Well, not really. I just finished reading The New World of Publishing: E-Book Pricing by Dean Wesley Smith, and I liked what he had to say. It made sense.

Something he didn’t mention in the article, but has been going through my mind is overhead costs for indie publishers. For me, I’ve been thinking like an author. “Buy my books! I’ll give them away cheap, CHEAP, I say.” The overhead costs have been in my head, but I’ve quietly suppressed the thoughts in lieu of attracting readers.

The truth of the matter, I do have overhead costs.

• Website hosting
• Domain registrations
• Software purchases (for writing)
• Subscriptions (for writing)
• Advertising
• Giveaways (print copies, mailings, S.W.A.G.)
• Review copies
• Extended Distribution Channels (CreateSpace)
• Stockphotos (for cover art)
• Whatever else I’ve forgotten

Then there are items I’d like to have but can’t justify the expenses

• ISBNs
• The option to work with LSI (even if I eventually opt out)
• Paying an editor
• Paying a cover artist
• Ordering a bulk number of copies to place on consignment and sell through my websites

These are expenses before I even manage to pay myself a check. To be completely honest, I don’t break even at this stage in the game.

Math according to Mr. Smith

Mr. Smith does some fancy calculations… okay, not fancy. His calculations are simple enough for most folks to understand. He mentions publishing one book every six months. Though Control Freak: Brandon’s Story was my first publication (September 2010), it was only a short story. My first lengthy work was Shadow Cat (published January 2011). This year, I also published I Loved You First (July 2011).

I’m totally on track with the 2 books a year. One problem — they’re in separate genres. So really, I’m at one fantasy, one contemporary, and a small collection of short stories in various genres (5 original works in all, soon to be 6). Okay, I’m rambling… time to get on track.

Mr. Smith mentions there’s a reason traditional publishers charge a certain amount for their works; they have to make a profit to remain viable. That’s business. So I’m looking at my expenses compared to my profits and know it’s not happening for me. Like I said, I’ve been thinking like an author. “Please, just read my book.” When I need to think like a publisher. “I have X expenses and need to make X per book to cover those expenses.”

Like traditional publishers, I can only speculate what sales will be for the future months.

My works follow a trend

Let me share with you a trend I’ve noticed. I’ve priced Shadow Cat anywhere from $0.99 to $7.99. Sales slowed to a standstill above $4.99. However, my sales numbers didn’t change if I priced between $0.99-3.99. Odd, don’t you think? I can say the same for I Loved You First. I receive the same amount of sales regardless of pricing the book at $0.99 or $2.99. I’m sure you know where I’m going with this and pricing for those two books.

The only time price seemed to make a difference was Control Freak sales. If I price any of the Control Freak works at $2.99, the sales seem to slow. The sales don’t stop completely, but they do slow noticeably.

Anyway, Dean Wesley Smith has a pricing recommendation, and I rather like it. $0.99 for short stories, $2.99 for novellas and short story collections, and $4.99 for novels. I’m not at the $4.99 level for novels yet. As I mentioned, my sales slow to a standstill at that rate.

However, I’m thinking a modified pricing model would work well for me.

• $0.99 for short stories
• $2.99 for novellas
• $3.99 for novels

I do see myself playing around with short story collections. For example, this week I repackaged Brandon’s and Regina’s Stories in a single eBook for $1.49. You didn’t know that? Yeah… I published that in secret this week. It’s available at Amazon, Barnes & Nobles, and Smashwords. One note, it’s priced at $2.99 on Amazon for now. So if you’re a Kindle user like me, I encourage you to pick up a copy at Smashwords instead of Amazon.

Commercial break over.

Pricing models and overhead costs

So what does the pricing models above have to do with overhead costs. According to Mr. Smith’s calculations, an author might see $105 in six months after publishing one (the first) novel. As disappointing as those sales numbers are, they’re pretty much what I experienced my first 6 months with Shadow Cat. From there, my experience is a little different from Mr. Smith’s examples since I didn’t stick with the same genre. I went on to publisher Regina’s Story, I Loved You First, Unprotected, and next up Injustice Is Served. I don’t see the sequel to Shadow Cat happening until February of 2012.

Even so, my sales of Shadow Cat have increased during the latter half of the year. Still not a lot, but still easily hitting the $210 target Mr. Smith mentioned for the 2nd six months. I’m thinking promoting Shadow Cat in my other works has kept the sales from stagnating. If I include my other works, I even hit the $420 target for combined sales with one royalty payment to go.

As you can see, I’m not making a lot of money publishing. And if you do some mental calculations with my overhead costs above, you can see how easy it is not to not break even. That’s okay. Mr. Smith’s article focuses on long-term writing… not a single book then giving up. He offers a three year plan (2 novels per year). I plan on doing exactly just that, along with a few short stories in between.

But that’s then, this is now. Overhead costs. I’d have to sell 300 books to make $105 in 6 months at a rate of $0.99 each. That’s 50 books a month for ONE book, bringing in $0.35/book. $0.99 for a novel, people. A work which takes a couple months to write, even longer to polish and edit. That’s in comparison to 38 books at $3.99 ($2.75/book in royalties) or about 6 books per month. 50 books a month for Shadow Cat isn’t happening, and it’s not happening with I Loved You First, even when priced at $0.99. 6-10 books a month is. In fact, I hit those numbers with Shadow Cat now.

Self-publishing is a business

This isn’t about greediness. How can I be greedy when looking at $105 for 6 months? Or $210? or $525 for a 6 month period? 🙂 $525 isn’t even a reasonable profit for a month, much less a six month time period.

This is about business. I have overhead costs. I need to make a profit to meet those overhead costs. I need to make a larger profit to grow my business. I’m not just an author; I’m a publisher and have to think like a publisher.

I want more than anything for readers to go crazy for my works at $0.99. Unfortunately that’s not the case. Like I said, for my larger works $0.99 versus $2.99/3.99 doesn’t seem to matter. If I’m going to stay on track for the next six months (according to Mr. Dean’s calculations) and try to meet some of those overhead costs, I need to look at consistent prices which make sense. $0.99 – short, $2.99 – novellas, $3.99+ novels.

I’ll wait until the holiday season, but come January 1st, you should see the prices repopulating at the rates listed above. Hopefully by the end of January, my book prices will be consistent everywhere.

So that’s what to expect for the new year. If you’re looking to get my works for a discount, now’s the time. Otherwise, you’re free to wait. I certainly could use the extra royalties to cover my overhead costs. 🙂

By the way, keep an eye out for my next release (hopefully coming out in the next couple of days).

No lawyers.
No judges.
No trials.
At last,
Injustice
Is Served

Seven psychological thrillers to keep you awake at night.
Not meant for bedtime reading, children, or the guilty.

Rated M for intense violence, blood and gore, sexual content, strong language, and enough offensive content to make a man clench his knees tightly together.

You can read the first story of Injustice Is Served here.

A special  note to my readers

Though my fan base is small, I thank every one of you for supporting me. I know there are a lot of other books out there, many of them are free. Come January 1, even more will be less expensive than some of my works.

At the same time, I know my readers aren’t oblivious to costs associated with publishing books. My readers work hard for their paychecks, and so do I. They have bills to pay, and so do I. We all have our cutoff points… we each have a line when we tell our employer, “I just can’t work for that wage and make ends meet.”

Readers are my employers. You’ve hired me to produce stories for you to enjoy. I’m doing my best, but I’ve got to make enough to meet my expenses, or my business will go under. I’m counting on you to agree that my works are worth a fair wage. I trust that you will understand.