The Pros and Cons of Independent Publishing: Part Two

Welcome to part two of a three-part series on the pros and cons of independent or self publishing. This is an honest discussion about what you need to consider before The Pros and Cons of Independent Publishing Part 2deciding which route is best for your publishing goals and skills. We’ve already examined overall concerns by detailing the positives and negatives of each type of publishing in Part One. Now, we’ll dive into potential earnings and royalties along with the business concerns you must address for successful independent publishing. In part three, I’ll detail the many decisions you must be prepared to make if you choose to indie publish your work.

One of the positives of publishing independently is that you can be sure of earning a higher royalty rate. I’m using generalized royalty rates that you might see in traditional publishing contracts, but please note that every contract is different and you or your agent may be able to negotiate higher rates than I’m showing.

The Pros and Cons of Indie Publishing - a look at ebook revenues.

In the image above, you can see what an author earns on an ebook when traditionally publishing.

I start with a retail price of $6.99 (Traditionally published ebooks may be priced higher than this, so keep that variable in mind.)

The distributor of the ebook will earn a 30% fee for distributing the book, leaving the publisher with $4.89.

From that $4.89 then the author’s royalty rate (set here at 25%) would be $1.22 minus the standard 15% to the agent, giving the author a final royalty of $1.04 per ebook.

The next column looks at selling your ebook independently. On Kindle, you receive the entire $4.89 or 70% of the total price.  If you’re using an ebook aggregator/distributor like Draft2Digital, you’ll pay 10% for that convenience, plus the distributor fee of 30% (for instance iBooks or Kobo), leaving you with $4.19 in earnings per book.

The Pros and Cons of Self-Publishing: Paperback Revenue comparison.

In the image above, I examine royalties on paperbacks. (Indie authors typically utilize print-on-demand services which are typically paperbacks but not always!)

If you follow the math above for traditionally publishing a paperback, you see a cost of $15 with the author earning $1.27 at a 10% royalty minus their agent’s fee. (There are many ways contracts can be written, but this is based on a retail royalty contract.)

Moving over to the Indie Publishing column, we see that an author can earn $4.55 on the same book sold on Amazon after the distributor (Kindle Direct Publishing) takes their cut and you pay for the production of the book. (Those costs are based on a 300 page book with black ink.)

Many authors publish their physical copies with IngramSpark, there you make a little less at $4.08 per book. IngramSpark is not a retailer, they are a wholesale distributor and you have the freedom to set the distributor discount percentage. I’ve just used 40% for simplicity with comparison to KDP-Print. The production costs at IngramSpark are a little higher for the same 300 page book, too. But, there are definitely positives to using IngramSpark to reach the non-Amazon book retailers. Many authors us both KDP-Print and IngramSpark.

It’s not hard to see that your earnings per book are much higher if you independently publish.

I should mention here, that if you do traditionally publish and received an advance, you must first sell enough books to earn out your advance before you start receiving these royalties.

BUSINESS CONSIDERATIONS

Now I always start with the caveat you frequently see—which is that I am not a lawyer nor an accountant. You should seek advice from those professionals who know more about your specific tax situation.

Here are my recommendations based on my own experience:Why You Need an Imprint When Publishing Independently!

Separate your personal finances from your publishing work by establishing an imprint/company name. (I have a free download on why an imprint is important!)

Register that imprint name with your state as either a limited liability company or a corporation (based on what your accountant/lawyer says) and get your tax identification number (TIN) or employer identification number (EIN) from the IRS. Don’t forget you’ll also need to register as a seller of goods and file sales tax reports/payments at the intervals required by your state.

You’ll also want to establish a separate bank account and a reliable accounting method to keep track of expenses, revenues, and inventory.

We’ll continue this discussion in part three, which will detail the many decisions you must be prepared to successfully publish independently. (To review part one click HERE.)

Don’t hesitate to ask questions or share your own experiences in the comments below! - Valerie

Comments

Great post Val! I will definitely share. And great "handout" on imprints!
You rock, girl!
I set up my publishing business (a long time ago!) as a sole proprietor. Was that a mistake?

Hi Christine,
Thanks! I'm glad you found this helpful. No, that's fine because you're doing business as CK Books Publishing, so you have a separate identity! I should have made that clear -- that a sole proprietorship works well, too!
Thanks, Val

Good info, Val. Clear, concise, easily understood. Thanks.

Hi Chris,
Thanks! Let me know if you see any errors with my info/assumptions!
- Valerie

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