During one of the recent “Introduction to Self-Publishing” seminars that I teach locally, the group was discussing the bookkeeping end of the self-publishing business. While people were eager to know how to set up their new businesses and how to figure the bottom line, several lamented that I had made them aware of the enormous amount of effort required to self-publish successfully. They agreed that they would rather spend their time writing the next book than fiddling around with all the business involved in publishing, “because being an author is where the money is.”

One woman’s comment on the class evaluation form–”It will be helpful to know what an author can earn”–stayed with me long past the end of that discussion.

You had that brilliant idea for the world’s greatest novel, or saw an opportunity to write a nonfiction reference work about a popular topic on which little information was available. You decided, for several reasons, that self-publishing was the way to go. You took a class about publishing, read up on the subject, and hired top-notch professionals to do the things you couldn’t handle yourself (for lack of confidence, experience, skills, or time), like cover design, indexing, creating CIP data, laying out the interior of the book, printing, warehousing, and so on.

Your product did well in the marketplace, and you were happy with the results. You bought one of the small publisher management software packages and kept careful records.

Now that the time has come to do your taxes, you pull a handful of reports from the software and meet with your tax accountant to determine your bottom line.

You made $30,000 in sales in the first year. Not bad for a new author! Your expenses, including paying for the cover designer, indexer, printing, distribution, warehousing, and so forth, were $15,000. “Not bad,” your tax accountant agrees. “You made $15,000 as an author last year.”

No, you didn’t.

You made roughly $15,000 as a self-publisher last year. The data you provided to your accountant doesn’t tell you what you made as an author.

The Economics of a Double Role

When you self-publish, you really work at two occupations, author and publisher. Authors write. Publishers publish, and publishing entails specific tasks like arranging for editing, copy editing, design, layout, printing and binding, warehousing, distribution, bookkeeping, publicity, promotion, sales, and other elements of marketing–tasks that authors don’t do. For example, when author Anne Rice finishes writing a book, packages it, and sends it off, the publisher performs all those tasks required to physically produce and sell the product that resulted from their collaboration. Anne immediately begins her next book, and I doubt she spends much time contemplating what typestyle to use for the interior, or which booksellers should receive the boxes of finished books. That’s not her job.

The good news for Anne is that she knows how much her efforts as an author are worth. She gets lovely checks to look at, and all of them reflect her efforts as an author. For the rest of us, the checks that come in recognize the time and effort spent on writing, but they also represent the time and effort spent in the publishing profession.

For some of us, writing goes quickly (in my case–since I’ve been writing for a very long time–researching, writing, and editing my latest book took just three weeks). For others, it’s more tedious, and I’ve known several authors who have been working on their books for years, or even decades. In the end, how much time you spend on writing is insignificant when determining what you’ll be paid for that task. The income from the book is derived from a collaborative effort that leads to sales of the finished product, not from time expended in producing the raw product. Whether you complete a book in a couple of weeks or six years, you can end up being paid the same figure.

So in this writing profession, you cannot compute an hourly wage. For authors, such a thing does not exist. You can, of course, always work backward, taking total sales over a year and dividing by the time you spent writing, but that’s neither accurate nor realistic. If, for example, I saw $45,000 in sales last year on this specific book, some might think I made $15,000 a week as a writer. Not even close.

Most self-publishers don’t know their worth as an author. Here’s a simple way to determine what part of the return on a book can be allocated to the author, as opposed to that part allocated to the publishing side of the business.

Pay Yourself the Going Rate

Most publishing software packages can compute author royalties. If you self-publish, set up your software to track royalties for each of your books, to provide a report about what portion of the profits can be allocated to the writing job you did before you started working on the publishing job. Pay yourself a royalty!

First, you need to decide the amount of the royalty. A number of resources can help you determine the royalty an author can expect to receive from a publisher these days. Often, beginning authors get from 5 to 10 percent of net sales from smaller publishing companies, which may pay 15 or even 20 percent of net sales to authors with several published works that sell well. Keep your calculation method simple. Calculations based on net sales are by far the easiest to make.

It’s important to calculate a fair royalty–one that you would have had a good chance of receiving from an outside publisher. Don’t give yourself 20 percent if you’re a new author; it’s not reasonable, it provides no real-world data, and therefore it’s a waste of time. To a publisher, your value as an author is tied directly to how much your book earns.

Also, avoid calculating royalties on gross sales. While this is still done in the publishing world, and in fact is the norm for large publishers, it is not common for beginning authors with books in niche markets. It’s also harder to track and to calculate.

And don’t worry about a royalty advance. Many beginning authors do not receive advances on royalties when they deal with smaller or niche publishers, and publishers calculate advances in different ways. Since there’s no average (or accurate) way to figure an advance, ignore the issue.

You don’t have to actually issue a royalty check to yourself or waste time maintaining separate records. After taking a few minutes to set up the royalty in your software, you can let it tend to the tedious task of calculating your royalties. At the end of the year, run a royalty report in your software for each book you wrote and published. This will tell you the amount of your total income that was a direct return on your writing efforts.

In our example, the author had $30,000 in sales and was paid a 5 percent royalty on net sales because this was a first book. Royalties in the first year came to $1,500. Subtract that amount from total profit for the year ($15,000) and you’ll see that the author part of the self-publisher made $1,500 and the publisher part made $13,500.

Why Bother?

It’s important to bear in mind that when you self-publish, you’re really working at two very different jobs. The writing job has a different rate of return than the publishing job. Publishing usually pays better. Knowing how much return your publishing efforts netted often provides an incentive to stay at your desk and continue to do the tedious (and did I hear “unrewarding”?) work that comes with being a publisher.

For many self-publishers, it’s more fun and often a lot easier to write. But expending an extra five minutes of time to set up a royalty and produce a report once a year will give you an accurate picture of why you should not cut corners when the time comes to handle those publishing tasks, like sending news releases and following up with reviewers, that aren’t as much fun as putting a few more words down on paper.

I’ve had several former students from my publishing classes contact me a year or two after they started their publishing business, complaining about the time it takes to do the publishing job well. They’d rather write. It’s so much more rewarding. Or it’s easier. Or it impresses their friends. Or whatever. Fine, I tell them, but look what it pays. Putting more effort into the publishing part of your business creates greater return. But you can’t really understand that until you see it, in dollars and cents.

John Simone owns Three Pyramids Publishing and is a partner in Fat Boys Software, which produces Myrlyn: The Management Software for Small and Self-Publishers, available at a discount to PMA members as part of the PMA benefits package. He has been a writer for more than 30 years and has produced hundreds of books, mostly on computer hardware and software. His most recent trade paperback is The LCIS & DCIS Breast Cancer Fact Book. For more information, see www.myrlyn.com or www.three-pyramids.com.