This section might stand on its own or it might be part of Chapter 1. Or…
I want to do a little bit of myth-busting here. First of all, a book will not automatically make you rich, famous or good looking. So sorry, Oprah is probably not going to call and that’s one of the biggest disappointments I’ve ever had.
Don’t think writing one book is going to make or break you. It’s very rare that one book will free you from your job or make you famous. But one book can certainly help in your business marketing. That’s why I say you don’t want to market your book. You want to market your business with your book.
Why? The average book sells fewer than 500 copies in its lifetime, and I’ve seen that number cited as low as 250 copies. That’s not a whole lot of money. A bestselling business book can be as few as 10,000 copies sold in its lifetime. So if you’re making $5 a book, 250 copies at $5 is not going to get you too far. Even a book that sells reasonably well, perhaps 10,000 copies over its lifetime at $5 each, might be $50,000 over two, three, four, five, 10 years. So no, you can’t quit your job on that one either.
The money—obviously—is not in book sales.
Royalties from Traditional Publishers
Let’s look at royalties on books because assuming a profit or royalty of $5 per book is generous. Traditionally published books bring in anywhere from a dollar to $4 per book sold. With traditional publishers, if you’re lucky, you’ll get some sort of advance, which helps keep you in food and housing while you’re writing the book. But that advance has to be paid back by book sales and the dirty little secret in publishing is that most books do not make back their advances. Authors used to receive anywhere from $10,000 to $50,000, even $100,000 or more as an advance. (And yes, “name” others still do; the publisher is confident it will make its money back.) Advances have been cut substantially and with some publishers (or for new authors) they are non-existent. In addition, some publishers have initiated claw backs when a book doesn’t pay back its advance. Ouch!
Even if you get an advance, it can take a while, sometimes years, before you start receiving royalties. Royalties from traditional publishers on paperbacks run 8% to 10% of the retail price. If your book sells for $14.95, you’ll make about $1.50 per book sold. Hard covers earn a little higher percentage (12.5%) and the price is usually a bit higher, also. That’s still under $4 for a hard cover book retailing at $30.
The Trade Off
Self-publishing can bring in anywhere from $1 to $10 per book sold, and depending on your pricing and how you sell it, it could be more. I had an eBook that I sold for anywhere from $29 to $47 and because it was a downloadable book straight from my website, I would earn just about the whole amount. PayPal would take about 3% of that as a transaction fee. So if it was a $47 sale, I made about $45 and change. That was a good royalty, but I didn’t sell that many books.
So, with traditional publishing, you’re trading off a larger royalty against the benefit of having wider distribution and, hopefully, a greater number of sales. Self-publishing nets you more per book, but you are responsible for all the sales and distribution. Chances are you will not sell as many books as you would with a traditional publisher.
Enter Print on Demand
Print on demand allows you to print one book at a time at an incredibly low price.
Many years ago, before print on demand technology came into being, if you wanted to self-publish a book, you would have to buy and actually print up a minimum number of books. The minimum print run could be anywhere from 500 or 1,000 to 5,000 books depending on the vanity press or printer. You had to sink thousands of dollars just into the set up and printing costs, and then there was the cost to ship all of those books to you. You would make your money back selling your books a copy at a time.
There are a lot of upfront fees in traditional publishing, whether you have an actual publishing house behind you covering those costs or you use a vanity press or a printing company. With print on demand, your upfront fees can be next to nothing: many people upload a basic cover and manuscript file and let the POD platform create the book. Some people just sell eBooks; they never bother with a hard copy. Print on demand technology has changed the publishing field, making it easier for anyone to publish a book.
Where’s the Money in Book Writing?
The money, for most of us and for most business books, is not in book royalties. The money is in leveraging your book to market your business: bring in new clients, gain authority, be seen by more people.
I worked with a private money lender, helping him put together a course on how to lend money to real estate investors. These are investment loans, typically short term, high interest, and based on the value of the property more than the investor’s credit. He had been in the lending industry for years, first with banks, then traditional mortgages, and finally running his own company financing investors. He knew his stuff.
He was an absolute sweetheart to work with. I loved the topic and working with him, so much in fact, that I wrote a little promotional eBook for him to use as a free giveaway on his site. People would come to his site, see the free eBook, enter their name and email address, and the eBook would automatically download. The promotional book was designed to get people excited about the amount of money they could make by becoming a private lender. You’re loaning out money at 12% or 15% which is a nice return on your money, so it’s something that catches people’s attention. My client said just about everybody who read the promotional book bought the course which was priced at roughly $1,000.
That’s exactly what the promotional book was designed to do. He knew if someone got the promotional book, nine out of ten people would buy the course. Converting leads to sales was not his problem. His problem was in getting people to his website. Even though he had hired a pricey marketing consultant, not that many people were hitting his website. To be fair, he wasn’t out there marketing the course. He wasn’t posting on social media, going out to real estate meetings, doing webinars ,or speaking about his course. He had a great course, he had a great lead magnet, and nobody was hitting his website to get it. As a result, the sales of his course were virtually nonexistent. He probably sold about 20 or 30 courses—enough to make back some of his money, but he wasn’t really making big money from selling his course.
However, one of the people who got the promotional eBook bought his course. The man and his partners went all through it, then they called him up and said, “You know, we’ve read your course and it looks like a lot of work to lend money privately. There’s a lot of due diligence involved. There’s a lot of this and that, and it’s too much work. We don’t want to become private money lenders. We would like you to loan out our money.”
They gave him just shy of $2 million to invest for them.
Here’s where he makes his money: When he makes a loan, he gets three points and a point is 1% of a loan. So if it’s $100,000 loan, he makes $3,000 on points as an upfront fee. He also makes money on the interest spread. He pays the investors who gave him the money, 8% or 10% interest, but he loans it out at 12% to 15%, sometimes even 18%. He makes the difference between the interest he gets and the interest he pays his investors.
On a $100,000 loan, if it was out for a year, he would make $15,000 in interest. He would pay his investors either $8,000 or $10,000 and he keeps the difference, plus the points and any fees he charges. Most of his loans were short term. He can turn over the money at least twice a year, sometimes three times. So he makes the points every time he does a loan. Rolling $2,000,000 twice a year nets him $120,000—just on the points. The interest spread probably put at least another $100,000 in his pocket. Over the next few years, he earned almost $500,000 because of that course.
He made more money from the fact that somebody read his course and gave him money to invest than he would have ever made selling courses at $1,000 a pop. The course brought in the client. I used a course in this example but it could just as easily have been a book.
The money is not in the book sales. (Though that can be a nice income stream.) For nonfiction business books, the money is in the back end: garnering clients and bringing in business.
Your book is a MARKETING
TOOL; it is not your product.