Writing a book can feel like climbing a mountain—a big, steep, frustrating one sometimes. Once you reach the summit, it would be great to just sit back, see your book on the New York Times bestseller list, and watch the royalties flow in. But for many (maybe most) nonfiction authors, book sales are not where the money is made.
Let’s take a look at how you might calculate an ROI on your book investment. For brevity, we’ll look only at self-publishing, but the same principles hold true for traditional publishing.
What is ROI?
Return on investment, ROI, is a straightforward financial ratio that answers the question “If I invest $X, how much will I make as a percentage of that investment?”
(Revenue – Investment) / Investment * 100
If I spend $105 and gain revenue of $115, I’ve made a return of 9.5%.
($115 – $105) / $105 * 100 = 9.5%
To calculate book ROI, we need to know what expenses (investments) are entailed in writing and publishing a book and what revenue we can expect to make.
The potential cost of writing and publishing a book
The cost of writing and publishing a book can vary widely, from under $1,000 if you DIY as much as possible, to well over $50k if you hire a ghostwriter. This article outlines some of the types of project support you might need.
“How much should you spend?” is a trick question. The answer is “It depends.” Key considerations include:
- How much do you like to write?
- How much time do you have available to write?
- What is your skill level at writing?
- To meet your brand promise, what quality does your book need to be?
- What is the best and highest use of your time?
If you love to write and have time to do it, focus your financial investment on elements like cover design and editing. If you cringe at the thought of spending a few hundred hours at your computer or you command high fees in your core business engagements, it may be worth the financial investment to hire a ghostwriter.
Remember, there is always an opportunity cost when you spend your time writing rather than working on regular business tasks (or spending time on things outside of work).
How much do you make on book sales?
When you self-publish your book, you get to set the price, so to some extent you control what you make, but of course the market will have something to say about maximum prices. On a $20 book, you might make $5 to $10, depending on a number of parameters—distribution channel, page count, and so on.
A quick search will tell you the average nonfiction book sells 200-300 copies in its first year and maybe 1,000-3,000 copies over its lifetime. Other sources estimate self-published authors sell 50 books, mostly to friends and family. But some books do in fact hit the NYT bestseller list, and the number of books sold varies enormously depending on the breadth of the author’s marketing platform.
So if you sell 200 copies at $5 net, you make $1,000; you sell 3,000 at $10 net, you make $30,000. When you have scale, you can go much higher. However, for most first-time authors with limited marketing reach, book sales will not be especially impressive. That’s where we look at other forms of revenue.
Where the real book ROI usually comes from
Imagine if having a book made your business development process easier and you sold 10% more of your speaking or coaching or consulting services. What would that translate to? What if having a book let you raise your rates 10%? For many of my clients, book ROI comes not from books sales but from the doors that are opened and the authority that is gained, leading to growth in the number of clients and ability to raise professional fees.
Just to use easy (and conservative) numbers, if you make $100k and increase sales by 10%, you’re at $110k. And if you also raise prices 10%, you’re at $121k. Would a $21k increase in revenue be a big enough return on your investment? Well, you can see that it depends on what you spend. If you spend $10k, probably. If you spend $50k, maybe not.
(Of course, none of this happens automatically. You must put effort into determining the right price increases, continuing your business development work, and intentionally choosing to use your book asset to its full potential.)
The point: Book sales, while they can be material, often are a relatively small stream of revenue compared to other products and services. Consider the effort of selling 3,000 books compared to the effort of selling one $30k consulting engagement. Consider the effort of selling two speaking engagements at $500 higher than your current rate to the effort of selling 200 books.
As Seth Godin might ask, what’s the minimum viable audience you need to reach? One of my clients planned to direct mail copies of his book to 100 clearly identified prospective clients. If he sold two base consulting contracts, that more than covered his book expenses—and of course he expected to leverage the base contract into further engagements.
Sometimes book ROI is not financial
Let’s not forget that there are other reasons for writing a book beyond financial ROI. From a business standpoint, a book may give you a new strategic position in your industry. It may create higher visibility and open doors not just to new revenue but to new opportunities—industry expert panels, community leadership positions, exciting projects.
Sometimes writing a book is about leaving a legacy—business lessons for your clients and colleagues, or personal reflections for family and friends.
And sometimes you want to climb this type of creative mountain just so you can say, “I did it!”
Having worked as a strategist in both the corporate and consulting worlds, I can’t help but look at books with a strategic eye. If you’re not sure how your book fits your strategy, maybe I can help. Get in touch at karin@clearsightbooks.com or 919.609.2817.