You did it! You published your a course in miracles videos. You talked some stores into carrying your book, you have a book signing planned for next week, and you just sold your first book to Mom for $20. “Dinner’s on me!” you tell your spouse, waving your new $20 bill. You’re on the way to riches, or so you hope.
Hold on. Did you really just make $20.00? Are you really going to have extra income from your book sales?
Maybe in time, but first, let’s look at reality. Being a successful author is going to require doing some basic math and understanding about supply and demand.
Let’s start out modest. You didn’t have a lot of money to publish your book, but you decided to give it a try. For the sake of example, we’ll say you spent $700 to layout the book, and you printed 500 copies at a unit cost of $10 each (including having the books shipped to you). Hopefully, you hired an editor, and you probably also had a cover designer, but for simplicity sake, we’ll say you’re a genius with a Ph.D. from Harvard in English and a graphics artist besides so you did those parts yourself. You decided to price the book at $19.95 (In the examples below, we’ll round to $20 to make the math easier).
So your costs so far are $5,000 for printing and $700 for layout to total $5,700. You also had a website made and paid for a domain and service for a year. We’ll say that cost you $300 so you are now at $6,000 in costs. It doesn’t make that first $20 from Mom that exciting does it, even when she generously declared, “Keep the change!”
Do you live in a state with sales tax? Let’s say since it’s easy, your sales tax is 5%. You better tell Mom, “Hold up; you actually owe me $20.95.” Mom looks irritated, but since you’re her famous author child and she’s already been down at the senior center bragging about how Oprah will call you any day now, she gives you another dollar and still doesn’t ask for her nickel back. Another dollar. Good, right? Wrong.
That dollar in sales tax you need to report on your taxes. Starting now, any book you sell within your state you need to charge sales tax for, and you need to keep records of how much sales tax you take in so you can pay it out at the end of the year. Never spend that money.
So you’re back to $20 and 499 books left to sell by hand, in bookstores, and over the Internet. The bookstore wants 40% so you’re only going to get $12 a copy for each book it sells ($2 profit). The Internet bookstore wants 20% so you’ll only get $16. The ones you sell yourself you can keep the full $20. You decide to sell some at an art show that has a $200 fee to participate. You figure you only need to sell ten to break even. Wrong. You paid $10 each for those ten books, so you need to sell 20 to break even.
Are you starting to think you better eat in tonight rather than spending the money from your first book sale?
We’ll say a few months have gone by. Roughly 98% of all books never sell 500 copies, but we want to be positive, so we’ll say you’re likely to be one of the lucky ones. You published your book in May. It’s now November and you’ve been smart and haven’t spent any of the money from the book sales except the $200 to go to the craft sale, which was worth it because you sold 50 books there. Your sales have brought in income as follows.
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