PUBLISHED MAY/JUNE 2019
by Curt Matthews, Founder, Chicago Review Press —
Print-on-demand minimizes both risk and opportunity cost, making it the smartest choice for the modern publisher.
Initial order quantities, or “laydowns,” are not what they used to be for new titles. Why not?
B&N is closing stores, and the major wholesalers now bring in much lower initial quantities of new titles than they did in recent memory. They now want to keep on hand only the quantity needed for a month or less instead of the two or three month’s supply that used to be the norm. Amazon insists on what amounts to just-in-time inventory. Titles that in the past would have generated 2,500 initial orders now are likely to turn up only half as many.
In addition, there are many more new titles published now than there used to be, even if you exclude the tens of thousands of self-published titles that compete for the attention of readers. And while the number of titles produced by traditional publishers has increased, the amount of shelf space available in bookstores has not. What these changes ought to mean for publishers is a radical reduction in the size of their initial print runs for many titles.
Setting the Initial Print Run
The initial print run is by far the riskiest printing decision that a publisher must make. Titles with obvious bestseller potential will continue to require large first printings, but if a book’s author does not have a strong track record, or if the subject area does not have a proven and broad audience-in other words, for the sorts of titles usually published by independent presses-there is no reliable data on which to base an initial print run.
On the other hand, a reprint decision is a much more straightforward proposition. When the title has been in the market for a while, you can track actual sales and project future demand from current sales trends. Is demand increasing over time or falling off? If it is falling off, at what rate? For reprints, it is generally just a question of quite simple math to estimate a reliable reprint quantity.
Reducing the Risk of Initial Print Decisions by Using Print-on-Demand
Here are some thoughts about how print-on-demand (POD) can reduce the risk of that first printing. Suppose your current catalog has been in use by your sales team for three months (about half a publishing season) before you have had to order that first print run. The lead time on a typical offset print run-the time between the order and the delivery of books-is about 10 weeks. POD printing gives you the luxury of holding off the initial print run decision until you have some actual data on which to base it. Instead of 10 weeks, the lead time can be two weeks, and the quantity can be changed up until the last minute to reflect new information. If there have been encouraging expressions of interest from major customers, and the firm order total has reached, say, 700 copies, you might decide at that point to print 1,000 copies POD at a cost of something like $3.50 per unit, which would add up to a total cost of $3,500.
The book takes off. The reviews are positive. Projected sales, based on actual sell-through and some reorders, indicate a need for 4,000 additional copies. Of course you order these copies from an offset printer. They cost $2 a copy or a total of $8,000. The total printing cost for the 5,000 copies you have produced is now $11,500.
But wait. If you had skipped the POD initial run and ordered 5,000 offset copies at the get-go, your total cost would have been $10,000. The combined POD and offset run costs $1,500 more than an offset print run alone. Have you wasted that $1,500?
Perhaps you have if you quickly sell all 5,000 copies. But suppose only half of them sell through in the first season of the book’s existence, reorders are not good, and the rest of the copies sit in a warehouse for years incurring storage costs. You will have wasted $5,000 instead of $1,500. This unhappy scenario is by no means rare in the publishing business.
Other Kinds of Costs
Wasting money is bad enough, but there is also the “cost of money” consideration. With a POD initial printing, you tied up only $3,500, not the $10,000 price of an offset run. What does it cost you to have the difference-$6,500-not actively working in your business? It might have been employed in a sales and marketing campaign that kick-started the sales of your title, converting a dud into a winner. There is also the opportunity cost of unnecessarily committed cash: you might have had to turn down a promising project because the necessary cash was not available. There is controversy about exactly how such costs should be calculated, but no doubt at all that they are significant.
Clearly, POD can radically reduce the inherent risks of a first printing. And POD first printing offers other important advantages. No POD-ready titles need ever be out of stock (OS). This is important because it is now widely understood that even strongly selling titles can be badly damaged or even killed off by being OS for as little as a week or two. The book market’s attention span is very short.
Chicago Review Press, one of book distributor Independent Publisher Group’s (IPG’s) in-house publishing programs, has been carefully considering this POD initial printing approach for C-level titles for the last year or so. The decline in initial orders is real and has serious consequences for cash flow. A six month’s supply of inventory, not a year or even two, is the new target for many trade publishers.
To facilitate this approach, IPG has added a POD facility to its distribution center so that POD copies needed for initial print runs, for filling inventory gaps, and for keeping long-tail titles in print, all flow smoothly into its traditional pick-pack and shipping operations. IPG client publishers can choose automatic POD-enabled programs for their titles that assure that sales and sales momentum will never be lost at any stage in their publication history.
Why the Idea of POD for Initial Printing Is a Hard Sell
Why do publishers typically resist the notion of a POD initial printing? I think the answer to that is largely emotional rather than rational. Except for a few esoteric and expensive types of books, there is no longer a meaningful quality difference between copies produced by offset or by POD equipment. It is usually now impossible to tell the difference. A POD title is every bit as much a real book as an offset title.
I think the fact of the matter is that publishers (and certainly authors) assume that a short initial print run indicates a lack of confidence in a title, and that somehow this lack of confidence will doom a book’s prospects. It is a very American notion that the success of a project is somehow guaranteed if everyone involved gets on board and maintains a high level of confidence, even if that confidence is not based on much of anything.
Well, enthusiasm is important, but successful publishers are also very good at managing risk.
Curt Matthews is the founder (recently retired) of Chicago Review Press Inc., which, now under its various imprints, publishes 150-200 new titles a year and is the parent company of IPG (Independent Publishers Group), the second largest independent press distributor in the US. CRP is also the parent company of Trafalgar Square Publishing, which distributes in the US most of the major UK Publishing houses, including Random House and Penguin UK.