Making a book: costings (the final episode)

Making a Book Step Seven: The book is instore and selling. So what were the costs to get it there, and who takes the larger slice of the pie, publisher or bookseller?

The Read’s seventh and final episode in a series suggested by a bookseller, who told Booksellers New Zealand: “I'd like to see a series of articles about how a book is made.”

Castoff - no it is not knitting - and costs:
Making a Book started with the writer and their concepts and being accepted by a publisher. At that stage we were able to make the estimate that if authors were paid on royalties, they received approximately 10 percent of the book’s cost (minus GST) at retail.

Breaking down costs were then a little hard to discover as we went through editing, layout, design, production, printing and distribution. So this is the catch up: two different scenarios for book costs, one an illustrated non-fiction book with a mix of black and white and colour illustration pages, the other a text only paperback with colour cover, such as a novel.

The Read thanks Sam Elworthy of Auckland University Press (AUP) whose chapter on costings in The Publishers Association of New Zealand’s (PANZ) An Introduction to New Zealand Publishing* has provided the basis for this feature.

Publishers call it castoff when they calculate how many book pages the manuscript will produce, and calculate the cost of illustrated and non illustrated pages at different rates.

Following the castoff, specifications must be taken into account and decisions made – paperback or hardback, colour or black and white, art paper or uncoated paper?

Next, the print run. Five thousand copies or fifty thousand? The bigger the print run the lower the cost per unit, but there’s likely no profit at all if half the print run has to eventually be pulped.

Naturally no publisher is reckless enough to get to this point and decide a project will have to be abandoned. Anticipated costs will be front of mind right from the time a book title is considered, even to the extent of getting print quotes before a manuscript is accepted.

What will it cost the publisher to print and what retail price will be set for the book?

The publisher will be cautious at setting the book at a higher price than the market currently accepts for the genre.

If the figures aren’t adding up, the temptation is to be so smitten with the project the publisher ups the estimated sales to make the figures work. As AUP publisher Sam Elworthy wryly remarks: “A costing is only as good a guide to profitability as the amount of realism that goes into a sales projection.”

Publishers also have to factor in the freebies – for years publicity has been generated by review copies, so that’s forty or more for a mass market book, perhaps 20 for a specialist one.

Here are two different estimations, one for a black and white text and colour cover paperback such as a novel, the other for an informational nonfiction book with a mix of colour and black and white photographs.

Note: the examples given are purely hypothetical.

So what is the scenario for booksellers in all this?
Illustrated books: If the bookstore sells 1900 illustrated books at the base price of $56.52 then that is $107,388 gross revenue.

Less the cost to the bookstore of these books, 1900 books ($56.52) at 55 percent equals $59,065. So that leaves a gross profit (before wages and other costs) of $48,323.

So Booksellers share of the pie at $48,323 is larger than the publisher’s $29,621(which is also before wages and other overheads).

Non-illustrated books: If the bookstore sells 1900 non-illustrated books at the base price of $34.77 then that is $66,063.00 gross revenue.

Less the cost to the bookstore of these books, 1900 books ($34.77) at 55 percent equals $36,338.74. So that leaves a gross profit (before wages and other costs) of $29,724.26

Booksellers take $29,724.26 to the publisher’s $19,477.30.

Some booksellers may be surprised to learn that their share of book revenue is larger – and in some ways they take less risk as a proportion of the book stock they carry will be sale or return.

Publishers risk taking is on their estimation of a book’s sell through - an over calculation on number of books ordered and an under calculation of the number eventually sold means a loss.

As Sam Elworthy concludes: “In the costing, the creative heart of publishing bumps up directly against the mathematics of costs and revenue.” One step removed, it is the same for booksellers.

*An Introduction to New Zealand Publishing, released annually by PANZ, now includes 19 different short chapters on all aspects of book publishing including selling, written by different trade authorities.

If you have wannabe authors come in store looking for information, this is a comprehensive and easy to read guide for them.

For booksellers it also has full contact information on publisher members of PANZ. Cost is $25 less 30 percent discount.

Packing and posting is free for orders of more than five copies. Email Sophia Broom on sophia@panz.org.nz or call her on 09 4775594.

Article written by Jillian Ewart, writer for The Read.