One question I always ask myself when I launch a new book into the buying world is “How long to earn out?” For print, sometimes the answer is close to the 12th of Never. For e-books, it depends on how much time and research and the cost of the cover art. Since I use Vellum for formatting, the cost of the program got amortized a long time ago.

Dean Wesley Smith chants over and over, “Money should flow to the writer.” Which is true. However, you also have WIBBOW – Would I Be Better Off Writing? Sometimes yes, sometimes no. The more you can do yourself, or with a one-time buy program, then the lower your cash costs. However, it may be that you spend too much writing time doing something, and would be better served by hiring it out, or buying it. That varies with you. Your goal is to reach earn out, and start enjoying the fruits of your labors.

What is earn out? It is when the book pays for itself, and starts generating profit for you, the writer. All the cover art, formatting, research materials, advertising, and other expenses are paid for. Everything from that point on is for you to enjoy (aside from taxes, but those are a whole ‘nother topic).

How do you calculate the cost-to-you of a book? In my case, I look at cash costs, like research books and cover art, then at time cost. The first two are easy, because I have a spreadsheet set up and enter expenses as I go. If the book is a print book, there is an additional expense for formatting and wrap-around cover and ISBN. My time is a little harder to calculate. I don’t include time spent reading the research books, because often I do that while on break at Day Job (if I have nothing else going on,) or during my general reading time. Writing time? What else would I have been doing? What would that “else” bring in per hour?

Since Day Job is my primary source of income, anything for it has to come first. However, I set aside writing time every day, because my sanity requires it.

How much should the book earn per copy? I base e-book prices on the length of the book. Note, once there are three or four books in a series, I drop the price of the first volume. By that point, it has probably earned out, and I want to use it as a way to encourage new readers to sample the series. Print books … I price mine low. Too low, because I think of them as loss-leaders. They are for younger readers, and readers who prefer print copies to electronic. And some for sales at Cons and other things, or to give away. Print is not my major sales area, and never has been.

When a book brings in enough to pay for the cover, the research, and at least part of the writing time, it has earned out. Since I don’t market, that expense is not included. You should budget time and funds for marketing. At that point, the book has earned out, and what comes in after that is profit. Fun money! Or money to apply toward the next book’s expenses, after you have some fun.

One big, big advantage of indie publishing or working with a reputable small press is that you don’t have to worry about earning out advances and hidden costs. You should know up front what the costs will be, within a reasonable estimate. There is no reason to be unpleasantly surprised about the cost of something, or being told, “Oh, it didn’t earn out, so we’re keeping your IP and firing you.”

Author Note: I’m on the road without internet. If I don’t answer your questions, or don’t liberate your comment from moderation, that’s why.

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