How to Make Money as a Writer Part Three: Profit Margins and Frequency of Purchase
Back in Part One, I teased you by saying that there were four factors involved in making money as a writer - leads, customers, profit margins and frequency of purchase - and that the writer was, simply by being a writer, already engaged in two of them. And that’s true - and in this article I hope to show you how the second two factors - profit margins and frequency of purchase - are much more directly under a writer’s control, but that, if managed well, they also have a positive effect on the first two.
Writers’ expectations generally, we have seen, are along the lines of expecting that a book will sell, and sell well, as soon as it appears. Most writers - by far the majority - are thus disappointed when months later they have not experienced the tsunami of sales that they were expecting. We have outlined that that is partly because books initially must be placed where they will be seen by those most interested in buying them - the audience for a particular book, whom we could call ‘leads’. If presented properly, with powerful covers, impactful blurbs, correct placements and good social proof, many of the leads will convert into customers.
But when it comes to profit margins, we need to look at things slightly differently. The market for books dictates to a large degree what a reader will pay for a book: a writer can’t expect to exceed that, either offline or online, and in these days of online self-publishing, some writers give work away for free or at very low prices in order to attract more readers. These have proven to be workable strategies, because of course they lower any resistance a reader might have to purchasing a book. (Note that the reader must still be of the interested variety - even free books will not be downloaded by the wrong public.) But if we are talking about profit margins, that takes us in a different direction.
For a reader - any reader - to be prompted into paying more for a particular book, rather than acquiring it as some kind of discounted or giveaway item, then that reader has to feel that that book is going to be worth it. That sounds almost like a tautology, but it bears closer scrutiny: there has to be something about a book, some quality or set of qualities in a story, which mean that a reader will reach for his or her money and hand it over. There has to be a greater commitment on the part of the reader to pay top dollar.
How does a writer get that greater commitment?
This isn’t a rhetorical or unanswerable question. Great stories, stories written by master authors through the decades and centuries, have such qualities. What those qualities are, how they work, and how to replicate them in your own work is explained in some detail in my book How Stories Really Work. My point here is this: profit margin - the ability to price a book so that profit is made on it, rather than treating it as a giveaway or cheap item - has much more to do with what is inside the book, what the story contains, than what is outside the book (its cover, its blurb, any kind of sales setting). Readers will pay for worthwhile material - and it is up to the writer to learn what makes material worthwhile, if they hope to benefit in any way from this point of margins.
Of course, a writer’s first book is an unknown quantity: no one really knows if it’s worthwhile or not. Only once it has been read by a few people does news begin to spread through reviews and word of mouth. A book might be priced relatively cheaply at first, in order to reduce resistance to buying it, but then, once its qualities are perceived, a good story should be able to fetch a higher price.
However, to any writer hoping to achieve viability, it must be clear by now that one book alone isn’t going to do it. Even if all the above factors are dealt with professionally - a book release occurring in front of the right audience, with cover, blurb, positioning and social proof all relevant and in place, and the book itself containing a good story with magnetic qualities - by the time it has developed a reputation and its price has been adjusted accordingly, years may have passed.
Which brings me to the last of the four factors: frequency of purchase.
A book is a strange thing: you don’t have to buy another one if you want to use it again. Selling books isn’t like selling pizzas: they are not ‘consumed’ in the same way. They stay on the shelf, to be enjoyed again and again at the reader’s leisure. So a classic, best-selling novel is also a one-off purchase: there is no need for a reader to buy it again, unless he or she wants a special edition. Pizzas benefit from frequency of purchase every time the customer wants to have another pizza; to improve frequency of purchase for his or her books, a writer must have more than one book available.
Various estimates have been given about this, ranging from ten to a hundred - in other words, to achieve a desirable level of income, a writer must have ten or a hundred books out there. Readers, finding any one of these and being enamoured of the one they have chosen, seek out the others. In this way, Terry Pratchett, J. K. Rowling and many, many others benefitted financially from having whole series of books available.
Frequency of purchase obviously can also boost profit margins. As a writer’s sales and reputation grows, this also feeds back into customer attraction - more leads become buyers when they see that a writer’s work is popular.
So it’s possible to increase one’s income as a writer by having more leads; by converting them into customers using the tools available, one can make more money; and by creating solid, worthwhile stories that justify more expensive purchases, one’s profit margins can be increased. Then, to improve through frequency of purchase, one has to do this all over again, with more and more books.
That’s too bad if you were hoping to write one Grand Tale and sit back and watch it become a best seller and make you millions. Harper Lee did it with To Kill a Mockingbird, but she was the exception. Most writers need to make sure that they find the audiences who are interested in their type of tale, use their wits to convert those into customers, write powerful tales which use the secret story-telling techniques of master authors, and then repeat the process.
The good news is that all of this can be done and the tools are there for you to do it.