Tuesday, September 25, 2012

TUESDAY TIP How to Calculate Pricing + Lead Time for Your Next Book #indie #pubtip #selfpub #iamwriting r u #reading?

Today I'll illustrate how to calculate the lead time and costs associated with producing your next book. This discussion is an excerpt from the chapter on "Resources" in my new book, The 22 Immutable Law of Marketing (for Indie Authors), coming soon. Click through the jump break to preview the excerpt now.

1) Estimate the time required to produce a book

You should have a budget—how much it costs in time and effort—to produce a book. Some people take longer to write a book, some books require more editing than others and some people just can’t seem to settle on details like a cover image or the description blurbage. I fly through the first and drag through the last but all of these activities are part of the production costs for every book.

Dean Wesley Smith has some fabulous articles on pricing, showing you exactly how to do them—and he even uses real numbers. All of his pricing articles are free on his blog but you might leave Dean a thank you in his Tip Jar if you find his articles helpful because he’s gotta make a living, too. Is 99¢ too much to pay for a template on how to correctly price your books?

I've written about 20 full-length novels over the years. Generally, for me, I know it takes me about 150 manhours (actual hours spent working, not time elapsed) to write a book. Then, if I work non-stop, uninterrupted on editing, without delays while I wait for others to give me inputs, I could probably edit that book in another 80-100 manhours. So my total time required to write a novel from original idea conception to "ready for prime time" airing is an average of 240 manhours.

That's an average. Some of my novels have taken less than 100 manhours to draft. Some have taken just over 200 manhours. Decades of experience with my own work habits tells me that my average is around 150 manhours (or just under a month if I were to work full-time on it) to get something cohesive that is reading for final proofreading by someone else.

How long do you take? A month? Six months? A year? A year or just over is average for most people (my rate of 150 manhours is fast, not average). Pick a number you know is reasonable and realistic. It’s only an estimate but make it as close to realistic as you can.

This is how much time you need.

2) Calculate your available time.

There are 24 hours in a day, 7 days in a week—or a maximum of 168 hours in a week. Start there, then subtract for things that are not related to your book production. For instance, let’s say 40 hours a week for working a day job and another 5 hours a week for commuting 30 minutes each way to/from work 5 days a week (45 hours for the day job). Allow decompression time from your day job, as well as time for meals, visiting with your family—assuming you live with family or if not, then visiting with friends because everyone socializes with someone at some point each week (say 3 hours a day for eating and talking to your spouse, children and friends, or 21 hours/week).

Plan to have other “life” stuff that you need to do (ever do your own laundry? shopping for all that food you’re eating? say ½ an hour a day for this stuff, averaged out, or 3 hours a week) and allow at least 6 hours of sleep a night times 7 nights a week (or 42 hour for sleep, minimum). That’s another 45 hours gone, so our subtotal of time is:

168 in a week
-21 for meals/family/friends
-45 for working a day job
-21 for “life maintenance” errands and sleep
57 hours left for book production and promotion

Rather than including promotion and other business activities like royalty tracking, taxes preparation, meeting with a lawyer or accountant in this 57 hours a week, I urge you to allocate a certain amount of time per day or per week specifically for promotion. Say 1 hour a day (or 7 hours a week) to do nothing but promotional work and allow for at least 1 hour a week (4 hours per month) for the rest of those business activities. You might spend an entire weekend on your taxes—once a year—but that marathon session of 48 to 72 hours will average out with the rest of your business-related activities to about 1 hour a week. Taking away 8 more hours from our 57 leaves 49 hours a week for writing, editing and other book production that is not promotion.

Notice there isn’t any TV-watching or movie-going or other entertainment expressly listed here but I have actually included that in the “decompression” time. If you need more than 21 hours a week to eat and “play” while you’re trying to launch a small business, you might want to reconsider being a small business owner. At least until you’re ready to commit the hard first three (yes, 3) years.

Also notice that Facebook, Twitter and Goodreads are not listed here as social media “entertainment” but should come out of that 1 hour a day allocated to promotion. Don’t play on your social media sites; it’s work. If you go over an hour a day, skip getting on at all the next day to even it out. Remember, after you’ve subtracted all of your own personal life from your 168 hours a week, all you have is 49 hours a week available for book production.

This is how much time you have.

Now what? Calculate the cost in money. If you have 7 hours a week available for promotion and let’s say your time is worth $50/hr, that’s $350 a week you’re spending on promotion. Don't waste your minutes on Facebook, Twitter, Google+ and other social media sites. If you're on there, make it count! Are you aware that for every 10 minutes you spend resharing Facebook meme pics, it costs you money?

Would it help discourage you from spending more than 10 minutes sharing pictures to think in terms of $50/hr or $350 a week? It stops me. I still spend at least 10 minutes a day, but only 10 minutes a day. I literally watch the clock while I'm scanning through my newsfeed.

Oh, and don't forget, I try to maintain multiple Facebook Pages, profiles, Twitter IDs, Goodreads Author accounts and now, I'm setting up LibraryThing Early Reviewer profiles, too. I don't do all things all the time. I divide my time and attention according to how relevant each account is at any given moment--and I re-evaluate that analysis daily (or at least, weekly).

Again, do whatever works for you but do something to monetize your own time in your own mind and keep a watch on how much time you spend. Use a kitchen timer if you need something clicking to discipline yourself or like me, use a large-readout digital clock directly in your line of sight while on the computer.

Then choose how you spend your time. Don't just do whatever you strikes you in the moment, not after you've spent time and effort to draw up this budget. Work to the budget. Assign your time and effort value and then don’t squander your assets, spend them according to the informed choices you decided to make when you created the budget. A budget isn’t a “limit on spending”; it’s an allocation of costs.

I spend less than two hours a week on Twitter by using Hootsuite Pro to auto-schedule promo tweets and I spend less than 30 minutes a week “freshening” the files full of prepared tweets to be auto-scheduled, leaving me free to actually engage with people on Twitter—which I do for maybe another 2 hours a week.

Again, do what works for you but do it knowingly, from a plan, not just “whatever happens, happens.” You’re running a business, not playing an online game.

3) Calculate cost of book production

To figure out how long—in months or years—it’ll take you to turn out a new book, take the production time from Step 1 and divide by your available time from Step 2 minus promotional efforts (which are ongoing for all books, collectively) and that’ll tell you how many weeks, months or years you’ll need for each book.

For our example, we have 49 hours available per week. Let’s say you can write and edit 10,000 words per week (final form) on a consistent basis. No one really writes exactly the same number of words each day or each week—or in perfect, final form all at once every time—but let’s say it averages out to 10,000 words a week, ready for sale. If your book is 100,000 words long (for sake of easy calculations) then you need 10 weeks (or 2.5 months) to produce a book, beginning to end, working non-stop, 7 days a week, relentlessly.

No one can do this without a break, not even me, but I do have days when I turn out 15,000 words—final, not draft. Unless you’re a Super Speedy Gonzales like me, you have to realistically calculate how many of those 49 hours a week you're going to be spent on producing the next book. For me, I know I need 6-8 weeks, but I figure it’ll take me at least 3 months to find those weeks among my life because life always happens to get in the way. Plan on life happening. You know you’ll be interrupted. Now assign a monetary value to your production time.

If you have 49 hours a week and spend 10 weeks, you’ve spent 490 hours. If you were to pay yourself, say, $50.00 per hour for all of the writing, editing, and your consulting time with people you hire, you’d be getting a bargain—and spending 490 hours times $50.00 per hour or $24,500 on producing your book. Wow. Really? Did you know your book is worth $24,500 before you’ve ever sold a copy?

Even if you think you’re only “worth” $10.00 per hour (which is higher than a wage earner’s average salary right now in the USA but a nice, round number for our calculations here), then that book is going to cost $4,900—not counting the cost of graphics design or formatters or others you might hire. How many copies will you need to sell? Now you begin to see why understanding pricing is so critical. If you charge $5.00 for each book, you'll need to sell 1,000 copies to finish recouping your costs--and that's if you think you're only worth minimum wage.

(According to the US Dept. of Labor, minimum wage varies from state to state with the federal amount set to $7.25 in 2007 and averaging $8.00 in states with minimum wage laws setting the rate above the federal number. There has been no raise in the minimum wage here since the law enacted in 2007 to be implemented by 2009. There are also several states with laws setting their local minimum wage below the federal rate--e.g., states in The Deep South--so $10.00 per hour becomes a relative high rate of hourly wage when taken contextually.)

Don't quit the day job yet and don’t go into debt to hire someone to do a lot of the production for you. Wait until your books can support their own budgets. Take your profits and reinvest them. The second you earn the production costs—or close to them—start reinvesting your profits. Plan on taking no profits “for fun” or “just for yourself” until at least three (3) years down the road.

Back in the 1990s, I ran my own web design and development company and did consulting in online marketing. I didn’t see my first profits (earned more than I spent to stay afloat) until the end of the second year. I had to reinvest in software and computer equipment to keep pace with the changes that the advent of the web spawned. We used to call it “the speed of the internet” and generally, we found that something that was true at 9:00 a.m. might have become obsolete by 5:00 p.m. that same day. We had to not just think on our feet, but think into the future. The same is true of Digital Publishing. By the time you produce a book, your choices might have become obsolete. Plan ahead. Plan to become timeless, to produce quality work that won’t reach the end of its lifecycle before you’ve reached the start of your profitability.

Lastly, remember that the average small business can take between 18 and 36 months (that's 3 years) before it turns a profit. Don't be discouraged, don't be impatient, don't give up. Three years can go by a lot faster than you might think if you keep busy turning out the next book.

[more to this chapter will appear in the finished book]

The content of this post was excerpted from the final chapter of Webbiegrrl's book, The 22 Immutable Laws of Marketing (for Indie Authors), which will be released in both digital (eBook) and paperback forms. Check back here for news of where to buy it or follow @webbiegrrl on Twitter for a link.

What's Next....
Next week's Monday Marketing will look at Immutable Law of Branding (for Indie Authors) Law 21: Mortality. No brand lives forever; sometimes killing your brand yourself is the quickest and least-painful option for a brand that isn't working for you.

Hope to see you then!

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