Business of Publishing: How to Write a P&L statement
This is the ninth post in our ongoing Business of Publishing series by Joe Biel, the author of A People’s Guide to Publishing. This edition tackles an important but more advanced question, “how much can I afford to spend on the book that I am publishing?”
While, on the surface, any answer to a question like this seems to be built from a steady diet of bullshit, books are remarkably consistent. Unlike cookies or soft drinks, most books are not branded. A book from a major house sits next to your book and others from indie presses. If you’ve successfully developed your book, you are providing each reader with enough information to make a choice based on their own experiences, observations, and tastes.
Let’s begin! For those following along at home, I’ve created this spreadsheet that you can download or duplicate and edit. And as you’ll see, there are fairly predictable formulas for everything.
The upper left hand corner begins with the title, author, and book’s release season. Lines 5 and 6 include retail prices for each format. If you’re doing a hardcover, you’d include that as well. Lines 9 and 10 list the author’s royalty by format as well as any advance payment that they receive. Traditionally this advance is your projected first two years of royalties paid in advance.
Line 13 is income from selling film or translation rights or foreign territory rights but it’s best not to plan for this in advance since even commitments can fall apart as the licensee changes their plans.
Beginning in column D, lines 4-5 predict what will likely be the sales in bookstores as well as returns and revenues. These numbers are based on your comparable titles and their selling habits. It’s best to be conservative here so that your expectations are reasonable and you aren’t shocked when you see your actual sales and returns.
Lines 7-8 predict similar sales in the direct market, which would include sales at your own events, via your own website, to non-trade stores that buy non-returnable, and books sold to the author. Again, these numbers should be conservative and based on figures in reality that you are seeing elsewhere.
Scooting over to column I, we’re looking at the publisher’s expenses for putting the book together from editorial to production to licensing to eBook conversion to paper, printing, and binding costs. Fiddle with these numbers to see what you can afford for a project before committing with an author.
Next, back on column D and lines 12-16, we’re looking at sales minus returns minus development costs minus author royalties. This will tell you what your gross profit is.
Next, we subtract operating costs (“the bottom line”), like rent, staff, telephones, envelopes, warehousing, etc. These should comprise every expense that you’ll have to pay for even if you don’t work on a book during a given month. Subtracting your gross profit from your bottom line will tell you how much actual profit the publisher is earning from each book. In this example, it’s less than $62. This example represents the most statistically likely outcome for a book like this. Publishing is about volume so to make up for these low returns, you can either produce tons and tons of books (called a “paper mill” in the industry”) or land a few heavy hitters every year. Your choice, kind of.
Another vital part of the P&L is to evaluate a year or two later how well the book did against expectations. If a book does not sell as well as expected, it’s important to figure out why. Was tons of new competition added? Did interest in the subject fade away? Was it revealed that the author’s cure for cancer was actually bogus and their credibility tanked? Was there a major developmental error in the cover/title/subtitle that confused readers about what the book offered or how it was unique? Answer these questions. Similarly, if a book did better than expected, it’s similarly important to figure out why and repeat these events with other titles.
Alternately, to demonstrate how these traditional contracts still benefit the author, I showed an alternate royalty model where the author takes 50% of the profit. But as you can see, comparing cell G29 to G15, 8% of the cover price ends up being more than 50% of gross profit in most cases until you really land a bestseller.
Due to Amazon’s immense marketing budget and campaign to convince authors that publishers are greedy and obsolete, many authors don’t understand why the traditional 4-8% paperback royalty is still much more in their favor than self-publishing on Kindle and CreateSpace so I’ve made a chart for that too.








Thank you. I would like to believe that I’m cautious about everything but most of the rest of the staff would probably disagree. In prehistoric times, a memoir was simply a story. If we’re using marketing terms, a memoir could simply be a nonfiction novel. But a novel has a narrative, characters, plot, a theme, and an arc. Many writers don’t engage the reader as a stakeholder in their writing and many of the memoirs that are submitted to us are expected to be published on the grounds that they have been written. For a memoir to work, it needs to have all of those components and have a clear concept of what it is, who it is for, and how it is different from the pack. My book is for would-be publishers, adult autistics, Microcosm fans, and people who want to start businesses. There needs to be at least 5,000 of these people out there and we need to know how to reach them. I am too close to the work to tell you if mine succeeds but thankfully everyone who I have heard from so far has enjoyed it immensely so I am thankful that I have good editors and that I put so many hours into it.




I wrote a book that I, personally, absolutely loved and felt like it represented everything about me as a person and as a writer. I submitted the hell out of that manuscript. After 68 rejections (too personal, too raw, too dark, too taboo, etc.), I just put the manuscript away and worked on other books. Two years later, I submitted an essay to a contest. The editor loved my essay (which won!), and emailed me asking if I had a manuscript. The one I was working on at that time wasn’t ready yet. I remembered the first book I wrote—the one I loved, the one that defined who I was when I wrote it. I thought, “What the hell? Why not send it?”. I sent it. She loved it. Nine months later it was published. I had found the right editor at the right time and presented to her the right manuscript, and
In 2014 at the Pacific Northwest Booksellers Association (PNBA) trade show, as Microcosm was debuting Erik Spellmeyer and Jamie Floyd’s
In 2007 while Microcosm was at the Bay Area Anarchist Book Fair, a couple approached our table during the last hour minutes of the final day. They pawed around through our displays for a few minutes and then, looking concerned, before finally asking “Hard times, huh?”