Secret (Literary) Agent Math

Tortuga Bay earned two gold medals in the FAPA President’s Awards

Ever wonder why literary agents and book publishers don’t take on your awesome, life changing book project? It’s in the math. Literally. This point was recently reinforced by a fellow author struggling to get her book signed at a traditional publisher. At one point, she asked an agent to consider representing her. The agent respectfully declined, saying that the press run was too small for the project to be worth his while.

As the number of literary agents becomes smaller, and the number of conventional publishers shrinks, authors need to understand the basic logic underlying these decisions in order to shepherd their project productivity and profitably forward.

So, here’s the math that dooms the vast majority of books in today’s market for traditional publishers (and opens the doors for savvy companies with nonconventional business models).

First, recognize that publishers, unlike authors, exist first and foremost to make money. They can’t exist publishing books people don’t buy. So, while we (authors) may be convinced of the objective value of our work, publishers see mostly risk and uncertainty. Their goal is to minimize risk, and they accomplish that by choosing projects with the highest sales potential. You may have a great book, but not one that will appeal to a large enough market to make their investment profitable.

Taking a book from manuscript to printing to distribution requires a substantial investment upfront. Excluding the time and effort it takes for authors to write the manuscript, a conventional publishing company can easily invest $15,000 or more just in bringing a book to print. Here’s a quick back of the envelope breakdown of the costs for taking a book from manuscript to print (excluding printing and mailing costs), based on my experience costing out print projects and working with publishers on seven different book projects. (Note that this is a highly stylized estimate for illustrative purposes; each book has its on unique costs associated with the project specific to individual publishers):

  • Acquisition & project management: $5,000
  • Editing, copyediting & proofreading: $5,000
  • Cover design, layout: $1,500
  • Marketing: $5,000

Now, let’s compare these costs to the revenue the publisher can expect from book sales. Let’s start with a mass market paperback with a retail price of $10. This would be more typical of books published by major national publishing houses.

  • Discount the revenue by 50% off the retail price because books are sold to retailers at wholesale, leaving $5 per unit for the publisher;
  • The author receives a 20% commission on net revenues, or $1 per book, leaving $4 for the publisher;
  • Very large press runs (5,000 or more) can bring printing costs down to about $2-3 per paperback book, leaving $1-2 per book to cover editing, acquisitions and overhead.

It’s pretty clear that for a conventional publisher facing these costs would need to sell upwards of 7,500 copies just to cover the upfront costs of publishing this book. The publisher hasn’t even started to make a profit. Moreover, since many books fail to meet sales goals, publishers have to build these losses into sales expectations for new projects. So, they are likely shooting for a minimum sales target of 10,000 copies or more. (Remember, they still aren’t making money if they hit this target.)

Raising the retail price helps, but only by a little. Increasing the paperback price to $15, for example, reduces the break even unit sales point to about 3,700. Raising the price to $20 reduces the break even sales to about 2,500 (although this might begin to increase per unit print costs).

Here’s the reality check: The vast majority of books published today sell fewer than 1,000 copies. So, it becomes pretty obvious that most mass market publishers need to acquire books they believe will sell a lot of copies and appeal to a broad market. Traditional publishers and agents are looking for those projects they believe will move lots and lots of units. (Note: The logic, but not the example, works with smaller presses and university presses as well.)

Moreover, the value of a literary agent is in placing books with publishers that can sell large numbers of units. Most large publishers don’t even take unsolicited or unagented manuscripts because they expect agents to send only projects with very high sales potential.  In short, publishers and agents need to be completely, 100% in love with your book project and believe there is a very large market for it before they will take the financial risk of publishing it or representing it for publishers.

So, don’t be too discouraged if your book isn’t picked up by a literary agent or a conventional publisher. They’ve probably just done the math. If your book’s market can’t meet these sales thresholds, an alternative or nonconventional publisher is probably a much better route to paying readers than beating your head against a wall for years hoping that an agent or traditional publisher will “see the light” and bite the bullet on yours.

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