The Fine Print of Self-Publishing by Mark Levine - HTML preview

 CHAPTER 8

An Apples-to-Apples Comparison of Major

Self-Publishing Companies

Comparing one self-publishing company’s publishing package to that of another is difficult, if not impossible: Company A’s basic package and Company B’s basic package could have similar features, but a price difference of a few hundred dollars. Or, one company’s packages may have some features and another company’s comparable package some slightly different ones. Looking at the number of packages and features in one company versus another becomes an Excel spreadsheet nightmare.

For the first time in this book’s five editions, I’ve provided a head-to-head look at how the major self-publishing companies stack up against each other, not on publishing packages (as the disparity in price and services is so great), but on some of the most critical elements related to successfully publishing your book:

• Printing markups
• The price the author pays for copies of his/her book
• Royalty calculations
• The return of the original production files
• Ease of gathering information as a prospective client

You want to work with a good company, with good people who make good books and provide a fair contract. Whether a company marks up printing 15 percent or 200 percent, or takes no royalties or half of the royalties, doesn’t inherently make a contract or the services fair or unfair. Sure, I have my opinions, but you can decide for yourself what will work. If you love a particular company that marks up printing 30 percent more than another one, choosing them isn’t the worst thing that’ll ever happen to you. Understanding the ramifications of these differences is what this chapter is all about.

Printing Markups

If there is one thing you take away from this book, let it be an understanding of how printing markups affect every aspect of your book’s success. Let’s start at the root of the problem: the misconceptions of POD printing. Most authors don’t think about the effect of printing markups because many self-publishing companies pound into their heads that “You only pay for printing when someone orders your book.” Which, loosely translated, means: “Who cares how much your printing is marked up? Let the person who orders your book pay more to cover that cost.” This mentality will make your book DOA before one copy has been printed. Sure, with POD printing, you don’t “pay” the publisher for the cost of the print job until the book has been printed. But, by sticking that markup with the end buyer (e.g., a customer on Amazon) or a brick-and-mortar retailer, you’ve assured yourself virtually no sales outside of your family and friends.

In chapter 3, I discussed why you need to set the retail price of your book competitively. That’s impossible when the printing markups get much higher than 15 or 20 percent. From a retail pricing perspective, as long as your books are POD, you’ll never be able to compete dollar— for-dollar with a similar traditionally published title where the publisher printed thousands of copies. But, you have to get in the ballpark. And, the only way to do that is to get the printing costs somewhat under control.

Assume you have a 200-page, black-and-white interior, 6” x 9” paperback book. Assume also that you’re printing it on demand in small quantities with a publisher that prints with Lightning Source. You know that this particular book will cost your publisher about $3.90 to print (remember, most publishers get better pricing than this, but I always use stated prices for the purpose of examples). Assume Lightning Source is going to take a 55 percent wholesale trade discount.83 If you use CreateSpace, the trade discount is between 40 percent and 60 percent depending on the retail or wholesale channel.84 So, with that in mind, I use 55 percent as the baseline. Let’s also assume that your publisher isn’t taking any cut of the royalties (which you may know by now is the exception, not the rule).

While many self-publishing companies, including but not limited to CreateSpace, encourage you to price your book at any price you’d like, if you don’t price your book in line with similar books in your genre, you’re in trouble. You have to set the retail price at a competitive level. For the purposes of the example below, I’m going to set the retail price at what I consider the absolute highest reasonable retail price for a book of this size: $14.95.85 Watch how a few upticks in printing markup percentages can affect how you have to price your book.

How Printing Markups Affect Royalties for a

$14.95 Paperback86

Priced at really the highest possible retail price point, you barely profit when a publisher has even a 50 percent printing markup. And at the 100 percent printing markup, you are in the red; with that type of markup, you’ll be forced to price the book even higher.

The simple chart above also assumes that the publisher isn’t taking a cut of the sales (other than the printing markup). Add in a publisher royalty, and the royalty to the author becomes even less attractive as the printing markups rise.

So, let’s continue with my sample 200-page, 6” x 9” paperback and compare actual self-publishing companies’ printing markups. The chart entitled “Publisher Markups on Actual Print Costs on a 200-Page Paperback Sold through Online Retailers” reflects only this one sample 200-page paperback, and assumes a retail price of $14.99 (unless a higher minimum price is required). It doesn’t account for royalties (that comes later) or author discounts on books purchased by the author (that also comes later).

When I started building this chart, the idea was to show you the printing markups of books sold through third-party retailers. But, as you’ll see below, most companies would not provide enough information to ascertain the printing markup, or would claim not to mark up printing,  only to bury the cost in excessive royalties. I wasn’t asking them what their printing costs were (I don’t expect a business to tell me their costs of goods); I was asking what my printing costs were. These folks were sure testy about this. I debated whether to take this chart out, but decided to keep it in to show you which publishers don’t like questions about printing markups and to what degree. Make sure you read the footnotes to this chart in order to learn how squirrely some of these guys get when asked reasonable questions.

Of particular interest is that some of the Author Solutions companies (Abbott Press, Archway Publishing, Balboa Press, CrossBooks, WestBow Press) appear at first glance to have no printing markup. But, they are just pushing those markups into the royalties and printing markups when authors order copies of their own books. For example, Abbott Press, Archway, Balboa Press, CrossBooks, and WestBow all take a 50 percent net royalty (after backing out trade discount and printing costs).87 With so little going to the author, the true markups are buried in the huge chunk of each sale the companies make; whether there is technically a printing markup is inconsequential.

The core Author Solutions companies, iUniverse, Trafford, Xlibris, and AuthorHouse, pay authors a 10 to 20 percent royalty, and often require a higher retail price.88 With the exception of iUniverse (which marks up printing on third-party retail sales by 53 percent), the core Author Solutions companies wouldn’t provide any details as to their printing markups.

Given that almost every company is printing their books at the same printer, in theory printing markups should have been one of the few factors that allowed for an apples-to-apples comparison. But, since most companies didn’t want to provide the information, the chart on royalties below is the best way to determine the printing markups. Basically, you have to take the retail price and back out the royalties and trade discount (the portion of each sale a retailer, like Amazon or Barnes & Noble, gets for selling the book) to calculate the charged printing costs.

On this chart you will see which companies make it impossible to find out important information, which companies manipulate the print cost and push the markups into the publisher’s royalty, and which companies provide a print cost, making it easy to calculate the percentage of markups. Finally, it should be noted that while Lightning Source’s stated price for this particular book is $.015 per page and $.90 per cover, some bigger publishers pay less, hence the range of prices from $3.25 to $3.90 that would all be considered “at cost.”

Publisher Markups on Actual Print Costs on a 200-Page

Paperback Sold through Online Retailers

Remember, this is an example of one book, with a certain page count, and a specific retail price, printed on demand and then sold through third-party online retailers. These numbers could change by tinkering with any of the book specs used in this example.

The most frustrating part of putting together this chart was getting clear information out of these companies. Even to lock them down on what their “printing costs” were (including whatever they added for a markup) was next to impossible—and I had the advantage of knowing which questions to ask.

Author Price per Book

Not all printing markups are treated equally. Many publishers actually employ two types of printing markups for two different situations. As you read in the previous section, there are the printing markups for books sold through third-party retailers, but what about books sold to you for your own resale (at events, for example)? Some self-publishing companies are consistent in their printing markups, while others use different formulas to get the price they ultimately charge an author for copies of his or her own book.

Whether you’re selling your books on your website or out of your car, you need to be able to purchase those books cost-effectively so you can make a profit. In fact, an aggressive direct-to-consumer sales strategy can help make up for smaller profits from sales through third-party resellers. To illustrate this, let’s use our hypothetical 200-page paperback. For this example, we’ll assume that the publisher doesn’t mark up printing for third-party retail sales, but does mark it up on copies purchased by the author for his own use. We’ll also assume that the author gets a 50 percent royalty for third-party retail sales. Finally, we’ll take three printing markups—35 percent, 67 percent, and 150 percent—and see how those markups affect an author’s royalties on books sold on his own, through his website, and/or at events.

Author Royalties via Direct Sale at Various Printing Markups

The example above is why it matters what your publisher charges you for printing copies of the book for your own use. I included royalties from third-party sales (e.g., Amazon), so that you can see how, if printing markups are reasonable, one sale by you can equal two or three generated through a site like Amazon.

Now that you see how your costs for printing affect your bottom line, it’s important for you to know how self-publishing companies charge you for copies of your own books. The following chart shows what each self-publishing company charges an author each time that author orders a copy of his or her own book for personal use or for sales at events. Again, for the purposes of this chart, I’m using a 200-page, 6” x 9” paperback with a retail price of $14.95. The reason the retail price is important here is because many self-publishing companies set the author’s purchase price based on the book’s retail price.116 While it’s rare that an author would only order one copy of his book at a time, in order to get a baseline, I needed to base this chart on one copy per order, as some publishers give price breaks at various quantity levels. Remember, many of the larger companies that use Lightning Source are paying far less than the stated print costs. Thus, in reality, many of the markups will be higher.

Author Purchase Price per Book