Finances of writing books and ebooks

So, how much can you earn from writing books, and how reliable is that income?  These are the crucial questions when it comes down to working out if you should jack-in your job, or (as I’m doing) plan to shift away from working for a big company and start surviving on your own.

This won’t be a solid analysis, but let’s look at the rough numbers, make some estimates, and see if it stacks up or not.

Firstly, how much do you need to earn, and how reliably – could you cope with a lumpy income?  Mrs B and I have a nice house and I currently have a good income that we’ve adjusted to.  A fair bit of that income goes straight out again in things that are associated with the job (house near work, posh clothes, posh car, paying for things to be done around the house that I might be able to do myself if I wasn’t knackered when I got home after 9 hours of work and, sometimes, 6 hours of travelling).  I’m nearly at the stage when I could start claiming some pension money from a previous employment, and we’ve nearly cleared our mortgage for this house.  I think I would need a minimum of about 1,000 pounds (UK) a month, after tax, on top of that pension/savings income, so about £2,000 a month all told.  Round numbers.  I think £2,000 a month, after tax, would be a basic minimum for folks with lower outgoings and no other income streams, living somewhere reasonably nice.  In the UK at present, that would mean about £2,600 a month before tax if you’re a single person. Let’s take that as our target.

Next, how much would you earn per book sold?  This one’s a bit trickier, as it would depend on whether it’s a non-fiction title, a stand-alone fiction book, a fiction book in a series, etc.  It also depends on whether it’s a traditionally published hard-copy book, or a self-published ebook through Amazon, Smashwords, the iBook store, etc.  We’re going to go for a self-published ebook, through Amazon (UK and US only), and assume that extending to other sales channels (Nook, Kobo, Smashwords, etc) doubles the income and going to the whole world instead of just UK and US doubles it again.  We’ll say that you price your book at £2.99 and go for the 70% royalty option (= £2.09).  We’ll assume you have to drop the price from time to time to generate sales, and that there’s a number of other gotchas that reduce the actual profit earned per book (some of which will be tax-deductible and some not) so we’ll say £1.00 per book sale.

So far then we have a target of £2,600 a month pre-tax and an estimate of £1.00 per book (which we can multiple by four if we do all channels and all territories), so £4.00 per book.  This means we need to sell about 650 books a month to call ourselves full-time writers.  For me and Mrs B (with some other income and with our tax allowances spread across two people) it comes to about 250 books sold a month.

A couple more questions: how many customers/readers does this imply, and how much time would you need to put in to keep this many sales happening?

OK, 650 book sales a month is 7,800 books a year.  Let’s say that half of those are new readers that didn’t know you and half were people that liked your last book and are willing to risk £2.99 to see if you’ve written another good story.  The 3,900 new readers a year are down to your marketing efforts (more later on that) and the 3,900 returning readers are part of your loyal fan-base.  Back to them in a moment.

How long does it take to write to a new book?  This will affect how many books your loyal readers buy each year, and give us a measure of your hourly rate (in case it’s actually better to go and work in a supermarket!).  I’d guess a book that satisfies (and builds your readership) will be about 80,000 words.  I’d guess there’s a planning stage, a first draft stage, and two other polishing stages to kill off the annoying mistakes that plague some ebooks I’ve started reading and binned half-way.  I’d guess you can process about 2,000 words a day and outlining and re-drafting are 50% of the effort (each) compared to the first draft.  So we have 20 days outlining, 40 days first draft, 20 days second draft, 20 days final draft for a total of 100 days per finished book.

Let’s say we work 5 days a week and have 4 weeks off for holidays and family stuff, plus 8 weeks of general research, up-skilling, travelling and marketing to do with writing.  That’s 40 weeks of 5 days which is 200 days, so we’ll write two books a year.  If our readership are fairly loyal – say 50% of them buy the new book each time – then we need to have a readership of about 3,900 so that the 50% of them that buy each book means we get 3,900 sales from our two new books a year.  This ignores the back-sales of previously written books when new readers want to read other books from us, but maybe that’s balanced by our readership gradually being won over by other writers, so let’s say it equals out.

If we’re earning £31,200 a year pre-tax (£2,600 a month) and we’re doing 8 hour days for 200 days + marketing (say 4 weeks = 20 days = 160 hours) then that’s 1,760 hours which gives us £17.73 an hour, which is pretty good.  A supermarket in the UK pays about £8 – £10 an hour for an adult worker.

So the numbers are:

  1. Readership needs to be about 4,000 world-wide;
  2. You need to write two books a year;
  3. You need to sell them for about £3.00 each and use all channels and global regions;
  4. If you sell through traditional publishers, the numbers should be much better than ebooks, or don’t bother.
So how reliable is this income?  That analysis is harder,  There’s an increasing number of available purchasers, but also increasing sellers.  There’s the global smoothing of salaries – people living in some parts of the world may be surprised by a need for £17.00 an hour in the UK.  If your rent and food come to only £10 a day in some places, and you can write great stories, you won’t need to sell many books to make headway.  This will make it harder for writers in expensive countries to compete.  I expect this effect will happen faster than we expect, but my guess is that in the next 5 – 10 years, there will still be a good business to be made.  If, after that time, you have a large back catalogue of titles to sell that aren’t too dated, that should outweigh the fact that you have to charge less per book sold.
Right, stop prevaricating on business analysis and get writing, Charlie!
CB
PS – I thought 2,000 words a day for 8 hours, but I’ve spent two hours on this post and it’s 1,166 words long!

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