OLD POST ALERT! This is an older post and although you might find some useful tips, any technical or publishing information is likely to be out of date. Please click on Start Here on the menu bar above to find links to my most useful articles, videos and podcast. Thanks and happy writing! – Joanna Penn
There are several ways to evaluate a market, as outlined in Josh Kaufman's The Personal MBA, which should go into an assessment of whether a business idea should be investigated further. I've taken his concepts and applied them to the business of being an indie author.
Obviously you and I are already invested in this as a business, and yes, writing your book for creative reasons only can be totally valid, but this is an attempt to look at the model objectively.
This is an excerpt from Business For Authors: How To Be An Author Entrepreneur, available in ebook, print and audiobook.
We've seen the outliers of the uber-successful indies making 7 figures, but is the business model really sound for the rest of us?
Kaufman suggests that you rate each section from 0 to 10, where 0 is extremely unattractive and 10 is extremely attractive. I've put my scores in below based primarily on my fiction, so you can add yours in the comments at the bottom of the post if you want to join in.
(1) Urgency. How badly do people want or need this right now?
In general, people only desperately want a book if their information need is immediate (generally non-fiction), or they are about to get on a plane with nothing to read, or if there is a ‘must-read' book that everyone is talking about e.g. 50 Shades. But in general, books are not an urgent purchase.
(2) Market Size. How many people are actively purchasing things like this?
I don't have the latest figures, but the market for books worldwide is certainly in the billions of dollars. The question is – how does that break down for your type of book? For example, compare a romance novel ebook selling on Amazon in English with a poetry chapbook in Dutch selling in a unique bookstore in a chic corner of Amsterdam.
Think about the market for your book/s in multiple dimensions:
• Genre – big sellers like romance, sci-fi/fantasy, mystery/thriller vs lit fic or poetry. AuthorEarnings.com has a done a great job of giving the data behind the assumptions.
• Format – ebook, print, audio. If your book is only in print and only in a local bookstore, the market is small.
• Distribution platforms – the big ones are obviously Amazon, iBooks, Kobo, Nook but there are also platforms per country. If you're only on one, or not on any, your market is small.
• Language – English is the biggest seller in digital format and sold in the most countries with US and UK being the biggest markets. In Europe, German is the next biggest language seller for indies, with Spanish coming next. Although the Mandarin or Arabic languages would reach a lot of people, indie authors don't have platforms to reach that segment yet. If you are writing in Czech, your market is smaller than if you're writing in English.
One of my pet peeves is when authors say, “my book is so original that it doesn't fit any other categories.” We all write books that are original in some way. But clearly, if it doesn't fit any category on the biggest bookstore in the world, then there is likely to be no market for it, or at least a very small one. You have to have a look at the most popular categories on Amazon in order to assess the potential market. With self-publishing, you get 2-5 categories so you can be cross-genre.
Score: 8 – for mystery/thrillers which is the genre I write fiction in and one of the top-selling genres, although indies make up a smaller proportion of the top-sellers right now. That's OK … I have time!
(3) Pricing potential. What is the highest price people will pay for this type of product?
With books, we are down the lower end of the scale. I read 99% on the Kindle and I prefer to pay under £10 for a book, preferably under £5. The most I have paid for a book was ~£100 for the oversize, full color edition of Carl Jung's Red Book.
There are some non-fiction authors who will charge several hundred dollars for essentially a PDF ebook that they would only be able to sell for max $15 on Amazon. They call these guides or courses, but the information is similar to a book. That's one way to get higher prices.
Personalized, limited edition hardbacks for super fans may also hold higher prices, for example, Cory Doctorow's hand-bound, hardcover of With A Little Help for $275.
But we all know that books are a commodity game – we price low, and we need to sell in bulk to make decent money. The bickering about whether it's 99c or 2.99 or even 8.99 is a pittance compared to the price that people pay for other things.
Score: 2. Prices are low in general and we don't have much of a chance for variability.
(4) Cost of customer acquisition. How easy is it to acquire a new customer? How much will it cost to generate a sale?
This is an interesting question because most indies sell through established retailers like Amazon, Kobo, iBooks and Nook who already have the customers. The difficulty is getting the customer onto our own book sales page and this is generally through marketing activities. Most indie authors use free and low cost marketing tactics, and occasionally spend a few hundred dollars on BookBub or equivalent as well as print book giveaways. I haven't personally attempting to calculate a cost of acquisition, but in general, I think having a first book for free in a series and using ongoing marketing techniques keeps the cost down.
Score: 7. Indie authors use free and low cost methods to attract customers on retailers where customers already shop.
(5) Cost of value delivery. How much does it cost to deliver this product?
Professional editing and cover design generally sits between $500 – $2000 in total, and are recommended, although many indies do without them.
For ebooks, the delivery cost is taken out of the royalty in 70% rate for Amazon, which is why you should be minimizing file size by removing images at that level. But in general, delivery rates for ebooks are low to non-existent. Publishing on the ebook stores directly is free, and then the author is paid a royalty.
For print books, print-on-demand delivery costs are just billed to the customer for shipping, and the author receives the royalty from what's left.
Score: 9. Very low delivery cost if using ebooks and print on demand digital model.
(6) Uniqueness of offer. How unique is your product in the market and can people copy you quickly?
Yes, every book is unique, but the product itself is not particularly unique. I will absolutely acknowledge that there are other action-adventure thrillers out there in the Dan Brown-style niche, and my ARKANE novels fit in that grouping. Any of those books may satisfy a customer's desire for fast pace, global locations, religious conspiracy and explosions, but only my books contain my spin on tales created from my own adventures.
So for fiction, this question is hard to answer and probably comes down to the author's voice and the customer's desire to hear your particular spin on the genre in the future.
For non-fiction, it's a certainty that you can write similar books in a niche and customers will buy lots of books on the same topic. Just look at how many diet books there are, or how many books on specific self-help topics.
In terms of copying, you shouldn't be worrying too much about piracy. Here's a roundup on why you should be more concerned about obscurity.
Score: 5. Uniqueness based on the author's voice within a genre.
(7) Speed to market. How quickly can you create something to sell?
Speed to market is one of the most commonly cited reasons to self-publish, and indie authors certainly have an advantage over traditional publishing here. We can upload an ebook and it will be selling in 4-72 hours, depending on the site. We can get even print books up for sale within a week or two. Traditional publishers have such long lead times and pipelines that many authors won't see their books hitting the shelves for 6 months – 2 years after they have completed the book.
But that's the publishing side, and the creation of the book to sell will take as long as it takes you to write, edit and polish your manuscript to completion. The time that takes will depend on what you're writing, whether it is in a new series, how much research you need, how experienced you are and other variables. What we can say is that the more books you write, the better you will become and often, the faster you become too.
Score: 10. With online technologies, speed to market as an indie is super-fast!
(8) Upfront investment. How much do you have to invest before you're ready to sell?
I've tried businesses that involve a lot of upfront investment. Try starting a luxury scuba diving charter boat business in New Zealand! Or property renovations for on-sell. Both of those require large investments upfront before anything is ready to sell and you can start to see some return. I made substantial losses and gave up both of those ideas. (If you're interested, I go into a lot more detail in my book, Career Change.)
Authors have a very low start-up cost, as the overheads are practically nothing with a book. You only need a computer and an internet connection really, or just a notebook and a cafe!
It's definitely recommended that you budget for a professional editor and a professional cover designer, but many indies manage without. Publishing is free or very cheap if you know what you're doing! If you don't know what you're doing, read this.
Score: 8. Low start up costs and high profit potential with volume.
(9) Upsell potential. Are there related products that customers might also buy?
This is the power of the backlist, which many authors who have been writing for years are now realizing as they get their rights back. The backlist seems to be any book that is not currently the one in the current promotional cycle, but of course, with digital sales, there is no end to the promotional cycle. A book is always new to a new customer, even if it was written years ago.
If you have 10 books in a similar genre, or the same series, you absolutely have related products that a customer may buy. You might also have box-sets containing more of your books for a better price, or other products like consulting and courses (mainly for non-fiction authors).
The latest Author Earnings report demonstrates the earning potential of the backlist, so writing more great books should always be the focus if longevity in this market is your goal.
Score: 10. If you focus on writing more books in related niches, your backlist will grow and you can always upsell.
(10) Evergreen potential. Once the initial offer has been created, how much additional work will you have to put into it in order to keep on selling?
Books are fantastic products because they are scalable. That means you create them once and then you can sell them multiple times in multiple formats. Compare that to my old job as a business consultant, where I was paid once for every hour I worked. Work for time is not scalable and we will never make any more time. So scalability is one of the fundamentals of the book business model.
I knew all about scalability, it was one of the main reasons I moved into the online product creation space in 2008. But the penny only dropped for me on evergreen potential in early 2013 when I realized that fiction doesn't age, and the stories you write today can keep selling for the rest of your life and even after you die. Compare that to non-fiction, much of which does age and therefore have to be updated or removed. Check out the video below, which I recorded when I realized this!
My business model also used to include online digital courses, which also age and have to be updated or removed. I only have a few left now, in the ProWriter series and courses on writing, which are more evergreen. Now, I am moving as much as possible into the fiction evergreen model for my future income.
Score: 10 – for fiction, probably a 7/8 for non-fiction.
Kaufman suggests that a score of under 50 means you should try another idea. I make my score 70 which means being an indie author writing fiction reasonably fast in a popular genre is a decent business idea. Judging by the numbers at AuthorEarnings.com, we already knew that! But it's interesting to break it down.
I go into the detail of the business models for authors in my book, Business for Authors: How to be an Author Entrepreneur, available in ebook, print and audiobook formats.
I'd love to know what your numbers come out at, and what your thoughts are on this type of business evaluation. Please leave your thoughts below.
Top image: Flickr Creative Commons calculator by Anssi Koskinen
Brett Battles says
I think your numbers are spot on, Joanna. They pretty much sum me up, too. Excellent exercise.
Joanna Penn says
Thanks Brett – I’m glad you agree!
RJ Licata says
Interesting article, Joanna. I agree that it can be a sustainable business model. I have only one non-fiction book so far, and though it’s a nice source of passive income, without the backlist of books it is difficult to see my business generating a full-time income as is. That’s where other services would have to come into play, at least until I’ve put out a few more books. I know you focused mostly on books only, but for me, the real value in upselling would come from speaking and/or seminars/workshops. The seven figure stories are inspiring, but unrealistic to expect for most of us. I do like the score concept in this article. It helps to point out the places we are or should be focusing on.
Joanna Penn says
For non-fiction the business model is definitely the so-called “back end” of services like speaking, courses and consulting. That used to be my primary business model and still plays a part. Up until recently I had 12 courses for authors, now only 6 available and I no longer do consulting. That’s mainly because of the scalability and evergreen issue, and of course, it’s a personal choice. Not everyone wants to write fiction, and for sure, it’s a hell of a lot harder!
I’m glad you find the scoring useful!
Elizabeth Poole says
Thanks for the great information! I love you blog and your book “How to Market a Book”. I’ve been writing for years now, have five or six full length books under my belt, but I’ve never been professionally published. I’m just starting to look into self publishing and you’ve really helped me get my bearings. I’m set to publish the first episode in my first serial later this year, after it comes back from the professional editor and the cover artist gets lined up.
One thing I wonder about, how do you research how popular your genre is? I’ve heard this mentioned a lot in other sources, that you do better writing in a genre that is more popular, but never any tips on how to figure out if a genre is popular or not.
I write urban fantasy/dark fantasy, and I know overall it’s a popular genre, but I don’t know how popular compared to mysteries or romance. More popular than literary fiction, I would say, especially in the ebook market.
I was also looking around your blog to see if you had a pricing recommendations. I know pricing your books well can play a huge factor into how often people buy your book, and how they review it. Since I’m writing a serial, I plan to release an episode once every couple of months or so, and I’m shooting for around 25K.
I’ve seen recommendations that something between 20-30K be priced at 4.99, but that feels a little high. I worry at that price people will expect it to be much longer. I plan to keep the first episode eternally free, and then price the other episodes maybe around 2.99? Until the season is done and I bundle them together (I also read “Write. Publish. Repeat. and I’m setting up their funnel methods). If you covered this somewhere and I’m just missing it, could you point me in the right direction? Thanks so much!
Thanks again for all these wonderful resources!
Joanna Penn says
In terms of finding out what is popular, you can just browse the top categories on Amazon and check what overall rank the books are on the store. But the Author Earnings site has some top level breakdowns.
On pricing, you need to look at what others in your category are charging and also what you want to charge as well as what users will pay. Most serials seem to be free for the first episode, then maybe 99c and then up to 2.99 – I don’t think I have seen a small novella/serial episode for 4.99 but pricing is always up to you when you self-publish. Have fun!
Elizabeth Poole says
Thanks for the feedback!
Oooo that’s how you research your categories. Brilliant!
I’ll definitely price them lower then. I’ll just play with .99 versus 2.99, between royalties and the ability to put each episode on sale.
Garry Rodgers says
I’d like to hear your thoughts about a critical-mass point where one book begins to sell another, both sequels and backlist.
I’ve been following you for several years and watched you grow to nine published books now. You’ve achieved an admirable success and I’m wondering if there’s a particular milestone where things really took off for you.
I think there’s a bunch of us who’d like to know if there’s a tipping point to expect.
Joanna Penn says
Hi Garry, I’m still waiting for my lightning bolt moment and I wouldn’t say my sales have ‘taken off’ as yet! I’m still small fry as an author 🙂
However, I think 3 books in a series was important for actually getting decent sales – i.e. moving from hundreds per month to over a thousand $ a month in sales. I saw that jump after Exodus. I’ve heard from some of the romance ladies that it takes 5 books in a series before you see a tipping point, but also I heard from Donald Maass (agent) that it usually takes any author 5 books before they see a big enough audience to move decent sales. So it’s a long term game, for sure!
I have also split my brand into non-fiction and fiction, whereas I think I would have been able to grow income more if I had been focused. But I like writing both and will continue to do so. I will be focusing on expanding each series to 5 and then seeing what happens, as well as investigating writing in dark fantasy since I can’t stop the demons and the supernatural seeping into my books these days!
Alice Degan says
Very neat to see it laid out like this! I came up with a 68, losing points on “market size” because I write in less popular niches, and “speed to market” because I’m not as fast as I’d like to be. That still seems like a pretty good number.
Joanna Penn says
Fantastic, thanks for playing along Alice 🙂
Jamie Maltman says
Like yourself, I come from the world of IT consulting with various business launches on the side for the past decade, with some degrees of success, but now turning to my long love of fiction writing.
To see you run this kind of analysis (that I’ve done before for all my other businesses), makes me smile. Especially since it’s more fun along with lower risk. If we can enjoy our time drafting, editing and marketing, this makes for an amazing rest of our lives.
Now back to editing.
Joanna Penn says
Thanks Jamie, I’m glad you understand the analysis and great to hear of another corporate IT escapee into the creative life!
Sherry Marshall says
As usual, you have given us so much useful information in alot of detail.
My ‘business model’ is how to break even on my costs and earn a bit more as writing books are not my main source of income.
I have one non -fiction book published which is actually full of true stories and now am writing a fiction love story.
You have given me much to think about with a detailed analysis. Thank you
Joanna Penn says
Thanks Sherry – and this is meant to be an advanced analysis after you’ve been writing for a few years, with a few books under your belt. You’re right that breaking even is where we all start! All the best!
Frances M. Thompson says
Incredibly insightful and useful. I score much lower because I write contemporary literary and short stories and have a small range of “products”, but this is encourgaing as it confirms my plan for next 12 – 24 months should (hopefully!) see my score go up as I branch out into novels and increase my output.
Inspiring stuff – thank you Joanna!
Joanna Penn says
Thanks for sharing Frances, and I have another post coming on specific business models. Having products and services alongside books, as well as speaking and teaching are just as valid as the higher volume fiction model – I just scored based on what I am aiming for – but we all have different goals 🙂 All the best!
Ed Charlton says
Very useful approach.
It contrasts with the trad publishing/big bookstore business model, where a book is a short-lived ‘event’, sometimes lasting no more than three months. The big companies seem to treat their back lists as more of a liability than an opportunity.
Your realization about fiction not aging is more in tune with readers than publishers. Finally we (as authors) can supply readers with the material they like over a longer term.
Joanna Penn says
Thanks Ed, and yes, I think most indies realize it is about the long term model, the long tail of content and reaching readers, not publishers!
Prasenjeet Kumar says
A very interesting and thought provoking article, Joanna. I completely agree with your numbers.
I would like to add an 11th point to the article. Being an indie author does not tie you down to one place like what happens in another businesses. I myself have shifted 3 cities within a span of one year but my business and work has not suffered. Running an online business means you are location independent.
Joanna Penn says
I totally agree Prasenjeet. I also have location independence as an important metric for my business model, although many people don’t see it that way as they might have kids or a mortgage etc to tie them down.
Bryan Collins says
I just found your site and I really like your approach to self-publishing. This post reminds me of what James Altucher says about choosing yourself.
I notice you say non-fiction goes out of date.
After finding your website, I had a look at Kindle Direct Publishing last night.
I haven’t used KDP yet, but I see you can upload new versions of older eBooks. This struck me a really useful way to keep proving relevant non-fiction content to readers.
I look forward to your next post.
Joanna Penn says
Hi Bryan, yes, I love James – I’ve read a lot of his stuff and agree with most of it! I love his new podcast.
Yes, you can upload new versions of your books to KDP. Just like you can recreate online courses and material over time. But that’s the point with non-fiction – for much of it, you DO need to update it. With fiction, you just leave it as is, so you can spend that time creating new books instead of updating the old.
I’m not saying you should avoid non-fiction – I write it too! and in fact, have another couple in the works – but it’s something to be aware of. You have to factor in rewrites and updates with non-fiction, that you don’t with fiction.
Shaina McAndrews says
Great article Joanna!
I like your approach as I don’t believe enough indie authors view what they do as a business necessarily. Thinking like this can certainly help us to become successful indie authors!
As for the market analysis section, there are distribution platforms to help authors make their ebooks available globally. For example, Narcissus.me is tackling the English, German, Spanish, Italian, French, Polish, Turkish, and Arabic markets. I believe in the next five years they will cover the globe at the rate they are expanding and teaming up with various ebook stores which are global, nationwide, or local. Because of this worldwide distribution, many indie authors are looking to have their content translated into English or another language in order to expand into another market. Unfortunately, translating is still a very expensive and time consuming process. I wonder if the need to reach new markets for indie authors will help lower the cost of translation services in the future.
Lee Pratt says
Thanks for a most interesting post. I’m closing in on publishing my second novel, Juliet’s Grave. I always use a professional editor and cover designer–it only makes sense, as we are competing with professionals who do so as a matter of course. I will be using Ingram to publish (IngramSpark) as they distribute to every e-book market and do POD, which they distribute to brick-and-mortar bookstores worldwide, at standard discount. I too recently realized that fiction doesn’t age. I will be putting out a ‘second edition, revised and updated’ of The Yachtjacking in the near future. I believe the notation ‘second edition’ will let the buyer know that this book has been around for a while, and therefore worth buying,
With only one book on the market now, I’d score myself at 56. And for ms >to>ebook conversion, I’d like to put in a good word for booknook.biz here in the US.
Kristen Steele says
Interesting analysis! I’m glad that you mentioned the 70 score is for an “indie author writing fiction reasonably fast in a popular genre”. There are plenty of authors that don’t write fast or for a popular genre which will change this number!
David J Delaney says
Reading this makes me happy that I’ve chosen an industry that’s expanding and still very very new in the publishing world. Thanks Joanna.
Joanna Penn says
We’re just in the toddling years, for sure! I’m super excited about what is to come 🙂
Excellent analysis; thank you. You touched on it briefly, but I do think the big advantage with non-fiction is the ability to connect it with a business you already operate – or a business you can create from demand of the book – leading to much greater revenues long-term.