Book to profit: How long does it really take?

Working with a lot of entrepreneurial authors, one of the most common questions I get from aspiring authors is, ‘How long will it take for me to make a profit from my book?’

Money and CalculatorI get it. As an entrepreneur or small business owner, there are countless places where you could be investing your time and energy – working with a coach, going to networking events, marketing and advertising campaigns, training your staff, and more. With all of these options available, you want to choose the one that’s going to get you the biggest bang for your buck.

The big question is, is a book going to generate a higher ROI than all of your other options and, if so, how long will it take?

What do you mean by ‘profit’?

The first thing to think about is what you actually mean by ‘making a profit’.

For most business authors, this can be defined in one of two ways:

  1. How much you make on book sales, or
  2. How much revenue your book generates as a sales tool.

While neither of these options is wrong, the truth is that if you’re measuring your ROI using book sales alone, you’re setting yourself up for disappointment.

Calculating your ROI on book sales

According to Publishers Weekly, the average book published in the US sells 250 copies a year, or 3,000 copies in its lifetime. (If you’re in Australia, like me, the numbers are likely to be much lower due to it being a much smaller market.)*

If you’re a traditionally published author, you’re probably making a royalty of 5-15% of the book’s recommended retail price, which means that doesn’t add up to much.

$25 RRP x 10% royalty x 250 copies = $625 a year

If you’re a self-published author, the numbers are better as you get to keep the entire profit, however, it’s not enough to retire on.

$25 RRP x 250 copies = $6,250 a year

If you’re already running a healthy business, this might not sound too bad – it’s a nice bit of bonus income. However, once you subtract your publishing and distribution costs, the story changes.

$25 RRP x 250 copies – $10,000 publishing costs = -$3,750

Assuming you’ve paid off your upfront publishing costs (this is your investment in editing, design, printing and so on – I’m using $10,000 as a ballpark, but you can learn more about the likely investment you’ll make in this article), things get slightly better, but you still have ongoing costs – printing and postage for books you sell directly, and printing and distribution fees for books sold through retailers like Amazon.

Let’s use books you sell yourself as an example of ongoing costs/profits:

($25 RRP – $5 postage – $5 per-book printing cost) x 250 copies = $3,750

As you can see, if you’re measuring the ROI of your book on book sales alone, it’s going to take a long time for you to make a profit from your book, if you ever do.

*(Note that there are some issues with these numbers, being based on Nielsen Bookscan sales numbers, which only accounts for books sold in stores via cash registers (and often only cash registers in the bigger stores), so doesn’t account for eBook sales, audiobook sales and sales made by the authors themselves – more about this here. However, the general principle holds true – most books don’t sell much, so if you’re relying on book sales as a stream of revenue, you’re out of luck.)

How to make the big bucks – your book as a sales tool

So what does it look like if you stop focusing on the potential revenue you might generate from book sales alone, and instead look at other ways your book could generate new business?

The truth is that the benefits of becoming a published author go far beyond creating a new product.

Become an instant expert

First, a book establishes you as an instant expert. Of all the thousands or millions of entrepreneurs out there offering similar products and services to you, a fraction of them will be published authors. This automatically positions you as being a cut above the rest. As someone with enough knowledge and experience to fill a book, and with enough discipline and confidence in their abilities to actually do it.

Then, once you achieve this expert status, you start getting the opportunities and advantages that come with being an expert. You can charge higher rates, connect with strategic partners, land paid speaking opportunities and get featured in the media. (Don’t believe me? Check out the stats.)

Generate leads

Second, a book helps generate leads. You only have so much time in your working day, and most of it is probably spent managing your business and doing great work for your clients.

Your book acts as a constant sales rep for your business, sharing what you do, what you believe and that value you can provide your ideal clients, 24 hours a day, 7 days a week. After you make the initial investment of your time, this then starts happening on autopilot, regularly making new potential clients aware of your business on your behalf.

Convert more leads

Finally, a book helps you convert more leads. I regularly speak with authors who land high-value clients just because they are published authors. And in my business, I regularly speak to potential clients who don’t intend to shop around for other self-publishing companies because they’ve read my book.

Ultimately, when someone reads and gets value from your book, by the time they contact you they have already been presold on your services.

Looking at the maths

When you focus on leveraging your book as a sales tool, rather than trying to make money from the sales themselves, the ROI equation changes dramatically.

Just consider this scenario:

You give away 5 copies of your book, valued at $25 each. Those five people read your book, and two of them then decide to sign up for a $10,000 product or service.

5 book giveaways x $25 = -$125

2 x $10,000 product sales = $20,000

Even after we take out the cost of initially publishing your book, you can see that those two sales were more than enough to generate a return on that investment:

5 book giveaways x $25 = -$125

2 x $10,000 product sales = $20,000

$20,000 product sales – $125 in giveaways – $10,000 publishing costs = $9,875

In fact, this is exactly what happened once I wrote my book. Even before my book came out, I generated $14,000 in new business just from having the first two chapters available on my website for download.

So how long does it actually take to make a profit?

The short answer is that it varies, depending on how you measure ‘profit’.

If you’re measuring profit based on book sales, the truth is that it will take two years, based on a book sale price of $25, an initial publishing investment of $10,000, and you selling 250 books a year (you’ll need to sell 400 books at $25 to make $10,000). If you take out ongoing postage and printing costs, knocking the sale price of your book down to $15, you’ll be looking at about two years and eight months. And keep in mind that if you don’t commit to regularly marketing your book for at least two years after you go to print, you’re unlikely to see a profit based on your book sales alone.

If, on the other hand, you measure profit based on how you leverage your book as a sales tool, your book could become profitable almost instantly. If you make one $10,000+ sale as a result of giving your book to a potential client, or two $5,000 sales, you will hit profitability within a couple of conversations.

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