How Do You Make a Living Writing Fiction? A Look at the Numbers
Passive Guy hit the wall with math in high school. He searched in vain for a college that didn’t require the math part of the SAT exam.
If Excel hadn’t been invented, PG would have required some horrible-looking finger transplant to add or subtract double-digit numbers.
Author Dean Wesley Smith has gone on a numbers binge. These numbers will interest even the most innumerate of authors because Dean shows you how to earn a living writing fiction.
Excerpts:
Start from the premise that I am a professional writer.
Start from the premise that I want to make $100,000.00 per year with my fiction writing.
Start from the premise that I can write four novels a year. (About one hour of work per day…1,000 words per day total. 80,000-90,000 word novels.)
Start from the premise that I only want to indie publish. (Ignoring all other income from sales that will come an indie publisher’s way such as translation, movie, audio, and such.)
Start from the premise that I will make this money like I make it in traditional publishing advance and royalty system. (When I make $25,000 on a book in traditional publishing, it comes in three advance parts for a $20,000 advance and $5,000 more in royalties over a few years. About five years total time to earn a full $25,000 traditionally publishing a book.)
So to the math:
I want to make $25,000.00 per book paid out over a 5 year period.
$25,000 divided by 5 years = $5,000 per year per book.
$5,000 per book divided by 12 months = $416.67 cents per month per book.
$416.67 per book divided by $3.50 per sale = 120 books sold per month per book. ($4.99 cover x 70% = $3.50)
That means across all sites (iBookstore, Sony, Kobo, Smashwords, Diesel, B&N, Kindle, Createspace, bookstores, and all the overseas ebook sites) a book must sell 120 books in a month regularly, on average, to make the author $25,000 over five years.
That’s right! 120 books per month to make $25,000 per book over five years.
And if you keep writing books at the 4 per year pace, in the sixth year you will make more than that $100,000.00 per year when all your books average that sales number. And you will have made far more than that total income over the five years.
Link to the rest of the numbers at Dean Wesley Smith
, Amazon will pay Passive Guy a small affiliate commission on any of your purchases. 
It sounds good, but the presumption is that you can find 120 people to buy your book every month at $4.99. That may not necessarily be possible.
I know he’s dismissing the .99 sale price, but I’ve seen so many authors use it to their advantage to get their books on the bestseller lists, and then their sales take off exponentially from there.
Sariah – I think there is likely more than one formula for success in self-publishing.
Sariah,
Dean’s post is worth a detailed read. He addresses the $.99 price alternative specifically. Because of different royalty rates, an author needs to sell 1200 books every month to match the income from a $4.99 purchase. He also discusses expected sales and the level of sales authors can expect over time.
Lots of factors are at work here, most of them psychological. $.99 is an easy impulse buy, where $4.99 takes a little more commitment to the purchase. But the flip side is a perception of value.
There’s a lot of research out there which shows that, when a buyer has a low purchase price, there’s a low expectation of value. I remember an interview with a CA humane society director. She more than doubled the price to adopt a dog (from, say, $50 to roughly $250). Adoption rates went way up, failed adoptions (where the pet was returned or abandoned) went way down. What she did was she matched the price of the experience to the value a customer could expect to receive.
Personally, I’ve only bought one sub-dollar ebook. I’ve bought many at between $4 and $9. If someone thinks their product is only worth a buck, I expect to get the same value I receive from a $.75 Twinkie — not all that much. That doesn’t mean $.99 ebooks are low quality, but that price is a signal of quality.
Pegging your books at $.99 is different from, say, Bob Mayer’s approach of a subset of books discounted to $.99 as loss leaders to hook readers and draw them into the higher priced ones, too. Loss leaders expect to have upsides.
Rich – Do you think 99 cent books damage an author’s brand over the long run?
“Brand” is a complicated idea, but it boils down to the customer’s perception of value associated with a product/provider/organization.
Pulp novelists tended to be treated as pulp novelists. That doesn’t mean they didn’t write great stories. It means they associated themselves with a market, and built fans and expectations around a particular community. If you need to transition between markets, you need to reestablish the brand, which can be hard to do (think Ford on quality in 1975 vs now, child actors growing up, Tylenol after the tampering scares).
In general, discount providers (companies who sell a commodity product based on the lowness of their price) attract buyers who buy based on price as long as minimum quality is exceeded. I go to Walmart because I pay less and the stuff is fine. When I want premium quality, I go elsewhere.
Books are different for lots of obvious reasons, but price is still a key signal in brand (including author brand) perception.
As you suggested, there are lots of roads to indie success. Personally, I’d rather be identified as a teller of very good stories at a fair price than an easy choice when someone doesn’t want to make a real investment in a book. There’s no right answer to there, though. And if you can sell enough really cheap books, you can still to really well. Walmart still makes a ton of money.
Good analysis, Rich.
Authors also have one additional tool in branding – pen names. Dean writes under several different pen names and my guess is that each is a separate brand.
I did read it carefully and even commented on it – but my question is about getting your foot in the door. Certainly Dean Wesley Smith can sell 120 copies per book per month.
I’ve seen too many indie authors who are selling 15 books a month at most. And I’ve seen several use .99 or free books to get on to lists that keep them as a bestseller, and then they see a marked improvement in their other books (particularly if they’re a series). Just saw a post from an author who lowered a price to .99 (was selling maybe 10 copies a month per book) and then her secondary, still priced higher books, jumped up into the hundreds. Loss leaders are highly effective.
And in my real life, I’m a bargain hunter. I’m one of those annoying people in line with a million coupons who spend $20 for $200 worth of groceries. I buy tons of .99 books. So I certainly do understand the psychology of a higher price point as it might equate to quality, but for me, it’s a little hard to get over the excitement of finding books I like at a lower price (although I’ve read some dogs, too).
I do plan on using loss leaders. But I’d need to have more than one book for sale in order to have one of those.
Sariah – I think we need more success/not success stories from indie authors who are willing to share their experiences and numbers.
I agree – they’re definitely my favorite threads over at indie boards – to try and figure out what’s working and why.
And from my observation – a .99 price can get you on bestseller lists. Which makes more people try you out. Which gives you more of a chance to find fans who love your book and will buy the next one. It got Victorine Lieske and Courtney Milan on NYT and USA Today bestselling lists.
I’ve seen several authors who have leveraged those hundreds of thousands of book sales into traditional deals, even if they didn’t make as much money.
Not to mention that every time book buyers are surveyed, hands down the number one reason they buy a book is familiarity with the author. .99 can get you familiarity.
I think the .99 price point is like the Wal-Mart method. I could go Nordstrom’s, and there’s certainly an audience that may/may not buy at a higher price point, but you might sell at a much higher volume at a lower price. And looking at John Locke again – $350,000 in FIVE MONTHS is not bad money, and is even more than what Dean Wesley Smith is proposing!
(I know, I know, he’s an outlier that doesn’t count.) Everyone talks about the money John Locke left on the table. But did anyone consider that he most likely would NEVER have sold in those numbers had he not been priced at .99? That he might have continued at that 63 sales a month he had back in October 2010? At $4.99, he’d still only be making $300 a month or so.
But at this point I’m almost willing to go with the Konrath belief that it’s luck and I have to do the best I can and hope Lady Luck smiles on me.
Sariah,
I don’t know that we disagree all that much. Low price books as a jumpstart approach leading to something else is perfectly workable within the non-$.99 approach Dean advocates. A self-publishing author selling $4.99 ebooks is not that different from a customer’s perspective than a trad publishing author selling $5-8 ebooks. The price, and so impulse barrier, are the same.
What I like about Dean’s approach is that it’s aimed at long term writers with non-outlier success levels. He addresses the everyman writer. Locke sold a lot of books in a short time, which is fantastic. That doesn’t make low price forever as the best recipe for succes. Konrath’s posts about experiments with different prices and their effects on sales are valuable. Bob Mayer’s discussion of his success with low price leaders and “standard” prices for the rest lays out another viable approach.
PG is right. There are lots of paths. Widespread direct access for authors to readers is a new world. It’s going to take a lot of experimentation before the “rules” shake out.
I agree that it’s important for us to experiment and see what works best for us and our target audience.
I also wonder how long the $4.99 price will be usable. If publishers start radically lowering their prices (say, half of what the prices are now), $4.99 will no longer be a deal. Both Mayer and Konrath seem to price their books at $2.99. I think that’s the price I’m leaning toward, particularly given that in romance, Harlequin will sell stories at $3.24.
I’m finding that it’s important to be flexible because it seems like everything changes so quickly!
I don’t know about any of the other new authors out there, but deciding the best price for my first few books is one of the hardest decisions to make.
When I first made my business plan for my writing career I set out prices depending on book length. From what I’ve been reading over the last few months, I’m now in two minds. I can see the reasons behind both lower and higher prices, but like Sariah (Great name. Can I use it in one of my novels :>)) said, the lower price can get familiarity for the authors, which new authors need.
However, will the readers who buy the $.99 books expect all books by the author to be that price? If that became the norm, it would make it more difficult to make a living as a writer. Unless, of course they could sell the sort of numbers that John Locke is seeing.
Paul
Paul – As I mentioned to Rich above, pen names can serve as branding tools for authors. One pen name for 99 cent books and another for $9.99 books.
A college that doesn’t require math… http://www.evergreen.edu/
Anthea – If only I had known you before I went to college.
The greatest unexpressed fear of anyone making the pricing decision who isn’t an established author already has to be the worry that pricing at $0.99 will condemn the work(s) to obscurity, simply because there are so may ebooks priced at $0.99. That’s almost a complete argument for pricing higher.
I enjoyed stopping by your blog and reading your posts. You have so much interesting reading here! I am glad I found your blog!
Thanks, Maeve. Come back often.
[...] Wesley Smith’s math-filled blog post on how to make $100K per year writing fiction generated a lot of comments here [...]
Interesting thoughts on pricing.
I just published my first kindle book. It’s 100K words, and is getting nothing but 5 star reviews. I’m getting e-mails from new fans who read it and loved it. I’ve been told again and again it’s easily the equivalent of many $9.99 paperbacks, and yet I priced it at an initial price of 99 cents.
Why?
I’m an unknown. I need a certain number of folks to take the book for a drive and write reviews. And I want to get my sales on a ramp. Do I base my writing career on projections of income from 35 cents of revenue in perpetuity? Of course not. Future novels will be priced higher – because they’re worth more. Even this one is. I understand that.
I also understand the Lexus marketing strategy – they sold their first years of cars at or below their cost, to establish a foothold in America. Once the mark was synonymous with a certain level of quality, they raised prices, and their customers went with them to the new level.
I love statistics and projections, as they can say whatever you want them to. This discussion is a moot point. The reality is that consumers will ultimately determine what price they’ll pay for a product, and it likely won’t be at the upper end of the pricing curve. My hunch is that within 2 years, this pricing discussion will all be sorted out.
Russell – Thanks for your comments.
We’re still in the very early days of self-pubbed ebooks and the adoption of ereaders by the book-reading public, so prices are going to be fluid for awhile, with lots of different people attempting pricing experiments. In a few years, the market will have developed a few more rules that seem to work in most cases, but right now, authors are searching for the optimum pricing structure for single books, books in a series and multiple books.
Russell, I have a hard time seeing $4.99 (the price DWS recommends for novels) as the upper end of the pricing curve. It certainly isn’t now, given that big publishing houses are charging $7.99 – $14.99 for e-books.
I think we need to watch. My take on how this is going to unfold is using the i-tunes model, where consumers won’t be willing to pay more than a few dollars for anything. Will there be exceptions? Sure. I hope I wind up being one of them. But if you want my gut on this, it’s that the traditional publishers know they are hosed, and know their revenue is going to suffer badly, and most notably know that their death grip on quality content is broken.
Will they disappear altogether? Maybe. Or Maybe they’ll have to get more realistic about pricing, and have to cut the fat in their industry so they can get a product to the consumer at a price the consumer wants to pay. All of this is coming down to technology rendering the industry obsolete in many ways – and that results in a loss of pricing power. Simply put, authors aren’t going to want deals where they give up a massive chunk to the publisher if all he’s doing is pretty much the author could do with a little effort – cover, format, edit. IT’s the marketing where they might have a believable advantage, but as their margins drop to near nothing, even the marketing advantage will fall away, and what we’ll be left with is an environment where building the author’s brand as a quality voice will command the higher bucks. IT will be more equitable, and more merit driven. Everyone wins – the consumers, the authors, the contractors – just not the publishers. So they’ll have to find a different model, or go the way of the horse and buggy. This is all good, by the way. Industries do require seismic shifts in order to advance. IT’s never easy or pretty, but it always inevitably good.
Russell – Excellent points. I agree that book prices will come down.
The problem for publishers is that in order to pay large advances, they need high wholesale prices. They’ll never be able to compete on overhead with an indie writer, even if that writer is hiring some services. The publishers’ brand is of value with bookstores, newspapers, reviewers, etc. With consumers, it’s the author’s brand, as you mention.
The problem with the iTunes model is that so many people, in choosing to the model, forget that a full novel is not a single song. It’s an album.
How much are albums on iTunes? Oh, right. $9.99.
One thing to keep in mind is that the larger publishers aren’t very nimble. They can’t simply cut the prices of their ebooks, as their overhead costs are static. Most publishers lease buildings and equipment. Such leases are multi-year contracts, and it’ll take time to be able to trim operational fat.
Give the Big 6 a few years to get lean – and probably go through a merger or two – and they’ll get back in the game.
L. – Agreed on nimbleness. They’re also worried about preserving their physical bookstore channel and don’t want to undercut those sales with less-expensive ebooks.
I have no doubt that we’ll always have publishers. I do believe they’ll look much different ten years from now than they do now.
[...] More from Passive Guy this week, a summation of Dean Wesley Smith’s numbers on how to make a living writing fiction. [...]
[...] a highly instructive by-the-numbers perspective. One of my favorite blogs, The Passive Voice takes it on in a couple of posts (the last also includes a shameless plug, which makes PG’s blog no less [...]
On the issue of “getting a foothold”:
There are a lot better ways to do it than simply marking your first year or two’s work at .99c for novels. You could, for example, do the legwork of sending out a few hundred review copies to bloggers. You could chose one or two to record as audio podcasts. You could blog one, and include a purchase link at the end of every chapter for those readers who can’t stand to wait through the cliffhangers.
Really, there are dozens of things you can do to drum up interest in a way that will attract people who like to engage (what Gladwell calls “the mavens”)–and at the beginning, particularly, those are the people you want. They’re the ones that talk about books to their friends, that mention them in blogs, that leave reviews, etc.
Yeah, it can take a bit longer to build this way, but in that build time you’re also (I hope) writing more books, so that as the audience grows you have the material to feed their appetite. You want them to develop a taste for you, so they’ll come back around in six months and see if the next installment in your series, or the next standalone book, is out yet. And if it’s not, you want them to be disappointed, and email you asking where it is. THAT is how an audience is built.
You surely will catch some of those same people competing on price. But not a lot of them.
Now, if you’ve got a lot of books out in a series, or better, in multiple series, setting the first or second volume to a deep discount can be a great attention-grabber, on the dope peddler model. Your existing fans decide to give the new series a try *now*, because the cost of entry is low, rather than putting it off until they finish their current to-read pile. That can work very well.
Or a holiday sale, or a short-term special. That can work too.
But if price is ALL that you’re using to distinguish, if the only reason you’re lowballing is to “get a foot in the door,” then I suspect you’re just spitting into the wind (and before you mention Locke or Hocking, remember that they were both doing a LOT more to attract attention than just lowballing. And in Locke’s case, he was using the lowball as a rehtorical device in a strategic way, he wasn’t just setting a low price to get his foot in the door).
For what it’s worth
–Dan
Dan – I think everyone is climbing a steep learning curve and balancing marketing and writing is a challenge for every author, including me.
Me as well