Economic Fundamentals That Authors Sometimes Misunderstand
When I wrote recently about how it’s not logical to compare your book to the price of a cup of coffee, most of the feedback was positive. What I saw among the not-so-positive feedback out there was a fundamental misunderstanding of economics among indie authors.
You know what, though? I am super here for you guys. I aced economics. I’m great at math. I’ve worked for major corporations and won sales competitions. We’re gonna hash this out, you and me.
Fundamental Misunderstanding #1: That writing and self-publishing is a “job.”
Calm down, I’m not saying that it’s not work. It’s work. But it’s not a “job.” A job is something that someone hires you to do because they have a need for your skills. They exchange your skills for a salary. You deciding that you want to write a book and publish it is an entrepreneurial decision, not an acceptance of a job. If someone asks you to write a book and offers to pay you for the time you spent writing, that’s a job.
I’m not splitting hairs here: there is a world of difference between having a job and starting your own business, which is essentially what becoming a writer is as far as using it to gain real-world currency. Starting your own business requires a lot of risk management and forecasting, and writing a book in a market that is already saturated with books is like deciding to open a coffee shop in a town that is roughly 80% coffee shops already. While it’s by no means impossible to do well, you have to be smart about it; if you open up a Starbucks clone on a block where you’re flanked by three official Starbucks and five other Starbucks-like shops, you’re not going to stand out and people will probably keep visiting the same shops they already frequent.
Your potential customers are already caffeinated as hell, so if you want them to come to your coffee shop, you have to do something special. (Hint: this is a metaphor. About books. And reading. We, the readers, have absolutely no shortage of books waiting for us to read them–there are literally millions of books out there.)
Because nobody has hired you to write this book (probably), you have to make smart decisions and understand the market or you won’t see any return on your investment. That’s why it’s important to understand that being an indie writer is not a job. It’s an investment, it’s a business, it’s work, but it’s not a job.
Fundamental Misunderstanding #2: Your book’s literary worth and the work you put into it are equivalent to its worth on the market.
I can go out right now and buy two different books and pay different amounts based in no way on their literary worth. If I want to buy, for example, a brand new hardback of a pop fiction title that may or may not do well and a brand-new mass-market paperback of a renowned literary classic that has been studied the world over, I’m going to pay far more for the pop fiction title. I might spend exactly the same amount on trade paperbacks of a pop fiction title, a science fiction title, a literary classic, and a romance novel. One of those authors may have spent ten years writing their book; another, six months. It doesn’t matter.
Large publishers invest thousands of dollars–sometimes tens of thousands, sometimes hundreds of thousands–into titles that they want to publish. They invest in editors, in cover art, in professional marketers and advertising, in space in bookstores and overprinting so that they can make a book look popular from day one. Then they calculate what they need to make back, how many titles they think they will sell at various price points, and do some complex math that hopefully brings them out on top. I’ve had some dubious thoughts on whether they’ve reallllly done their research about price points, but otherwise, I absolutely respect the fact that large publishers have to charge more than indie authors because they have put a much larger financial investment into each title.
None of these price points are based on:
- how good the book is
- how long it took to write the book
- how hard it is to write a book
- the literary value of the book
Instead, price points are based on things like:
- the amount of money invested in acquiring and publishing the book and the amount needed to get a good ROI (return on investment)
- the potential demand for the book and how many copies might sell
- competitors’ prices for like items
- what the market will bear in terms of pricing for that type of book
When it comes to indie authors, the amount of actual money invested into titles comes up pretty low compared to professional publishers. (Yes, I’m using the word professional there on purpose–if you have published one or two or even ten of your own books, you still don’t have the experience of people who have been in the business for decades. That is their established profession; you are a start-up. That’s not a commentary on how well you do it but on the experience you have.) If you really go all-out on design and editing, you might sink a grand into your book? I don’t think most indie authors spend even a thousand dollars on a title. Tell me if I’m wrong, but I get the impression that the DIY method usually comes with a small budget.
Which is great and scrappy and brave, but it’s something you have to take into account when you’re setting your price point. If you’re relatively unknown, demand for your book is probably going to be on the low side by virtue of the fact that most readers haven’t heard of you. Your monetary investment is low. For an unknown author who self-publishes, the risk for the consumer is much higher than buying from established channels, so the market won’t bear as high of a price. I’m not saying you have to charge $0.99 because of all of these factors, but I am saying that you won’t be able to make the same kind of money that traditionally-published books make right off the bat.
Fundamental Misunderstanding #3: Each individual copy is your book and thus has intrinsic worth.
Another thing to keep in mind is that the authors of traditionally-published books do not make $10 for every ebook they sell. They make maybe $1-2. A lot of the cost of a tradpub book is overhead, which most indie authors do not spend in even nearly the same amounts as professional publishers.
How is this able to work? For some authors, it doesn’t–they have to keep their day jobs. There aren’t enough readers to read every book. For other authors, it’s because they sell a crapload of copies of their books. The name of the game in book sales is volume and pricing your work too high prohibits high-volume sales.
Remember for a moment that “too high” has to do with your actual work compared to other works like yours, not compared to all other books. If you write paranormal romance, which is a pretty saturated area of publishing these days, you’re going to have a hell of a lot of competition from both big publishers and indies and you will need to price competitively or lose sales to your competition. If you have a niche market, on the other hand–you write some kind of specialized book that is in demand but isn’t oversaturated–you will have less competition and can probably charge more for your books.
The trick is to find that sweet spot that enables you to sell a lot of copies and make the sales worthwhile. This can be difficult! But if you’re hanging onto the idea that each copy of your book is worth x amount of money, you may actually be shooting yourself in the foot a little. Let’s say you price your book at $4.99 and you sell 100 a month. What if you dropped the price to $2.99 (a price point that Smashwords says is a sweet spot for indie sellers) and you sold 200 copies per month? Or 500 copies? You’re making more money overall at the lower price point if that’s the case.
Don’t get too focused on what one copy of your book is worth; think instead about how all of the copies that you can sell can work together for the greatest overall benefit.
Fundamental Misunderstanding #4: Because what you make is art, the regular rules of supply and demand aren’t applicable.
Just a big “nope” on this one. The rules literally apply to anything that customers can choose to pay money to acquire. If you can’t substitute your ideas about selling books to selling coffee or iPhones or cars or microwaves, then they’re probably not good ideas.
For example: the “I put a ton of time into making this so it’s worth more than x” idea. Time and effort don’t necessarily translate into your product being worth more. Trust me, I know this firsthand. I used to make jewelry as a side business. (I still make jewelry but I was much more entrepreneurial about it in the past.) My specialty is chainmaille jewelry, which was much rarer to find when I started making it about twelve years ago. I was passionate about making sterling silver chainmaille jewelry, specifically, and I used some of the best sterling silver materials available on the market to get the highest-quality product that I possibly could.
Making maille takes time. There are lots of formulas out there and lots of indie artists who will tell you that you need to charge x amount to make sure that you get compensated for both your materials and your time. My work was good–I invented my own maille weave and I got my work into local galleries. The problem was this: my less expensive work sold well but the more expensive work sold poorly. Even for simple designs, the work involved and the materials involved meant charging over a hundred dollars, sometimes multiple hundreds of dollars, for a piece of jewelry. For that kind of money, chainmaille jewelry isn’t exactly in the highest demand.
I realized a hard truth: I couldn’t afford the investment needed to sell my jewelry at a price point that would generate sales. I may not have been able to reach that point at all without seriously underselling my labor. I could tout the quality of my jewelry, talk about the value of the materials and how much time went into making the pieces; at the end of the day, the desire to own handmade sterling silver chainmaille versus having a hundred dollars or more in one’s pocket didn’t pan out.
It’s even harder now, with Etsy generating substantial competition and even steeper prices on materials. I still love making maille, but I can’t make a living off of it even if the pieces are “worth” the price I’d have to charge. They’re worth nothing in terms of profit if nobody will buy them.
Fundamental Misunderstanding #5: As a private citizen, your behavior/thoughts/opinions don’t or shouldn’t affect the sales of your book.
Do you know people who won’t shop at Walmart or eat at Chick-Fil-A? Did you see how apeshit people went when Target decided to de-gender their toys? Where and how customers spend money isn’t an unemotional transaction; as an entrepreneur trying to sell a product, you are the brand and branding matters.
I’m not saying, obviously, that everything that might result in a loss of sales is the wrong thing to do. I think Target’s non-gendered toy policies are morally sound–they don’t hurt anybody (despite the wailing of dissenters, literally nothing bad happened to them) and they help a lot of kids. In a case like Chick-Fil-A and the gay marriage debacle, though, their decision to go public with their opinions helped nobody and hurt a lot of people. Even though a fierce base of supporters rallied around Chick-Fil-A, the fact that Dan Cathy of Chick-Fil-A walked back his involvement in the gay marriage debate and they (mostly) stopped giving to anti-gay organizations speaks volumes for how it affected their company. If Cathy speaking out against gay marriage had done mostly good things for them, they would have held their ground. They didn’t.
It comes down to choosing your battles. There are things I would absolutely stand up for regardless of how many people unfollowed me as a result; I would stand up against behaviors that hurt people, like racism and sexism. I would not, however, want to take customers to task for doing things that customers are totally allowed to do–things like writing negative reviews, criticizing the price of my book, or criticizing my very public behavior. As consumers, we’re all permitted these freedoms for any products we consume; I may not love it, but I have to respect it.
Everyone decides to spend their money in complicated ways. It’s not as simple as “I want this, I will buy it.” People spend money based on their values and morals as well as based on desire and demand. It’s worth taking the time to cultivate a professional experience to interact with customers versus a private experience to interact with friends and family.
At the end of the day, if you want to profit off of your books, you need to treat your writing like it’s a business (not a job).
You can write for fun and do whatever you want, but when money comes into play, focus has to shift toward customers and demand. The only way to make money off of your writing is to make customers want to buy your product; to do that, you have to think of their wants and needs, not yours. You might find that your needs and their needs are not compatible; if that happens, and you choose to focus on your needs, your book sales will very likely stagnate. You may have to find another line of business or keep your day job.
It’s not personal. It’s just how business works. There isn’t enough money and there aren’t enough readers to keep every writer afloat.
I hate being the bearer of bad news, so I’m going to end this article with a kitten GIF. Tell me your thoughts in the comments–I know you have ’em.