Part of a publisher’s work, whether directly or via a consultant or employee, is locating the cheapest place in the world for getting work done, whether printing or design or other technical work.
Apart from those inherent in the above, there are two other main challenges here:
- Comparing the quality of the output from different suppliers is relatively easy in some areas (e.g., print!) but relatively difficult in others (IT/ software)
and
- Trying to avoid dealing with unethical countries and companies; naturally, every country, company and human being in the world has ethical challenges – and even after you have decided which the most unethical in the world are from your point of view, there are all kinds of shades of grey, in different aspects of business.
All the above takes time – which is money, as we know!
But after all this is done, here is a real example of a book I am about to send to a printer in a certain country, which we will call X, and we will call its currency CU, imagining it to have a decimal system
Unit cost for printing each book = CU 11.40
Net Pr: CU 20.00
Retail Pr: CU 59.90
I refer here to the retail price in the country concerned, because the market of that country, being relatively poor, can’t bear prices higher than that.
Everyone with any experience of publishing will be able to tell instantly, that there is very little money to be made in this market – but, as the book is being printed here, one may as well try and at least recoup some of the cost of printing the book there by selling the book there because, if nothing else, it provides scale – and scale is, sadly, very important in business – the more copies of a book one prints, the cheaper it is per copy but of course from a publisher’s point of view increases the risk taken with the book, because the total outlay on printing is larger.
But let’s take that example and see the whole business transaction from start to finish, from the local customer’s point of view.
That customer, on buying this book, will pay CU 59.90 to the shop.
Of that, only CU 20.00 will reach me, the publisher (the rest will go to the distributor and the shop as their commission for selling the book).
From that CU 20.00, I will have paid CU 11.40 for printing the book, leaving CU 8.60 for me as the publisher.
From that CU 8.60, I have to pay the author’s royalty (usually 7% of the retail price, but with bestselling authors perhaps 10%+), as well as all the costs of cover design, book packaging, book-transport, publicity, marketing, review copies, damaged copies, administration, legal, accountancy, salaries, administration and office expenses.
That is why publishers lose money on almost all books they publish.
You may of course rightly protest that this example is very limited because any publisher should have, if at all possible nowadays, also e-book sales and foreign sales.
So, let us take those one by one.
E-books: The fact of the matter is that most books sell niggardly amounts in terms of e-books. Certainly, that is the case with new authors, and new titles! – though the numbers are rather different for classics and bestselling authors; for details, please see my piece on that subject, at https://pipparannbooks.com/why-amazon-is-essential-but-relatively-useless-for-new-books/
Foreign sales: Yes, a publisher can and should make money on sales in countries other than the country where the book is being printed. However, it must be kept in mind that everything is more expensive – much more expensive! – in these countries. In other words, the costs of book-transport, publicity, marketing, review copies, damaged copies, administration, legal, accountancy, salaries, administration and office expenses are much higher in countries other than the country where the book is being printed. So the publisher needs to be able to sell a relatively large number of copies in foreign countries in order to survive, let alone actually make any money.
Overall, the fact is that publishing is a low-margin business.
It is also a long-cycle business.
First, the background costs need to be covered. Apart from office, admin, travel, hospitality and related expenses, a publisher invests time in understanding and trying to keep up with global trends in the subjects regarding which his books are to appear, but also in areas such as printing, inks, paper, boards (for hardback covers), binding, IT, global freight, distribution, marketing, and finance. It also part of the publisher’s work to create and nurture relationships with authors, editors, designers, book packagers, printers, IT consultants, marketing and distribution consultants, and professionals in the social media, advertising, the book industry, the book review industry, the book events industry, and so on.
Then come specific costs on each manuscript – proofing, developmental editing, cover design, book packaging, printing, publicity and PR, postage/ freight for the books to get to various destinations (bookshops, newspapers, magazines, media houses, reviewers, book competitions, book festivals and other events). These costs can start years before a manuscript is received, usually a year before the finished book hits the bookshops.
And, after that, due to the specific nature of the industry, it can take anything up to 18 months for the money from the customer in the bookshop to get to the publisher’s account in the bank.
Given therefore that publishing is low-margin and long-cycle, publishers in fact live entirely on the basis of any best-sellers they have, where the scale of success means they make some money.
In other words, publishing is not the best business to be in from a business point of view. Unless one focuses only on bestseller-type books (by celebrities of one sort or another). But that kind of publishing is only for those who (a) are in publishing solely to make money, and (b) have huge amounts of capital to put into paying the massive author-advances that are necessary, and are willing to take the huge bets that are necessary on printing tens of thousands of copies.
So, most publishers, and certainly independent publishers such as myself, enter publishing, and remain in publishing, only because we love books.
And because we believe in the power of books to change individuals for the better – and therefore the world for the better.