More on Accounting and Ebooks

After I finished yesterday's post and was mulling it over, another piece of information came back to me from one of my old accounting courses.

I didn't intend to be an accountant. I took English at university, over my parents' objections, but I had no idea, when I graduated, that there was any option for me but to get whatever job I could with an English degree. I was far from innocent about things I should have been but naive about ordinary parts of life. I had no one to tell me that there were all kinds of jobs an intelligent person with a basic post-secondary education could start with, or that I could go on with my education. (Before university, there had been a teacher, a Vassar alumnus, who had wanted me to apply there; but I didn't believe I was that kind of student, and I didn't understand how I could possibly get the money.)

I knew so little about the options (school loans, grants) that when I did need money for schooling later on, I just went and got a bank loan at the current rate, which was 18%.

I had worked in offices as a teenager to make money for university, so after I graduated, I opened up the want ads to office work. I got a job first as a receptionist and then as an order desk clerk at a factory that manufactured picture frames. (In those days, things were still manufactured in Canada.) By the time I'd been there a year, I was one of the most senior employees. It was that sort of place. My bosses sneered at my education and believed, in turn, that I must be mocking them behind their backs. I was too scared to.

It was odd that I decided to become an accountant. But it was a low time of my life when I thought little of myself and devoting myself to the last occupation on earth I'd ever considered made sense. I went to school at night 4 times a week, taking university courses in business. I got that loan to finance it. I studied my butt off to pass exams and I became a chartered accountant.

It was ok, really. At work I was treated with respect as a person with a brain and that was my first experience of it outside of school. And it beat waitressing as a way of supporting writing.

But back to the bit I remembered after I posted. You see dividing up your fixed costs across all your products, books as I was talking about, makes sense in terms of pricing, but it can lead to bad decisions.

Let's say you figure out that if you sell 200 books, your fixed costs amount to $10 a book. And that your printing cost is $1 a book. The author gets $1. You set your price at $16 and you, the publisher, get $4. Fair enough.

What happens if you have the opportunity to sell another 100 books but only at $9 a book. You decline. No thanks, the price is too low. But that doesn't make sense if the next 100 doesn't require you to hire any more staff or expand your offices.

You've already covered the costs by selling your first 200 books. The next 100 are gravy. Really all it costs you are the printing and royalties. You'd be making $700 selling those books.

So if you realize that what you need to do is cover your fixed costs and then you're free to devote yourself to whatever you, as a publisher, value–then what would that mean? These are issues I don't see anyone looking at but it would present a range of choices for both part a) covering fixed costs (eg gamble on a bestseller, have a line of cookbooks, develop a backlist) and then b) books of value (art, experimentation, literature, young authors, niche markets, works in translation, graphic novels, you name it).

As I said yesterday, we don't have to worry about those things. Writers just need to keep on with it. But we benefit, too, from being released from the line that we're fed about how the market (as if it's a thing) works and what the numbers really signify.

It's easy as masters of words, which can create a mood or make a case, to think that numbers are different, that they're more solid, immutable. But that isn't the case. I'm reminded of an old joke.

People are lined up to apply for a job as accountant for the Tzar. The first person in the line goes in. He gets asked, "How much is 2+2?" Four, he says. No job.

He comes out, everyone asks what happened and he tells them. So the next person goes in and answers 3, the next 6, the next 0, the next 8, then 2, and so on. None get the job. Finally someone comes out smiling. Yes! He got the job.

So how did it go? he's asked. How did you do it?

He says, "They asked me how much is 2+2."

"So what did you answer?"

He shrugs. "I said, How much do you want it to be?"

Filed under: Literary, Miscellany Tagged: accounting and publishing