Return on Investment is a concept for measuring the amount of profit compared to the amount of cost in a business endeavor. Basically the process answers the question: What percentage of profit am I making in this enterprise?
When applied to self-publishing the question of ROI involves a number of cost items that can be grouped into two large areas; production costs and marketing costs. Production costs include such items as the artwork, cover design, book design, book layout and typography, editing, ISBN number, copyright registration, and printing. Marketing costs include the cut taken by a marketer such as Amazon, creating a website, creating a blog, sending out review copies, advertising, hiring a publicist, and so on. The “and so on” is added because the marketing element can range from almost zero marketing to hiring professionals to promote a book. The “return” side of ROI on a self-published book is how much the book nets in sales minus all costs.
Unfortunately, I’m not going to be able to provide the magic answer as to how to garner a huge return on investment on a self-published title. There is a universe of variables here that can’t be generalized into a valid model. And I’m not even going to be able to provide a viable model of what sorts of costs might be involved in production and marketing. Also, there are a gazillion variables here as well and I’ve been able to find very few quantitative answers to these questions through an Internet search. What I will do here is provide an overview of the elements of cost found in self-publishing a title with some very rough ballpark figures for some of the elements.
The goal of this entry is to alert self-publishers to this very important concept of ROI and provide them with some sense of how to go about estimating it. My sense from reading online publishing groups is that many people dive into self-publishing without any quantitative consideration of whether they are going to make a profit on their book. Mea culpa, as well.
I’m hoping that the description of my self-publishing experience will be of value to those who are considering taking the plunge. Let’s take a look at some of the elements that make up the ROI equation.
Production Costs 
Online searches provide little quantitative information about production costs. One site mentioned that it is possible to spend $20,000 self-publishing a title. Think about how many books, with what profit margin, one would have to sell just to recoup that amount. Other more realistic cost figures from a publishing group poster, whom I feel is quite credible, suggests a cost in the $2,000 to $3,000 range. Even with zero marketing costs, if a person earned a handsome net profit per book of $10 per copy, one would have to sell 200 to 300 copies to regain the production investment. The fore-mentioned poster suggests that most self-publishers sell between 500 and 3,000 copies of a title.
Trying to hone in to get a more specific idea of costs, let’s take a look at some of the elements of self-publishing and their costs – at least a guesstimate of their costs.
Artwork costs arise from cover art or photos, interior photos or illustrations or charts, and so on. Searching the publishing groups may result in figures on costs for this area, but the numbers are likely to be all over the place. I’ve heard as much as $800 and up for cover art. Interior art might be a thousand or more. These figures may include cover design, or may not.
Book design and layout may come as one cost or separately. For fiction or mostly text titles these costs may be low or nonexistent. However, for graphics-oriented books prices for these services may be healthy. On one book prototype that I did, I spent a couple of hundred dollars for a person to set up the book in InDesign.
Editing can gobble up dollars. According to publishing list posts, most editors charge on a per word basis, and that can add up. Even if one is a proficient writer and good grammarian, it is difficult to be objective about one’s own writing and to catch the mistakes that are bound to occur. This is an area that is probably one of the most difficult to work around from a budget standpoint. I’ve seen reports where one could expect several thousand dollars for editing on a long manuscript.
Costs for ISBN and copyright registration are necessary, but not economically overwhelming, probably less than 100 dollars.
Printing costs can be high depending on the situation. When I explored self-publishing a book several years ago I found that I could get a very good price on printing working through a print broker. The cost per book would be seven dollars but to get that good price I had to order 3,000 books for a whopping upfront cost of $21,000. Print on demand (POD) has lessened that blow to the point where printing costs may be only a few hundred dollars as books are printed as they are sold and the printing costs are deducted from the selling price of the book. For the frugal and budget conscious, POD is the way to go.
Marketing Costs
There are two broad categories of marketing costs; those which are geared to selling the book, like advertising, and those whose intent is to get the book to become well known – publicity. Because the width and depth of marketing elements covers universes, and requires an attendant breadth of knowledge about those elements, I’ll just touch on a few of the more common elements here.
The most direct chunk of marketing costs is the discount that must be offered to resellers of your book. If you purchase copies of your book and sell them yourself you get the difference between the sale price and the printed price – your cost of the book. If you sell through a reseller, such as Amazon, you get the difference between the sale price minus the reseller’s cut and your cost. The difference between sale price and your cost is sometimes called your profit. However, there are production costs, discussed above, that you have to incorporate into the profit equation.
Other marketing costs need to be incorporated into the profit equation as well. Pundits recommend that you market your book through a website. You can build one yourself, if you have the skills, or hire one built, probably starting at about a thousand dollars for a relatively simple site. Pundits suggest that you have a blog to promote your book. Again, you can do your own or pay to have someone build one for you. Perhaps another five hundred to a thousand dollars.
Some self-publishing “experts” recommend sending out many copies of your book to reviewers; others see little value in this. Consider your cost of the book plus postage plus the fact that the book may not get reviewed plus the fact that the review may sell no or few copies of your book and you may decide that sending out review copies may not be a good return on investment.
Advertising – ka-ching goes the cash register. First question: Where do you begin? Second question: Whom do you get to do the advertising for you – and what will it cost? Even small advertising “campaigns” can be expensive as you will be paying for both the expertise of advertising professionals and the cost of the media through which you advertise. Ka-ching. So maybe no advertising, at least not until your book generates some revenue.
Publicity involves the long-term effort to get your book talked about and well known. Publicity involves professional publicists, unless you know how to do it yourself, which most of us don’t. Ka-ching. A grassroots publicity channel has opened up to the little guy through “social media,” more commonly known as Facebook, Twitter, etc. If you are savvy regarding this technology, it makes sense to take advantage of it – and the cost is right.
The Whole Ball of Wax
If you take the time, effort, and energy to track down accurate quantitative dollar amounts for all of the production and marketing elements mentioned above, you will be able to run a pretty accurate computation of return on investment for your self-publishing efforts. Realistically, this task is pretty much an impossibility. So how can you get an idea of how ROI works? Perhaps a rough example would be helpful.
Return on Investment: A Case Study
A case study is an analysis of an event, in this case. Since specifics on the various elements that must be considered to calculate ROI are sparse, this case study, even though it won’t generalize well to all self-publishing, may be helpful. The case study involves my recent self-publishing of North Cascades Beautiful: An Artist’s View. I’ve written about this book in an earlier post.
Production Costs
As I’ve mentioned in a previous post, I am fortunate in that over time I’ve acquired many of the skills involved in producing a book. For that reason my production costs for North Cascades Beautiful are much lower than they would be for someone without such skills who would have to hire the work done.
Artwork in the book was completed for the most part before the book was begun. I have been creating the scenes used in the book for the past six years. I only had to create a number of maps and the front and back covers.
Book design was also not a problem as I had created a prototype of a book that I previously had commercially published and I modified that design for this book. I found a great book on using typography with InDesign which helped immensely with the actual page design and layout.
Editing was my major expense area. Although I had created a prototype book via Blurb that resulted in good readability and very few typos, I felt that this book would benefit from professional editing. A woman who had worked for me as a technical writer in a high tech environment edited the book for the very reasonable sum of $330. I felt very fortunate to have her as a resource.
ISBNs I purchased in a block of 10 for $275, so the cost of the ISBN was $27.50 and electronic, online, copyright registration ran $35.
Printing proof copies from CreateSpace were the only other production costs that I incurred. Two proof copies cost me $50.
Thus the total out of pocket production costs for my book was about $450. Based on what I’ve been able to glean from Internet research, this is a paltry sum.
Marketing Costs
The most viable marketing channel that I found was to print via CreateSpace and sell through Amazon.com. Because my book of 190 pages was about half color pages of artwork the printing cost ran about $14 per book. After punching in various list prices on Amazon, I discovered that I would have to price my book at $29.95 to make a profit of $3.82 per book. I had hoped to offer the book at around $25 and make a profit of about $5 per book, but that didn’t work in the Amazon formula. Thus the chunk that Amazon takes for marketing the book on their website is the largest uncontrollable cost in self-publishing using this approach.
Website promotion of my book was no problem as I have three different sites up through which I sell my artwork. All I had to do was add the book information to the site. So no out of pocket costs here.
A blog I did not have, so I spent three days setting up a WordPress blog as part of my royehughes.com website. Time is money, but there were no monetary costs involved in this.
Preview copies of my book cost me about $21 each to send out. My cost on the books are about $16, including shipping costs to me, and postage to mail the books out is about $5 per book. I ordered 10 copies from CreateSpace and mailed them all out. Three copies went to folks who reviewed the book on Amazon, with no noticeable effect even though all reviews were five star ratings. Two copies went to Midwest Book Review, from which I’ve had no word. The other copies went to various and sundry “good shots” which
also haven’t panned out. My conclusion is that book reviews do not result in a
good return on investment. If you can find a way to write articles for magazines or newspapers where you can slip in mention of your book, you may get paid for writing these articles as well as subtly promoting your book.
Advertising I have not delved into. I believe that any costs associated with advertising would not be cost effective. I did check the prices for display ads in a local hiking magazine and found that a small ad would cost several hundred dollars for one issue. I’d have to sell a couple of hundred books to recoup the cost of the ad and I sincerely doubt that that would happen.
Publicity is much cheaper than advertising if you don’t resort to hiring a professional to do the work for you. But publicity can also be a black hole into which you send much information about your book and receive not even an echo back. Before launching a publicity blitz, or even a publicity whimper, you should prepare a news release and an information sheet about your book. Again, these are things that I could do without having to hire the work out. I created a summary flyer in InDesign that highlights the “selling points” of the book, the artwork, and the author. Saved in a PDF format,
this flyer is a great vehicle for passing information along via email with the option of the recipient printing out a color copy of the flyer at no expense to you. The news release is pretty much a boiler plate of information about the book, similar to the info in the flyer.
Email is a wonderful mechanism for distributing information, but in many cases you have to wonder whether the information got to the intended recipient and whether it was read because you often get no response. You know the sound on a telephone line when someone has hung up? That’s the feeling you get after sending out email to addresses that you have found for journalists, radio show hosts, etc. and receiving no reply. I don’t know if the reason for this is that the message is not delivered, if the addressees are overwhelmed with this sort of information and trash it, or if people are just downright rude when it comes to email etiquette.
I probably sent email to 30 addresses including writers at newspapers, radio and television stations, websites, magazines, art reviewers and critics, and any other relevant entity that I thought might be interested in my book. The results were less than luke warm. One newspaper writer who had done an article on my Glacier Park book replied that she would put a blurb in her Friday column; I have no knowledge if this happened. One bright spot was the response from magazines. I contacted three local hiking and outdoor magazines and pitched a story about how and why I wrote my book. One contact resulted in a column that I wrote that will appear after the first of the year and the other two resulted in “this sounds promising, we’ll be in touch” replies.
Otherwise nada. Except…
Libraries responded nicely in most part to my emails. My wife, a librarian, said that libraries were now buying through Amazon as well as through traditional library purchasing channels. I emailed five local library systems and got orders for a total of 16 books from four of the five. They were interested in a local topic by a local author. Yes! Some success.
As a matter of fact, at this point I have sold 23 books in a little over two months and libraries purchased 16 of those. Of the rest, my wife and three friends each purchased one each and another friend purchased three. A person on an online hiking list that I post to reportedly bought the other one.
At $3.82 profit per book, I have recouped $87.86 of the $450 in production costs and $160 in preview copy costs that I have incurred. If my math is correct, I am still over $500 in the hole on this endeavor. I have to sell another 130 books to break even.
How’s that for return on investment for you? Perhaps in another year I’ll show a profit, if I’m lucky.
Conclusions
The moral of the story of ROI and self-publishing is that you had better have motives other than making a profit before taking on a large, labor-intensive project such as self-publishing a book. If you don’t have the necessary skills to do all, or most, of the work yourself, you best rethink your project. Even with my ultra low production and marketing costs it is questionable whether I’ll wind up making a profit on this book. I certainly won’t get a decent return on my investment.
Although it is probably impossible to accurately research all of your production and marketing costs before embarking on your book publishing project, you should at least make a list of the elements that you will have to consider and make a “guesstimate” of what each might cost. Also, as you consider the cost of a given element, such as artwork, you should calculate a “mini-ROI” for that cost. In other words, figure out how much the element will cost and then figure how many books you will have to sell to recoup the cost. The results of this calculation may cause you to re-evaluate whether to consider another approach or to skirt that element all together.
All this seems like a lot of work, peering at smoke and mirrors, and potential frustration leading to perhaps no profit or return on investment whatsoever.
So, then, why do it? I love the fact that I have created something that will outlive me. I love holding my book in my hands and turning the pages and thinking that this is mine, all mine. I very much enjoyed doing the artwork and I enjoyed writing the book and putting it together and birthing it. There’s a lot of ego stuff there. So be it. To me it’s worth the effort.
