Publishing Accounting 101

  • 22nd September 2020
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(Originally presented on Twitter on 16 August 2020. Follow us on @spenguin.)

I’ve seen a suggestion that publishers are raking it in at creators’ expense. I accept that there are some publishers who may be less than scrupulous in their publishing deals. For the majority of us, particularly smaller publishers, the accounting may come as a surprise.

Generally speaking, the cover price for any given book is about 6 to 8 times the cost of printing. A book that costs £1.50 to print will be sold for about £9 to £12. Going much higher tends to price any given book out of the market.

Book publishers offer their titles through a distributor. It’s _possible_ to distribute your own titles but distribution is a full-time job in itself. So publishers tend to sell through a distributor, who charge an average of 30% of revenue.

Bookstores work on a Sale-Or-Return basis; any book they display can be returned to the distributor for full credit. To make bookstores viable, they get a minimum of 40% off the cover price.

Larger stores or chains of stores get 50%. Amazon gets 55 – 60%. But let’s just stay with the 40% discount.

So a book sold at a bookstore brings in gross revenue of 60% of cover. Distributor takes 30% of that, leaving 42% of the cover. Printing takes about 1/7th or 14%. That leaves 28%.

Royalties are agreed at a rate of 7 ½% to 10% of cover. Assuming the lower level, that leaves 20 ½% to the publisher. Which sounds like a lot. But out of that 20 ½%, publishers have to pay for marketing, administration (including paying employees) and general overheads.

And then there’s shrinkage. It’s acceptable that up to 5% of any given print run will be damaged in shipping. That’s not just shipping from the printers; that’s also shipping to the bookstore or being returned from the bookstore for credit.

Books that are returned that are considered still good enough to be offered again will be sent out when another bookstore orders the title. (This incurs a restocking fee, which is over-and-above the baseline distributors charge. Just so you know.)

I could mention that, apart from royalties, all costs incurred are paid up front. There can be a three month lag between when the distributor sends a book to a shop and the shop pays for it. But it doesn’t matter. You get the idea. Publishers don’t make huge amounts.

So why do it?

Because we have to. Almost every day, we see stories that deserve a bigger audience. That deserve to be read and loved as much as we do. So we put our efforts and our money behind these titles, to bring them to print, to bring them to market.

To show what’s possible with the comics medium, and to encourage these creators to continue to tell stories that captivate us. But it ain’t for the money.