Writers are continually telling me how unfair the system of payment for authors is. I have been in business all my adult life, so I would like to put this in perspective for you. To sell in any kind of volume you need a distributor and bookshops. So let’s look at what they receive.
Distributor: Out of the money they receive, (usually 20 – 30% of retail price) the distributor has to pay warehouse rent, on the road salespeople, office staff, warehouse storemen, insurance and other business expenses.
Bookstores: Out of the 30 – 35% the stores receive, they have to pay huge rents and outgoings in the shopping centres, staff wages, insurances, and other business expenses.
According to my accountant, most businesses operate on as small as 7-10% profit on their gross figure. So if they are getting 30% of the retail price on a $19.99 book (or 5.99), they are at best making .59. If you look at the sum below, you will see that as small as it is, the author is making the most.
Retail price: $19.99
Gross to distributor and retailer: 50% 9.99 (Net profit at 10% = .99 divided between them.)
Publisher’s Gross Balance 10.00
Print Cost on 280 page book 6.77
Net Balance to publisher 3.23
Publisher share 25% .80
Author share 75% of net 2.43
Sure, you can print the books yourself, flog them around your area, and sell a few that way. But without the distributor and the book shops, you have no hope of selling Australiawide. Cutting out the distributor and selling directly to bookshops is hard. They would rather buy from a reputable distributor. They have an account with them to pay in 30 days, they know that the returns policy will be accepted and they will receive their refund for returned books promptly. Libraries would rather use a distributor as well. A librarian told me that any promotional material that doesn’t come from a major publisher or distributor is thrown out. She says, in her opinion, the publishers and distributors sort out what is worth stocking. She doesn’t have time to do that, so she only buys from them.
What you have to rely on for income is selling in large volumes. This doesn’t happen very often if you are selling them yourself – unless you are lucky, or you go global. What you have to decide is, do you want to be a published author, share your books with as many as you can and make a modest income, or do you want sell them yourself, only sell a few and barely make a profit.
Is it all worth it? That is for you to work out. From my discussions with published authors, if you want to make lots of money, being a published author is not the way to do – unless you ‘do a Rawlings’ and become a world wide sensation. And you know how often that happens.
I guess what I am saying is, as authors we have to accept the little we make from each book and try to maximise our sales as much as we can. Happy writing.