Where Publishing Gets Practical(sm)

Printing on Demand

To successfully use Printing On Demand (POD) for the publication of your book, the complete document must be in an electronic format. These days, this is normally the case. However, if your book has illustrations or photographs that are not presently electronic, then these must be scanned and "placed" in your book as electronic files.

The concept of printing on demand is that you only print a book when it is ordered. While this concept is certainly the epitome of POD, it is not usually practical for the small, independent publisher. POD equipment is extremely expensive. At the very least a publisher may expect to invest upward of $50,000 for a basic POD system (that will involve considerable hand labor). A Xerox Docutech costs from $250,000 and up depending on options. Océ and IBM have fully automated POD systems--the file goes in one end and books "fall out" the other with (at most) minimal human contact along the way. These POD systems cost upwards of $1 million. Clearly most of these systems are outside the budget of a small, independent publisher.

How can the publisher take advantage of POD?

Fortunately, a publisher does not need to own POD equipment to get most of the benefit from publishing on demand. The publisher can use the services many regular book printers, who have added POD services, some 'copy' shops that have established reasonable pricing for book production, or of one of the many operators of digital presses to handle the production. Since most digital printing companies are not (yet) fully attuned to the needs of small, independent publishers or POD for books, you may need to work with your selected vendor and mutually educate each other.

POD for the independent publisher will probably have to miss the ideal but will secure most of the advantages by only printing a small quantity at any one time. This approach will minimize investment and inventory carrying costs and may result in lower overall costs even if the nominal unit cost of the book is higher.

The Traditional Publishing Model

In the traditional scenario, the publisher decides to print an "economic order quantity" of a particular book. For small publishers, this may be 1000, 3000, 5000 or more copies. The more books you order, the lower the unit cost. Using an example of a 208 page soft cover book, the cost per unit might be: 1000 qty=$2.66 each; 3000 qty=$1.95 each; and 5000 qty=$1.46 each. (This reflects "typical" printing costs--prices vary (that's why you get estimates) and the prices do not include some "fixed" costs for design and production of the book, cover, or film, plates, or proofs. Since book/cover design and production costs (of the master file) are the same for either traditional or POD, we'll ignore those costs. A printer might charge set up fees (on our 208 page example) of about $300 for plates, films, etc. Some POD shops may charge a 'RIP' fee for the electronic preparation of the file.

This requires the publisher to invest at least $2960 for 1000, $6150 for 3000, and $7600 for 5000 books. A 200 page (approximately) book might retail for $18.00--20.00 per copy, or perhaps more depending on the topic. Using the typical publisher's overhead, markup, royalties, and other costs, we would probably want to print at least 3000, if not 5000 copies to keep the book cost in line with our retail price. (Publisher's rule of thumb: retail price should be eight to ten times the production cost.) Assuming a $20 retail price and a net average sale of $10 (50% off list) to the publisher (from all sources), it will require sales of 615 to 760 books to pay for the printing. Throwing in some other costs (review copies, publicity and marketing costs, production costs, overhead), our break even point will require sales of more than 1000 books.

The risk: A publisher never knows how many books will sell for any given title. With the "right" program and good timing (e.g. a well publicized book by an established author on Princess Diana that reaches the market the week she died), the publisher may sell hundreds of thousands of copies. Most small publishers will never face these challenges! More likely, the book will make some initial sales--a few hundred copies or perhaps a couple of thousand. If sales are to continue, the publisher and the author must keep up marketing and publicity efforts. If the book does well, it could be reprinted and sell several thousand copies. If the book is poorly received in the market, it may not sell more than a couple of hundred copies. (This is how small publishers end up with a "garage" full of books!)

The POD Model (Revised)

Situation 1: The publisher sells out the first (normal) printing. (That's good news.) The book took about thirty months to sell out. Initial sales reached 300 per month, but during the last six months, sales have averaged 25 copies per month. Now what? Do a second printing of 1000 books? That would give you inventory for 3+ years, if the sales don't slow down any more. And, it would take nearly a year to recover your printing costs on the second printing (if sales stay constant at 25 copies per month).

Converting the book to POD might increase the unit cost to $4.00 (initial production costs have been recovered at this point, so you don't need to consider them further). If you run 25 or 50 copies per order, you only need to sell 10 or 20 copies to pay the printing costs. With 25 copies per month sales (probably declining over time) you can continue to make a profit on the title without making a risky investment in a large inventory. Eventually, you may only want to order reprints 5 or 10 copies at a time as the demand trails off. In the end, you will probably only have "excess inventory" of 2 or 3 books.

Many "general interest" books fit situation 1 very well and can be profitably produced using this scenario.

Situation 2: Plan the book as POD from the beginning. Since you won't tie up your cash in inventory for an extended time, you really can afford to pay more for the unit cost of production. This is called the "opportunity cost of capital." If I invest in book inventory, then I can't invest (that same money) in something else (that might give a higher return).

I estimate that my book will interest a fairly limited market. I don't want to invest thousands of dollars in inventory (that I may never sell). Therefore, I produce the book (to full trade-book standards) then print using POD technology. Since I need to "prime" the market with review, publicity, and distribution copies; my first "printing" may be about 100 copies. As initial orders are received, I may print another 100 copies. When that sells (almost) out, I'll print 50 copies; then 25 copies, etc. until demand is satisfied. Perhaps I'll sell a total of 500 books. My (net) revenues (same assumptions as situation 1) on the book will be $5000, my printing costs $2000. The $3000 gross profit will easily pay the design and production costs associated with the manuscript and the remaining profit can be applied to my overhead.

Had I printed (using the traditional model) 1000 or 3000 books, my sales of only 500 would leave me with a loss and a garage full of books (i.e. a liability where I need to find a way to dispose of the excess inventory). If the demand for the book proves to be more than expected, the book can always be sent to a "traditional" printer for a modest number of copies, then revert to the POD model.

Situation 3: Use the POD model to work the "kinks" out of a book. Many small publishers combine book sales with "expert" consulting or speakers fees. By selling your book through a (low to moderate cost) seminar, you can leverage book sales revenues with your speakers fees. Using POD, you can print only the number of books you're likely to sell at the seminar and you can use the feedback that comes with such close contact with the consumers. After a period of "beta" testing and improvements to the book, then you can move to a general distribution, marketing and publicity plan that will support a traditional initial printing of your book or you can continue with the Situation 2 approach.