Tuesday, July 5, 2022

The Financial Costs of Authorhood

This week's topic: Minding Your Business:
 How I Manage the Financial Side of Being an Author

The downside of being an indie author is that all the upfront financing comes from...me. Upside, I don't have additional layers of people with whom I share my royalties like a trad-published author would (no agents or publishing houses taking a percentage).

Now that I have eight books selling on leading retail sites, I have a fair idea of production and distribution costs. 

  • Art can range from as little as $300 to as much as $5,000+. 
    • There's an extra $200-$400 for social media and advertising art bundles. 
    • Buying art may not include cover design (aka fonts, wraps, lettering, etc.). You might need to hire a designer in addition to the artist.
  • Editing costs fluctuate with wordcount and the editor chosen. I've paid an average of $1,000 for 85k-word books and $3,500 for a 125k-word book. No, that's not a math failure, that's a difference in the per-word rate charged by different editors.
    • Choosing the right editor(s) for your work is a topic for a different post. 
  • Formatting for ebook and paperback is something I outsource. That's a couple hundred.
    • While it's worth every sanity-saving penny to me, I am limited to what changes I can make in the future without incurring additional costs. Pro and con there.
  • Production costs for print books and distribution costs for ebooks are higher the more graphics included in the novel. 
    • In addition to a royalty share, digital distributors charge for file size.  
    • Sure, I'd love to pepper artwork throughout the book, but that gets pricey fast.

Easy to see why indie authors may choose to pre-fund a novel via Kickstarter or Patreon, right? And the costs outlined above don't include the hours (aka months/years) spent writing the novel. 

I have not gotten into audiobooks because the upfront costs are too much compared to the odds of recouping those costs, much less generating net revenue. Good narrators are worth every penny. Bland or AI-generated narrators will chase away customers. Expect to pay for quality production (which should be part of the narrarator's cost-per-finished-hour rate), but don't expect this format to become your sales leader (compared to ebook or print). Yes, some narrators accept royalty-share payments, but that's not recommended for either party. A web search will provide many horror stories of why.

Advertising is a relentless money-eating monster. Welcome to the world of small business where making consumers aware that your product a) exists and b) is worth the purchase is critical. Sadly, there is no One Magical Success Formula. Unlike book production costs, advertising costs are ongoing and subject to constant fluctuations. ROI is a BFD and it must be monitored regularly to minimize losses. There are authors who spend thousands a month on advertising, and I am...not one of them. It's not in my budget to pay more for advertising than I do for my mortgage, health insurance, or total monthly cost of living. My income simply doesn't allow for it. 

Side note: Do not take out a personal loan for the sake of advertising (yes, it happens).  

How do I manage these finances? Basic math. Income - cost of living - splurges/savings/crises - book production costs - advertising budget. I use Excel to budget and track monthlies and YOY, though Quicken for Small Business is likely to come on the scene soon.