Tuesday, October 16, 2007

Editor + Financial Spreadsheet = Headache

Part of my job as an acquisitions editor/product manager is to determine whether the books we are considering publishing will make us any money. (If they won't, I guess we'd better not do them.) Once I got up to speed with the P&L (profit and loss) spreadsheet that I somehow inherited, this was a pretty simple matter: Plug in some numbers, and if the final number is positive, it's a go.

Numbers I have to consider include the following:
  • How many copies of the book we will print.
  • How many copies we will sell.
  • What the book's cover price will be.
  • How much of a discount will the bookstores take.
  • How much it will cost to edit, design, and print the book.
  • How many copies the bookstores will send back to us in the end.
  • How much money we'll spend on promoting the book.
  • What royalty we will pay the author.
  • What commissions we'll pay the salesperson.

After several years in the same market, it became almost instinctual. Sometimes we didn't even do P&Ls for every book because we could pretty much guess they'd do OK. And they did.

But now we've got a new owner, and we're trying to enter a new section of the bookstore. So I've turbo-charged our rickety P&L to do calculations over the life of the book, not just the first year. And I was also trying to do best-case, worst-case, and middle-case scenarios. I was up to my eyeballs in numbers. And the conclusion is this: My new book will either lose $12,000, make $1.2 million in profit, or something in between. (My money is on the in-between!)

As someone who entered publishing for the sheer love of the written word, I can't believe I'm the one in charge of all these numbers. It's like the time in middle school when they put me on the math team because I had all the math definitions memorized. (I was also a cheerleader, if that gives you any further idea of the caliber of our class.)

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