Mo’ Indie, Mo’ Money: Can You Make a Decent Income by Self-Publishing?

Yesterday, I made a bold statement. I claimed that I’m happier self-publishing my debut novel, The Triumphs and Travails of Talisman Turner, than I would have been if I had found her a home at a traditional publishing house.

After comparing self-publishing and traditional publishing on variables such as print turnaround, author control, shelf life, publishing priority, industry evolution, and income, I concluded that self-publishing stacked up better every time.

It’s that last variable–income–that I really want to concentrate on today. Is it possible to make more money self-publishing your novel than traditionally publishing it? If you’re a midlist author, the answer appears to be yes.

Let me make one very important caveat. If you’ve written a potential bestseller, one which has the full force of a traditional publisher’s marketing department behind it, there is no way you are going to make more money by self-publishing this book.

Almost every blog on self-publishing has referred to success stories like Amanda Hocking, John Locke, and JA Konrath. But these authors are making money with several titles under their belt. They have sold millions of books–NOT one million copies of a single title.

Traditionally publishing, with its vast array of distribution networks, has. In 2009, they sold a million hardcover copies of Nicholas Sparks’s The Last Song as well as a million copies of James Patterson’s I, Alex Cross. (Figures provided by Publisher’s Weekly.) You can argue that half their job was done for them. Both Sparks and Patterson are big names with established audiences.

But traditional publishing also sold more than a million copies of The Help in 2009 (and again in 2010). The Help was a debut novel written by Kathryn Stockett, who didn’t have a built-in fan base like James Patterson.

If you have written a book with the mass appeal of a Patterson thriller or a Sparks romance, you’re not going to experience the same level of book sales (or profits) by self-publishing it.

But if a traditional publisher isn’t backing your book with a large sum of marketing dollars–if you’d be considered a midlist author–you’ll probably make a better income by self-publishing. Here are 6 reasons why:

Self-Publishing Income and Print Turnaround

It takes an awful lot of time to turn a completed manuscript into a printed book. First there’s the submission process to literary agents. Then the literary agents have to submit to editors at different publishing houses. Once a deal is negotiated (preferably one involving a massive bidding war and Colin Firth), the manuscript will be structurally edited, copyedited, and proofread. The cover has to be designed and approved; marketing and publicity departments have to settle upon book launching strategies. These processes can take more than a year, possibly even two.

In these lean economic times, publishers are doling out smaller and smaller advances. You probably won’t get a very large check from them, not at the beginning. (Since an author’s advance is typically doled out in thirds, the first check could be really tiny.)

Then you still have to wait 1-2 years before your book hits the market and earns back its advance, before you receive a single additional penny. If your book is yanked prematurely from the bookstore shelf, your bank account won’t see much of an addition at all. Keep in mind too, that royalty checks are mailed at a slower than snail’s pace–once every six months.

What if you self-publish? Your finances could see a nice swell right away. Once you’ve polished your manuscript (and hopefully had it proofread by a professional editor and had a cover designed for it, again by a professional), you can sell it on online through Amazon, Barnes & Noble and Apple, to name a few.

You don’t have to wait two years for the opportunity to make a sale. You don’t have to wait six months to see your royalty check. After taking into account expenses such as a website, professional proofreading and a professional cover, you’ll not just be earning money, you’ll be making a profit.

In the self-publishing model, your book could be earning money, while in the traditional publishing model, it would still be on an editor’s desk, waiting to be proofread. (And if your editor gets fired or decides to leave the publishing world altogether, good luck getting your novel on a bookstore shelf at all.)

If you’re a prolific writer, your odds of making money multiply. Within the span of two years, you could have four books lining virtual shelves, four ways to earn a royalty check. While in the world of traditional publishing, your first book might not even be finished at the printing press.

Once they did print your first book and it did reasonably well, a traditional publisher would print the new books you’d written at regular intervals, typically one a year, even if you had all four manuscripts ready and waiting to go. You might have to wait 4-6 years to start earning an income from all four of the books you had written. But in the self-publishing world, it bears repeating, you could earn money from all four books as soon as you’ve launched them online.

David Gaughran, of indie resource Let’s Get Digital, and indie author of A Storm Hits Valparaiso, shares his thoughts:

But what if I hadn’t self-published? Where would I be now?

I had 300 rejections (including those that didn’t respond) from agents in Ireland, the UK, and the US, as well as a handful of rejections from editors. I had lots of partial requests, many full requests, and even got as far as the phone call twice, but always fell short.

However, let’s cut this alternative scenario some slack. Let’s assume that I dusted myself off, continued to query A Storm Hits Valparaiso and, after three months, finally caught a break and landed an agent.

I’m sure the agent would have wanted some changes, so let’s assume we hammered those out over another three months before going on submission.

I severely doubt that an MS which attracted 300 rejections – many focusing on the difficulty of selling a historical novel from an unknown, unpublished Irish writer set during the South American independence wars – would attract a firestorm of attention from publishers, but let’s assume I got real lucky and landed a deal within six months. I’ll also be generous and grant this alternative me the average advance: $5,000.

In this alternative scenario – which is the best possible outcome on the spectrum of realistic possibilities, requiring a series of incredibly lucky breaks – I’ve also made around $5,000.

But wait. I don’t even have all that yet. I’ve probably only got a check for a third of that, and 15% is going to my agent. I would likely have banked just over $1,400 by now (or, more likely, be waiting on the check from the publisher or the agent).

My agent and publisher would be advising me to start blogging and set up a Twitter account. With the level of marketing I’m likely to get (on a book the publisher bought for $5,000), the promotional burden is going to fall on my shoulders.

The book wouldn’t be released until Fall 2013 (when I receive the final third of my advance, the second check being on acceptance of the manuscript), and I would most likely never see another penny from it either. I might catch a break and make a few grand from foreign rights sales, but that wouldn’t be for some time.

And that’s the best case scenario.

It’s much more likely that I would have failed to get representation for A Storm Hits Valparaiso, let alone a deal. I probably would have given up, trunked it, and continued to hammer away at something new.

I’m pretty determined, but the query grind was getting me down. I don’t think I could have pumped the book out that quickly, and probably wouldn’t have started querying again by this time. In fact, it might have been well into 2013 before I would have been ready.

And, of course, A Storm Hits Valparaiso would simply have gathered dust, rather than being my top-seller in 2012.

I think I made the right decision.

I think he did too. In his first year, he’s sold almost 3,500 copies of his historical novel and earned over $8,000. For more details, here’s a link to the full article, Was Self-Publishing the Right Decision?

Self-Publishing Income and Author Control

When you self-publish your book, you get to make the decisions which would have been under the purview of a traditional publisher. This includes setting the price your book will be sold at. Currently, the way things work, you can decide how much an online retailer like Amazon, Smashwords, and Barnes & Noble charges to the consumer. They decide how much of that price you get to keep–and their royalty rates are a lot higher than what’s found in traditional publishing. (Specific percentages are listed in the last section, Self-Publishing and Royalty Checks.)

The best part about being in control of pricing is that you can experiment with different prices until you find the one which maximizes your earnings.

Oddly, enough, in some circumstances, that price might be $0.00. A few months ago, Amazon launched a program called Kindle Direct Publishing Select (KDP Select). By granting Amazon the exclusive rights to sell your ebook for a period of three months, you could, among other things, charge $0.00 for your book for a maximum of five days during the three month period.

Why would anyone want to give away their book for free? How can you make any money with this strategy?

You don’t. But thousands of free downloads gave self-published ebooks a boost in Amazon’s algorithms. Indie authors got a lot more exposure on Amazon’s website than before–all at a cost of $0.00 to them. As a result, indie authors saw huge spikes in their sales during the period following their free giveaway days. Note: Amazon has since changed their algorithms, so this strategy isn’t as effective as it once was.

If you’ve written a series of novels, giving away a book for free can still increase your sales. If you give away the first book for free (or at an introductory price of 99 cents) more readers are likely to take a chance on you. If they love what they’ve read, they will gladly pay for the remaining books in your series.

A lot of indie authors price their books at $2.99 because a) it’s the lowest price at which Amazon pays out a 70% royalty and b) it’s low enough that readers will take a chance on an unknown author.

But some indie authors like Elle Lothlorien have discovered that higher prices actually increased their sales.

I thought I was conveying the message “Give this book a shot! At $2.99 what do you have to lose?” Instead, I think I had inadvertently turned my Amazon page into the equivalent of a dubious used-car lot, with blinking neon lights screaming “SALE, SALE SALE! EVERYTHING MUST GO!”

…in mid-October I raised the price of THE FROG PRINCE to $3.99. I immediately saw a jump in sales. And when I say immediate, I mean overnight. Within a few days the book had leap-frogged for the first time onto two Amazon Top 100 lists. And even though half of the month had already passed, I sold 158 copies for the month of October.

At the beginning of November, I raised the price to $4.99. In November I sold 224 copies. I raised it again to $5.99 at the beginning of December, and that’s when the whole thing began to pick up steam.

December: 472 copies

January: 857

February: 862

March: 867

April: 746

May: 799

Keep in mind that by December I was charging $5.99 per book and keeping $4.19 per book. In January my royalties on Amazon alone were close to $3,500. Now, these aren’t New York Times best-seller numbers, but they’re comfortable, mid-list bestseller numbers.

(By the way, if you like romantic comedy novels with quirky, memorable characters, The Frog Prince is definitely worth a read!)

Free. 99 cents. $2.99. $4.99…or more. The choice is yours. You get to experiment until you discover what helps you make the most amount of money. If you traditionally publish, you don’t get any experimentation, only the agency model and an accounting system which favors publishers over authors.

Self-Publishing Income and Shelf Life

The primary way traditional publishing makes money is by selling books through bookstores. Bookstores have finite square feet and bookshelf space. They’re defined by limitation.

For a bookstore to earn profit, your book has to sell at a high volume right away. If it doesn’t, the store will just ship your book back to the publisher and fill the empty space where your book once reposed with another candidate.

Publishing houses know theirs is a hit-or-miss game. If your book doesn’t take off fast enough and is quickly yanked from bookstore shelves, they’ll just roll up their designer sleeves, and begin their search all over again for the runaway bestseller which will recoup their losses. Meanwhile, your publishing career could be over before it really was given a chance to begin.

If you self-publish your novel as an ebook, it’s a different story. Online stores have no square feet or limited bookshelf space to worry about. Online stores can afford to keep your book on their virtual shelves, even when it’s not an instant hit.

Your self-published novel can wait, undisturbed, until a reader takes a chance on it and falls in love with it. Then another reader, and another, and another…until both you and the online bookstore are making money. When you self-publish, your novel can be a late bloomer. It will have time to germinate, time to grow.

Take this example from Mark Coker’s guide, The Secrets to Epublishing Success, available for free through Smashwords, the indie epublishing platform he founded. Daily sales of indie author Ruth Ann Nordin’s novel, An Inconvenient Marriage, were slow for about five months before they started to soar.

Since Nordin self-published her book, An Inconvenient Marriage, it had time to sell at a “slow boil” before really breaking out–even becoming the #1 seller in Apple’s iBookstore romance category. (Coker surmised that the spark for the breakout “was a price reduction coinciding with the release of a new (different) title, and at least one of her other titles going to free.”)

A bricks-and-mortar bookstore wouldn’t have been so patient–it can’t afford to be. But an online retailer of ebooks can–and that feature is of substantial financial benefit to a midlist author.

Self-Publishing Income and Priority

One of traditional publishing’s biggest advantages over self-publishing is the sheer wealth of marketing and publicity resources at its disposal. But the biggest slices of that publicity pie are served to sure bets, industry heavyweights like Nora Roberts, Nicholas Sparks, James Patterson, Jodi Picoult, etc.

Take the co-op. Moon Rat, alter ego of a New York editor, explains:

Now it’s generally agreed that the one thing that is far, far more important than anything else in the world in selling a book is that said book be present and available in bookstores. Bookstores cleverly figured this out awhile back, and now charge for the privilege of increased bookstore presence. This is called co-op.

See the stacks of books on the “new fiction” table? Or the pretty Mother’s Day endcap display on your local bookstore’s aisle? All that placement is paid for by the publisher, and we compete for the honor of paying for those slots. There are so many books that want to be co-oped that vendors get to pick and choose.

Co-op costs an arm and a leg–on average, a dollar a copy. If you do some quick math, you’ll see that co-op basically eats up the entire marketing budget for any given book. Yeah, unfortunate.

What publishers tend to do is “borrow” marketing budget from the books that aren’t anticipated to “need” it, meaning books that won’t score co-op [emphasis added]. What YOU want is for your book to be one of the borrowers, not the borrowed from.

What this also means is the belt has already been tightened for marketing, and we haven’t even started yet…

In other words, to finance the marketing push behind the bestsellers, publishing houses often “borrow” the marketing budget from several smaller titles. As a writer, there’s very little you can do about it.

Traditional publishing houses also expect you to do some marketing on your own. The burden of developing a platform–that’s all yours. In addition to working on your next book, you should be writing blog posts, tweeting tidbits, pinning to your Pinterest boards, etc.

Of course, if you self-publish, you need to engage in all of these marketing activities too. The big difference is that when you self-publish your book, you get a higher percentage of the royalties. Same promotional efforts, but more money…

Self-Publishing Income and Evolution

If traditional publishers make you a priority and give you a worthy marketing push, they certainly have the knowledge and experience to turn your book into a bestseller. But their knowledge and experience, their whole business model, is based on the assumption that consumers will continue to buy their books primarily at bookstores.

However, the consumer landscape is changing. The market for ebooks is exploding. You’d think publishers would embrace this new source of revenue. They haven’t. They’ve been dragged to the ebook table by their Brooks Brothers collars. Hence, the agency model. JA Konrath succinctly explains:

[Under the wholesale model], the recommended retail price for ebooks was often about half of the hardcover price. So a $25 recommended retail price meant Amazon paid $12.50 for the ebook.

According to most contracts, the author made 25% of the net price the publisher received. So at the above numbers, an author would make $3.12 NO MATTER WHAT PRICE AMAZON SOLD THE EBOOK FOR.

Publishers also made more money under the wholesale model. But instead the Big 6 decided they wanted an agency model.

Authors still get 25% of net. But net has gotten lower in almost all cases.

With the wholesale model, net was $12.50. With the agency model, net is 17.5% of the list price set by the publisher.

So the publisher sells it for $12.99, the author makes $2.27.

Sell it for $9.99? Author makes $1.74.

Sell it for $5.99? Author makes $1.04.

Sell it for 99 cents? Author makes 17 cents.

The Big 6 don’t like low priced ebooks. It hurts their paper sales, and paper is the model they hold distribution power over. So once the agency model became adopted, the Big 6 kept ebook prices high.

With the agency model, authors made less money per unit, and sold fewer units.

Is this sinking in yet? The wholesale model was better for authors. It was also better for customers, who benefited from lower prices.

I don’t want an archaic, inefficient industry controlling the prices of the books I’ve written to further their own Machiavellian agenda. It’s absurd that I’m the one who wrote the book, and I get 17.5% of list price, while the company setting my list price is getting 52.5%. Even worse, that company setting this list price is NOT PRICING TO MAXIMIZE REVENUE. They are PRICING TO PROTECT THEIR STRANGLEHOLD ON THE INDUSTRY which is HURTING MY INCOME.

Unless you’ve been living in Dick Cheney’s bunker, you know that the Department of Justice has filed a lawsuit against the big traditional publishing houses, alleging they colluded with Apple to increase ebook prices. Whether or not the agency model gets thrown out the window by the DOJ, it clearly demonstrates that traditional publishing has picked a side: physical books and standard trade distribution.

That is likely to disappear. As the cost of ereaders continues to decrease, and the costs of ebooks remains much lower than paper books, physical book sales will plummet. According to Barry Eisler, 50% of sales for his novel, Inside Out, were digital–and that was at a publisher-set price of $9.99. Soon, selling ebooks will be the dominant way to sell books. Period.

What happens to traditional publishers then? They haven’t been preparing for this moment; they’ve been fighting it–which begs the question…what happens to the authors who’ve signed traditional publishing deals?

Thanks again to JA Konrath for providing contract legalese:

Let’s start with one of the most obvious, and despicable, clauses, the Grant of Rights.

Author grants and assigns to Publisher the sole and exclusive rights to the Material throughout the Territory during the entire term of the copyright and any renewals and extensions thereof.

“Territory” refers to where in the world the publisher is allowed to exploit these rights. In several of my contracts, Territory encompasses the entire world.

I don’t consider that unfair, especially if a publisher pays extra for these territories. But none of my contracts have clauses that say I get those rights back if the publisher doesn’t exploit them after a certain length of time.

So the publisher can have French or Japanese or Urdu rights for my lifetime plus 70 years, and might never do anything with them. But I can’t do anything with them, either.

If you sign a traditional publishing deal today, you might not care that your publishing house hasn’t tried to sell your books in India. How many paper books could they really ship and sell at a profit?

But what happens when the ebook market takes over India? From Mark Coker’s Secrets to Epublishing Success:

The markets outside the U.S. will embrace ebooks quickly because ebooks dramatically improve the selection and availability of books previously unavailable as print books.

This is especially true in smaller markets historically neglected by large publishers.

Another driver for global growth is the rise of low-cost smart phones. Billions of ebook-ready smart phones are already in the hands of customers around the world, and each year these devices are getting smarter, cheaper and more connected.

Five years ago (2007), I traveled to Tanzania to climb Mt. Kilimanjaro. Most people there didn’t have running water or electricity, but they had cell phones.

Imagine billions of smart phone users in Africa and India and every other corner of the globe, all carrying online bookstores in their pocket. These new book readers can sample, discover and purchase low-cost ebooks with a couple clicks.

For the first time ever, global ebook stores will make it feasible and cost-effective for authors and publishers to distribute every book to every country.

Such instant, global distribution of books is impossible with print.

(BTW, from the comments on this post, Updates to Amazon’s Book Ranking Algorithms, ebook retailer Kobo could be at the forefront of this development.)

Imagine all that potential, all that possibility…which traditional publishing houses are viewing with shortsighted stubbornness. Time’s money, babe. If you’ve signed away your territory rights to India in a traditional publishing contract, the Big 6′s reluctance to adapt to the ebook revolution could cost you serious profits.

At some point, traditional publishers will embrace ebooks as their primary mode of distribution. When that happens, you can bet it will be on terms heavily weighted towards their favor, which brings me to:

Self-Publishing Income and Royalty Checks

Royalty rates in the traditional publishing industry are low. Typically, they go as follows:

• For hardcovers, author receives 10% of the price marked on the book
• For trade paperbacks (my fave), author receives 7% of the price marked on the book
• For mass paperbacks, author receives 6-8% of the price marked on the book
• For ebooks, under the agency model, the author receives 17.5% of whatever price the book is sold at

If you’re selling the volume of hardcovers along the likes of Nora Roberts, Kathryn Stockett, or John Grisham, you’ll still be making gobs of money, even at these royalty rates–and even after your agent takes his cut, usually 15%. Read And You Thought Royalty Involved a Crown for more facts and figures.

What if you’re a midlist author? A midlist author sells a decent number of books, but doesn’t have anywhere near the sales (or marketing support) big name authors like David Baldacci and Janet Evanovich do. Because midlist authors sell a smaller volume of books, the royalty rates of the traditional publishing industry–and their crafty accounting system–start to hurt.

To illustrate, here’s romance writer Ann Voss’s experience:

There’s one more thing that I find valuable and enjoyable that I can no longer afford to do, and that is write for Harlequin.

I published my first novel with Harlequin’s Intrigue line in August of 2000. My twenty-fifth was released in November, 2011. I had a lot of fun writing those books–taut, page-turning, action-packed romantic suspense staring a myriad of different heroes and heroines and a boatload of delicious villains. I had four editors during that time, and all of them were great to work with.

My books were in bookstores and Target and WalMart, and my office overflows with foreign copies from countries I’ve never visited.

I have around three million books in print, and Harlequin throws the best parties in all of publishing, hands down.

But as lovely as all that is, I can’t afford to write for them anymore.

Why?

If you do a (very) little digging into publishing companies, you’ll discover that while the industry standard royalty rate for mass market paperback sales is 8% for US retail, Harlequin pays its series authors only 6%.

The royalty goes down from there.

All Harlequin series authors know that US retail royalties are going to be lower than industry standard going in. We also know that Harlequin pays rather low advances. My largest and most current advance was only $6,500 per book, but here’s the kicker; the books are widely distributed and sell a lot of copies. I have NEVER failed to earn out in my first royalty statement. That’s right, ALL of my books have earned out and then some.

So why can’t I afford to write for them any longer?

Let me share with you the numbers of a book I wrote that was first published in January, 2002, still one of my favorites.

My life-to-date statement says this book has sold 179,057 copies so far, and it has earned $20,375.22. That means the average I’ve earned is a whopping 11 cents per copy. If you use the cover price to calculate (the number used in the contract), which was $4.50 at the time of release, I’ve earned an AVERAGE of 2.4 % per copy.

What if Voss had self-published this novel? She wouldn’t have the name brand recognition of Harlequin to her advantage, but she would’t need to.

Currently, if she priced her book at $3.99 (lower than Harlequin’s paperback price mind you), according to Amazon’s 70% royalty rate, Voss would only need to sell 7,303 copies of that title in one year to earn the same amount that she did under Harlequin’s royalty system. She only needs to sell 4% of the number of copies she sold the traditional way to earn the same amount of money. That’s 609 copies a month.

That’s doable, don’t ya think?

Of course, Amazon could change their royalty system tomorrow. But for right now, if you’re a midlist author, self-publishing could be the best way for you to make a living just by writing…and isn’t that the essence at the heart of every writer’s dream?

Piggy bank by 05com

Bookstore co-op by Terry Ballard

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