The “ec•o•nom•ics” Of Being An Author: What Are The Real Financial Burdens? – Guest Post by Kersten L. Kelly
Every author dreams that their book will be a #1 bestseller on Amazon, featured in The New York Times, carried by every book store around the world, and generate millions of dollars in revenue. This scenario describes the epitome of success as an author. Although many people have accomplished some or all of these goals, the reality of book publishing is quite different. Authors are constrained both financially and economically in their quest to spread their word to the world. Although in some contexts these two terms – finance and economics – are used interchangeably, it is important to note their mutual exclusivity for authors. The best example to depict the repercussions of both is through two publishing channels.
There are two mainstream ways for someone to get their work into a saleable format and available to the public: traditional publishing or self-publishing. Depending on the route an author takes to publish their book, the raw financial repercussions are quite different. With a traditional publishing house, an author would query the company with the book pitch and original manuscript. Once it is accepted, the publishing house retains all rights to the book through a signed contractual agreement between the author and the house. Typically, the publishing house assumes all responsibility for the initial costs to edit, design, and print the book.
In return for their services, the publishing house retains a predetermined percentage of every book sold. The infrastructure of editors, designers, a printer, and other forms of overhead are fixed costs. The team of people can work on multiple projects simultaneously; through sheer volume, this makes marginal costs per book relatively low. The only additional costs incurred are variable costs of raw materials per book. This is a desirable incentive for the company to publish more books. Mass quantities are a huge cost savings in a variety of aspects to publish books.
Being a self-published author, I started from ground zero. I expected a miniscule investment to cover the costs of my editor, designer, website, and review copies of the book. As I delved into the process, I found that the burden was far more cumbersome than I originally anticipated.
The Financial Burden
Book publishing was a learning process. With each step, I gained knowledge of another “thing” that needed to be completed for the book. In other words, I spent more money up front to follow the proper process that I didn’t think of ahead of time. Unlike the traditional publishing route, self-published authors usually publish one book at a time. This automatically upsurges costs due to the lack of volume. To scrutinize this conclusion a bit further, let’s look at a constant that all books are required to have regardless of how they are published.
An ISBN (International Standard Book Number) is the required unique identifier specifically assigned to every individual book. Bowker® is the agency for the United States that tracks all ISBN numbers to register them to the correct publishing company. They sell ISBN numbers via their website for any and all publishers. When an entity purchases a set of ISBN’s from their website, they register the book that they will be assigned to with their publishing company. Similarly to any other company, they provide a massive financial incentive to buy in bulk with bracketed pricing.
For a single ISBN, the price is $125. The cost of 1,000 ISBN’s is only $1,000 or one dollar per unit. This means that the price on a per unit basis drops by $124 just by purchasing a mass quantity of them. For a traditional publisher, the 1,000 unit purchase reduces the variable cost of each book published by $124. They publish far more than 1,000 books to negate any waste of the units.
On the contrary, a self-publisher only needs one ISBN to publish a single book. If they purchased mass quantities, the cost of each unit would skyrocket because the additional numbers would not be used. Instead of paying $125 per unit, the self-publisher would end up paying $1,000 per unit. Financially, this is a huge burden on the self-published author.
The Economic Burden
Based on the financial data and information presented, it seems ludicrous for someone to ever venture into the world of self-publishing with a book. The economic trade-offs will prove this assumption to be incorrect. There is an opportunity cost difference between traditional and self-publishing. It is up to the author to decide which cost is more valuable.
Because an author signs over all rights and ownership of the content they submit, the traditional publishing company controls the timeline of the book. It can take up to two full years (and sometimes longer) for a manuscript to be printed and distributed. During this time frame, the project is solely at the discretion of the publishing company. Authors are required to make timely changes to their manuscripts as directed by the traditional company.
The opportunity cost here is the potential income an author is foregoing through the process. Could the author be losing projected sales for their work due to a delay in processing? If a book is not on the shelf, it will not sell. What are the financial costs of the “waiting period?” During this time, the author could be generating income through another job. Is the timeliness of a book’s topic compromised because the publishing process outdates the material? For timely publications, this becomes a fairly key aspect to whether the financial costs outweigh the economic costs.
The process of self-publishing a book incurs economic opportunity costs as well. Although the timeliness is completely within the control of the author, all of the time for manual labor is being incurred by the author. The author does not get paid for the time spent working on the book until the book sells. Once the book starts selling, the money invested to that point is a deficit. The author must reach a break-even point to actual turn a profit. This makes the project a questionable venture because of the potential for the author to spend their time another way.
Being an author does not guarantee a gain or loss, financially or economically. The comparison between traditional publishing and self-publishing sheds light on some of the aspects of the process that readers do not contemplate. People think of the “costs” of something as purely a monetary measure. The examples illustrated the depth to which costs can probe into a product. It is critical to think of costs in a more holistic manner. An author must consider both sides of the spectrum in order to determine the most profitable venue for themself. It depends on what is more important to them – the financial or economic costs.
Excerpt from ec•o•nom•ics
Professional football players, corporate tobacco advertisers, volatile gasoline prices, and the Cold War all share an undetected commonality—each is an intrinsic part of economics. Though not obvious to the naked eye, each entity shares a pattern with the others. This book helps to shed light on these mutual characteristics. It is an extensive compilation of theories interpreted using supportive examples.
A person with a professional degree graduates from high school at age eighteen. At an average of eight years to fully earn their education, the age they start a professional position is twenty-six. They must also factor in the debt of $150,000 that will have to be paid back for their education. If the person works the same number of hours per year and retires at the same age as a person with less than a high school diploma, the average lifetime earnings of a person with a professional degree is $3,115,080 after educational debt repayment. This is a 287 percent lifetime increase for an eight-year average investment in human capital. If that isn’t a worthwhile payout, I don’t know what is!
Economics is an enthralling science that encompasses our actions, thoughts, and emotional rationality every day in the unconscious. This book dissects economic theory into bite-size, entertaining snippets that anyone can understand and apply to their daily routines. It is a compelling depiction of history, business, pop culture, and social movements intertwined with relevant economic trends. Economics is part of daily life, and this book challenges readers to question how and why people make decisions by adding a simple twist on normalcy.
Kersten L. Kelly is a self-published author of narrative non-fiction and semi-fiction books. She grew up in Munster, Indiana, and currently works in a sales role based out of Chicago, Illinois. She started writing at an early age and graduated from Indiana University with a dual Bachelor’s Degree in Economics and Communication & Culture. She then went on to earn a Master’s in Business Administration from the Kelley School of Business at Indiana University. She has a passion for learning, teaching, and writing as well as international travel in her spare time. This book is her first piece of published work.