In a guest post at Jane Friedman’s blog, Anne Trubek, founder and publisher of Belt Publishing, and author of So You Want to Publish a Book, gives us some real(-ish) numbers involved in the financial decision-making behind a particular book. These numbers may make more “real” the discussion of this topic I posted three years ago.

Her first paragraph gives a fairly good image for representing the publishing process: “Each book a publisher launches is its own miniature, stand-alone start-up. Every book is a gamble. Publishing could have a game table on the floor of a Vegas casino, nestled between blackjack and roulette. Bet on which title will earn out, and which will fail. When a title doesn’t break even, the casino swipes the chips off the table. But when a bet wins, it can make up for all those losses. A few bestsellers can support a press despite many money-losing titles.” Just as in the casino you mostly loose, so too do most books disappoint their publishing punters.  Yet we remain hooked, and defy the odds by laying down our money for the next chance to roll the dice. (The analogy seems to fall apart when I start to wonder who represents the casino owner in the book business. The trouble is that the money lost on a book is just money lost, not money gained by anyone. It just evaporates away into the sands of time.)

Ms Trubek’s costing for the case study book, Cleveland in 50 Maps yields a profit margin of 35%. This may sound pretty good, but it is gross profit, not net profit. The overhead cost of running the company; taxes, salaries, pension and medical benefits, rent, insurance, electricity, paper clips and coffee, etc., etc., etc., are not included anywhere else in the calculation — and obviously have to be paid for out of revenue from your books. Net profit is basically gross profit minus overhead. And there’s no god given reason why you need to include overhead in your costing calculation, as long as you don’t fool yourself into forgetting all about it! Mostly we’d solve for net, but solving for gross involves exactly the same sort of mathematics. Now Belt Publishing is a small independent publisher and clearly isn’t running the kind of overhead cost structure that a Penguin Random House, or even a small university press has, and at 35% gross, Ms Trubek reports satisfaction.

I do think she allows herself to fall into the common trap of assuming that because big publishers have big turnovers they can afford just to spray advances about wily-nilly. No doubt an unearned-out advance of $100,000 is less devastating for a big trade publisher that it would be for a small indie publisher — but it’s not something that can just be shrugged off as one of the normal costs of doing business, like buying another box of paper clips. Negotiate too many big advances (relative to the size of the company and the number of instances where you agree to an advance) which don’t earn out, and you go bankrupt — whether you start out big or small.