As you will know, budgeting is about balancing what you pay out against what you will earn. Many first-time self-publishers find it difficult to estimate how much they will earn. How will you ensure that your book’s cover price will be sufficient to meet your production costs?

Setting a price for your book early on in the planning process is critical. There is a science to the pricing of books, but, unfortunately, it isn’t an exact science. Here are some general rules of thumb that you need to consider.

• A small, independent retailer will usually take a 35 per cent cut when they sell your book.
• A large book retailer will demand anywhere between 45 percent and 60 per cent of the cover price when they sell your book.
• Amazon will ask for 60 per cent.
• If you use a book wholesaler (for more information see Chapter 9 on selling your book), they will take up to 55 per cent.

Unfortunately, as a small, unknown publisher you will not have the negotiating power to improve these margins to your favour.

WORKING OUT YOUR COSTS

To work out how much to charge for your book, you therefore need to do some‘backwards’ calculations! Using a unit cost, play around with various pricing options, using the following basic equation:

This formula is purposefully simplistic. Note that production costs will vary depending on how small or large your print run is. I recommend you do some budget calculations for at least two or three different print run sizes. (We will deal with obtaining quotes from printers in Chapter 6.) The following budgeting tables will help to get you started.

PRODUCTION COSTS

You will note how important it is to be as accurate as possible in your costings. For example, if your postage costs turn out to be 15p more expensive per copy than you estimated it might be, the difference comes off your bottom line – your profit margin.

You will also note how important it is to consider carefully where and how you’re going to sell your books. If you’re intending to sell all of your books directly, via postal order and other direct sales means, your profit margin will be more healthy. But have you budgeted enough for the advertising that will generate your postal orders? If you’re planning to reduce the price of your book for a key promotion, what will the reduction be? How many books are you estimating to sell via this promotion?

If you’re intending to send 200 free copies of your book to reviewers, you’ll need to factor in a 100 per cent discount.

In reality, you will probably sell your books at a range of discounted prices, and at this stage all you’ll be able to do for now is decide on an average figure to use for budgeting purposes.

Once you have reached a cover price that delivers the profit margin you desire, you then need to approach your costing from an opposite angle. You will need to be guided by industry pricing standards.

PRICING YOUR BOOK

If most paperback novels are priced between £4.99 and £7.99, you cannot price your own paperback novel at £10.99: it will not be competitive. There is more flexibility in the pricing of non-fiction

books, especially those for specialist markets, but you will nevertheless need to consider the price of similar books (size, format, quality) when you price your own.

If your own cover price is significantly higher than the competitive price for similar books in the market, you will have to reconsider your budgets. Overheads are normally the area that will have to be trimmed (but don’t immediately trim your marketing budget!).

It’s now that you’ll need to reconsider your four crucial areas of commitment to your self-publishing project: time, effort, money, and risk. Can you save money on your overheads by putting in more time? Can you save money on unit costs by printing a higher print run (i.e. take on more risk)?

You’ll need to revisit your costings during the pre-publication stage on a weekly basis, until you are confident that you’re publishing your book with a realistic understanding of

• a)what it’s going to cost you
• b)how you’re going to recoup these costs.