1 – It helps you trust the content I create here
2 – Being transparent is more comfortable for me than being vague
3 – Too many people in this space have wild misconceptions about how much money is or is not being made here, which leads to gossip and bitterness that’s a complete waste of time
Since I first mentioned last year that I was writing a book and then more so when it was published, people have been curious about the process. How long did it take? How do they get started? And yes, how much money can they make?
I wanted to address the money part here, because again, I believe there are some big misconceptions. There are three ways that an author makes money directly from their book:
1 – The advance
2 – Royalties off book sales
3 – Reselling the book themselves (typically you can buy your book for at least half off cover price, and sell it anywhere your publisher isn’t. Such as on your website, but not on Amazon)
In most cases, if you are writing your first business book, you can expect to get an advance of $4,000 to $10,000. The key thing to remember about that advance is that it’s an advance, so you have to pay that money back. And remember that if it’s your first book, you are largely an unproven commodity to publishers, so they are less likely to give you a bigger advance.
Royalties off books sales
In most cases, publishers will offer you a contract where you get 10-15% royalties off each sale. Now there is a big qualification to this number. Some publishers will offer you that rate off list price (Gross royalties), and some will offer you that rate off the amount of profit they make off the book (net royalties). The net amount is typically 50% of the book’s price.
So for example, if a book as a list price of $25.00, that means that if your contract says you get 10% royalties off list, then you will get $2.50 per book. If you are getting 10% of net profits, then you’d get around $1.25 per book. From my experience talking to other authors and receiving multiple contract offers for TLARS, it seems that most publishers in this space prefer to offer net royalties.
Additionally, you will likely get a higher royalty rate for ebooks, plus you may be offered a higher royalty rate as your sales of the book increase. You should ask the publisher for both.
So let’s do some quick math here: Let’s say you get a $5,000 advance for your book and you get 10% royalties net profit, and the book’s list price is $25.00. That means you are making $1.25 per book, and that you will need to sell 4,000 copies of your book just to break even. Thus the averages say that you will never make a penny from royalties off sales of your book (earn out). The average US non-fiction book sells about 250 copies a year and around 3,000 copies over its lifetime.
Scared yet? We haven’t even covered the time commitment involved.
So how long does it take to write a book?
Publishers vary in how long they will give you to write a book. Wiley and Que/Pearson seem to want most authors to spend 3-4 months on the actual writing process, then move to editing, etc (UPDATE: Make sure you check the comments as QUE’s Katherine Bull chimes in with more information on how the writing process works for them). One of the reasons I decided to go with McGraw-Hill was because they were willing to give me a bit more time to write TLARS, I actually ended up getting about 6 months to work on the writing until we moved to the editing process. All told, the editing and writing of Think Like a Rock Star took nine months.
Here’s the big problem: The amount of your advance will not come close to covering the amount of time it will take you to write the book. Let’s assume that you spend just 10 hours a week on writing your book, and that it takes you a total of 8 months to finish it. That’s 320 hours you have invested in writing this book. Assuming you get a $5,000 advance, that means your hourly rate for writing the book was $15.63. For reference, I spent around 25 hours a week on TLARS, for 9 months.
So this brings up the obvious question: When are you going to find time to write this book? If you already have a full-time job, then your nights and weekends are probably going to disappear for a few months. If you work for yourself as I do, then you may have to make the tough decision to turn down some work in order to work on your book. Which is what I decided to do.
Now another option is to bring on a co-author. This halves the work for you, but of course it also halves the amount of the advance you get, and the amount you make from any royalties in the future.
But wait, what about marketing and promoting the book?
Yep, after the writing and editing is done (really it starts months before that), you then have to start marketing and promoting the book. One thing I wanted to touch on is the quest to hit the bestseller lists that a lot of authors get excited about when writing a book.
The idea is this: If you can sell enough copies of the book in one week (typically launch week is your best bet), then the book may qualify for bestseller lists. How many copies you need to sell is a very vague and floating number, and can depend on several factors such as what other books are coming out during the same week. In general it seems that at least 2,000-3,000 copies sold during one week is needed. Since we’ve already established that the average non-fiction book doesn’t sell 3,000 copies over it’s lifetime, then you can work out the odds of your book hitting the bestsellers list. IOW, if you don’t have 100,000 people on your mailing list, good luck.
This is where I really screwed up. Now I started planning out my marketing for TLARS as soon as I started working on it a year ago. And early on I realized that this book likely wasn’t going to make any bestseller lists. Again, I just don’t have a big enough platform to drive the needed sales in a concentrated period. But, what I thought I would do is sell as many pre-orders as possible in the year leading up to the book’s launch. Based on my research, I realized that Amazon will count all the pre-orders as ‘new sales’ during the launch week (or when they officially begin offering the book for sale). So what I started doing last year was speaking and working in exchange for pre-orders! For example, I might waive my speaking fee for this event, if they agree to pre-order 100 copies of TLARS.
My thinking was this: Let’s say I sell 500 pre-orders of TLARS, and when the book launches in April, those 500 pre-orders will count as ‘new’ sales of the book, and push TLARS way up the sales rankings. Unfortunately, it turns out I as dead wrong about how Amazon calculates sales. The research on all of this seemed to be unclear about a few things, and one of them was how Amazon handles bulk sales. So after months of accepting pre-orders instead of $$$, I finally found out that Amazon counts bulk orders as one sale. For example, if you pre-order 100 copies of my book, Amazon will view it as if you only pre-ordered ONE copy, since the order is being placed on ONE credit card.
Which essentially meant in Amazon’s eyes I sold several hundred fewer copies than I actually did. For reference, the book’s sales rank peaked at 20,600 on April 1st. If the per-orders had each been counted as individual sales, the sales rank for the book would have likely been around 500 or less on launch. Which would have driven many additional sales because it would have been featured far more prominently on the site, on the hot new releases lists, etc etc. But live and learn. The main reason I wanted to talk about trying to make the bestseller list is that it is really hard to do on your first book unless you have a huge promotional platform.
So then why in the world would anyone want to write a book?
In my mind you don’t write a book to make money, you write a book to start a conversation. You write a book because you have an idea that you are passionate about, that you want to share with the world. If others find value in that idea, then you can make money indirectly off your book.
But in reality, I think the best way to approach writing a book is that you want to create something of value for others that will enable them to do something positive. A book that will be a tool for them to help them reach their goals and have greater accomplishments.
If you can do all that, then the money will take care of itself.
UPDATE: Getting some comments from others pointing out how a book gives you credibility and builds your awareness and how THAT leads to money for you. All of this is completely correct BUT how you position your book is crucial. If you are writing your book and at the same time thinking about how it will lead to bigger speaking fees and higher consulting rates for you, then it can easily impact your writing. As Kathy was telling me when I was working on TLARS, ‘most of the things that authors add to their books to make them sound smart, makes the reader feel stupid’. The point is if you are writing your book consciously as a tool to make more money, it’s probably going to make the book less valuable to the reader because it won’t be as focused on what’s best and valuable for the reader. So write the book that helps the reader kick-ass at whatever they are doing, and the money will take care of itself!