author covers 100% of the costs.

The number of books you sell will directly impact the amount of money you make. According to publishing industry statistics, the average number of copies sold for any given title is less than 250 per year and less than 3000 over the book’s lifetime.

It’s certainly possible you will sell more copies than average. But for the examples in this post, we’re going to assume average sales. We are also going to assume that your book, regardless of how it’s published, will retail for $20.

**Traditional Publishing Model**

Publishers pay advances to certain authors to encourage them to sign with their houses. These authors’ books have enormous sales potential because they are celebrities or have access to huge audiences for other reasons. The odds of you receiving an advance are infinitesimal.

The way you earn money with a traditional publishing deal is through royalties on copies sold. Royalty rates are notoriously low. Your rate, which will be specified in your contract, could be as low as seven percent. The rate may be even less for online versions of your work. To make matters worse, you’ll have to wait many months for your royalty payments.

**Traditional Publishing Model - Bookstores **

Royalties are usually based on the net price, which is the discounted rate bookstores and other retailers pay for books. It’s likely that your $20 book will be sold to the bookseller for a 50% discount, $10. At a seven percent royalty rate, you’ll earn .70 on each copy sold.

First year – Grand total sold is 200 copies. All copies were sold by bookstores which paid the publisher $10 per copy. The royalty rate was seven percent or .70 per copy. Total to the author $140.

Second year – Grand total sold is 150 copies. All copies were sold by bookstores which paid $10 per copy. The royalty rate was seven percent or .70 per copy. Total to the author $105.

Your total earned in two years is $245. You had no upfront investment and you didn’t have to do any direct selling, but still. Paltry is the nicest way to describe this.

**Traditional Publishing Model – Direct Sales**

The picture changes if you are willing and able to do some direct selling. If you offer tours or do presentations or other types of programs or events where you can sell from the back of the room, your earnings can quickly add up.

Many authors are surprised to learn they must buy copies of their own book from the publisher. Trust me. They are not going to give them to you. Most houses offer authors discounts on copies they purchase for their own use. Generally the more you buy, the bigger the discount.

Let’s say you buy enough copies of your $20 book to get a 50% discount. You buy the books for $10 then you turn around and sell them for $20. You’re earning $10 per copy sold. Quite a leap from the .70 per copy you’re making on royalties.

Let’s say you buy 100 copies. That costs $1000. Your breakeven point is 50 copies sold. If you sell all 100 copies, you’ll recover your $1000 upfront cost, plus earn an additional $1000.

**Traditional Publishing Model – Wholesaler**

A third possibility and one that works particularly well for local interest books is to sell them through retail outlets other than bookstores such as museum shops, antique shops, restaurants, hotel gift shops and other tourist attractions. We’ll talk more about finding and approaching these outlets in our next post on marketing and distribution.

Even though these businesses and organizations could order copies through your publisher, they may not be interested in doing so. They may only want two or three copies at a time and they may want to have a business relationship with you, the local author. So you become a wholesaler.

Remember those books you bought from the publisher for 50% off, $10 per copy? Offer some of them to Edna’s Antique Emporium on Main Street for $15 per copy. Edna sells them to her customers for $20. You make $5 and so does she. You could make the offer more appealing to Edna by autographing all her copies. When she runs out of books, you restock her.

**Self-Publishing Model**

The cost of self-publishing a book ranges from $1000 – $20,000. Your book is about 120 pages long and is paperback so it wasn’t horribly expensive to produce. Read this post for a description of how to estimate book lengths. For the sake of this example, let’s say you invested $2000 in editing, cover design, etc. You printed 500 books because you’re confident you can sell them. That cost an additional $1500. So your total investment was $3500. We’ll stick with our $20 retail price.

**Self-Publishing Model – Bookstores**

You’re not going to bother trying to get your book in retail bookstores. They probably aren’t interested in working with you and you have much better, i.e. more lucrative, options.

**Self-Publishing Model - Direct Sales **

This is selling directly to the public, the people who take your tours or attend your programs or presentations. There is no middleman. There is no discounting. You receive $20 for each copy sold. Once you’ve earned enough to cover your investment, every copy you sell is pure profit. And you get paid when you make the sale. No lag time waiting for your publisher to issue a royalty check.

First year – Grand total sold is 200 copies. The total revenue was $4000. After deducting your upfront cost of $3500, your profit is $500.

Second year – Grand total sold is 150 copies. Since you recovered your cost in year one, this is all profit. Total to the author $3000.

Your total earned in two years is $3500. You’ve still got 150 books. If you can sell those in year three, you’ll earn an additional $3000 bringing your grand total after expenses to $6500.

**Self–Publishing Model – Wholesaler**

Let’s pay another visit to Edna’s Antique Emporium on Main Street this time as a self-publisher. Just as in the traditional publishing wholesale example, offer your books to Edna for $15 each. And just as in the previous example, Edna sells them to her customers for $20 and makes $5 per sale. But rather than making $5, you make $15, which either goes against your upfront cost or directly to your bottom line.

The best scenario regardless of how you publish is to sell in as many ways and places you can. That is precisely what we will discuss in the next and final installment of our book series.