Constructing a Book’s Financial Track

financial book track

After a book is written, it needs to run the race to get into reader hands. The idea of this article is not to win the race, but to study the track. Many indies either ignore the effort or run in the wrong direction.

My advice is simple: Build a simple sales channel, followed by understanding earn-outs.


Promotion Versus Sale Channel

A promotion is a one-time, temporary effort. When a book is released for the first time, it may have a promotion to help boost rankings. A sales channel is an on-going basis. Promotions are meant to boost sales while sale channels are meant to maintain sales.


Complex Versus Simple Sales Channel

Here is a complex route:  Write two books, find a place where people want free books, give away one of your books in exchange for an email address. Email these people with articles and free advice that leads to your author site. Use cues on your author site to lead to a conversion page. Use the conversion page to lead to Amazon. Finally sell the book on Amazon. (That’s a lot of work!)

Here is the simple route:  Find a group of people who want to buy your type of book. Spend money advertising to them.


Building a simple route sales channel

Step 1: Expect a loss

Here is the tough pill for a lot of indies to swallow: going into book publishing expecting to lose money. For most indies, they get in because they dream of people buying their work. The idea of a book costing them money is very distasteful. Furthermore, not having a guarentee the book will re-pay them is another frustration. However, an author needs to find their audience, and that can take money.

Step 2: Micro-testing markets

In order to build a sales channel, an author needs to test small advertisements and trials to a variety of places. Many locations will not work out. That is why you want to keep each test fairly low cost. Once a pocket of success is found, you can move forward with the next step.

Step 3: Slowly expand

The instinct of an indie may be to put a lot of money toward any successful sale. Instead, slowly expand that marketing effort. Was the increase a temporary moment or did it continue to last? If marketing efforts continue to produce results, then move on towards the next step.

Step 4: Expect a loss

We go full circle back to the first step. Once marketing is working, an indie needs to study cost conversion. How much did the marketing cost to sell one book? Did the marketing effort take all of the royalty or just a small portion? If the marketing is taking a small portion of the royalty then count that in as a reduction of royalty. Perhaps that 70% Amazon royalty is now 50%. However, 50% of something is better than 70% of nothing.



Understanding earn-outs

The most expensive time for a book is when it first starts out. Books have a variety of production costs. Production costs can include a decent cover, proper categorization, giving away review copies, editing, and producing several versions (print, audio, digital). Now that a regular sales channel is established, two things can be estimated:

Royalty Pace

Again, a promotion is temporary while a sales channel continues indefinitly. Having a sales channel allows an author to estimate how quickly royalties will arrive. Once an author knows that, they can estimate how quickly production costs will be repaid. Once production costs are repaid, the book is “earned out” (and making money).

Earn-out Goal

Knowing what to pay per production is tricky. Production costs can equal a specific time goal. For example, if you want to make profit after six months, estimate the total potential royalties for six months. That will be your total production costs. While the temptation may be to have no production costs: avoid this way of thinking. People who buy your work deserve the highest quality you can afford. Value your work by investing in it.