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Print on Demand example


Print on demand – and how it can make more money for you

This is an excerpt from an article by Morris Rosenthal originally published on the Foner Books website at Foner Books is an independent American publisher specialising in Jewish and computer books, but the financial side of their experience with print on demand holds good for self-publishing writers too. Lightning Source is a print on demand printer which operates on both sides of the Atlantic and is our WritersPrintShop printer too. Ingram is an American wholesaler.

A Lightning Source Book Example

Publishing industry veterans are often dubious of the worth of the print-on-demand publishing model, because it violates the "rules" of publishing they know. The best argument is to detail an actual year in the life of a POD title, published by the author through Lightning Source, including the actual sales, profits, and trends. The idea is to provide an overview of the whole process and costs. If you have trouble following the discussion the first time through, just keep an eye on the dollars.

Start Your Own Computer Business was published by Foner Books in December 2002. The book is a 6" x 9" paperback at 168 pages, and Lightning Source charges Foner Books $3.09 for each copy printed for distribution. The first thing that will occur to anybody who's been involved in traditional publishing is that the same book could be printed on an offset press for around $1.00 each in large quantity. Here's where the print-on-demand and traditional publishing models diverge. There never are "large quantities" involved with POD, no tons of books to warehouse or thousands of dollars to tie up in inventory. Even more important for a small publisher using Lighting Source, there's no shipping cost for books sold into distribution.

Publishers sell books to distributors and bookstores at a discount off the cover price, enabling the final retail outlet and any middlemen to make a profit. The normal discount rate that distributors require from publishers, the percentage off the cover price the publisher gives the distributor for a book that they resell to a retail outlet, is 55% or more. Small offset publishers who qualify for Ingram distribution may be charged 60%, and other distributors can charge 70% or more of the cover price to stock and distribute your books. In other words, the only time a publisher is ever paid the cover price on their books is if they sell them directly to the customer, usually by mail order.

Ingram will carry Lightning Source print-on-demand books on a "short-discount" basis, a discount less than 55%. Foner Books assigned a 35% discount on the $14.95 cover price of Start Your Own Computer Business so the book is sold by Lightning Source to Ingram, Amazon, and other wholesale customers, for $9.72. Here's where the math really departs from the traditional publishing model: $9.72 - $3.09 (the printing fee) leaves the publisher with $6.63, which happens to be 44% of the cover price. This price was chosen to correspond with the average net for a trade publisher before expenses such as book development, author royalties, etc. This 44% of the cover is entirely hands-off, with no inventory or storage costs, no shipping and handling, and virtually no returns since the book is only printed in accordance with demand.

Foner Books also chose to sell books direct from our website at a 20% discount. The delivered cost for short run of 25 books is $93.66 or $3.74 each. Our 20% off mail order price of $11.95 leaves a profit of $8.21 per book, and customers pay a $2.25 shipping and handling fee which covers the average cost of a mailer and postage. Direct mail order sales during 2003 earned 55% of the cover price, while maintaining an average inventory of less than 25 books! Many authors can compare this to the 4 % to 7.5% of the cover price they earn in royalties on domestic, full price sales of paperback books. An author willing to gamble on this self-publishing model can make ten times as much per book sold as compared with royalty income from a major trade house. With many books generating more than a tenth of their sales through Amazon alone, where trade publisher muscle carries little or no weight, one wonders what the trade publishers have to offer authors whose books aren't destined to become fiction bestsellers.

Compare these numbers to the traditional offset printing model. Printing the same book on offset, we would have to increase the page count to 176 (a multiple of 16 pages) for 8-up printing. The following pricing was obtained online at the print broker, and doesn't include shipping or fees:

Quantity 200 500 1000 2000 5000 10000
Price $5.26 $4.50 $2.60 $1.63 $1.04 $0.83

It takes a run of about 750 copies to get the offset printing cost per book down to the print-on-demand cost, and we'd still have to pay for delivery and storage. If the only sales channel was direct mail order, we'd be at break even with the POD model, but how about distribution, which generated over 80% of the sales for the case study title in 2003? Even if we had gambled on printing 10,000 books to bring the cost per book down to $0.83, the maximum profit would have been $5.89 per book, minus returns, warehousing, shipping, packing materials, and the cost of money. The hands-off $6.63 per book earned from Lightning Source is actually more than we would have earned by gambling on a huge offset print run, thanks to the short discount that's otherwise unavailable to most small publishers.

Reprinted by kind permission of Foner Books.

You can read the complete article from which this is an extract at Foner Books specialises in Print on Demand Publishing, translations from the Hebrew, books on running a PC business and on computer repair.

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© 2004 by Morris Rosenthal - All Rights Reserved