How to Start Your Own Publishing Company Revisited

The first post I ever made to this blog was titled How to Start a Publishing Company with Print on Demand. While I'm a big fan of on demand printing, I'm hearing more and more often from people who are sold on the print on demand model even when it doesn't really fit their needs. For example, you can earn more per book through distribution with short discount POD provided by Lightning Source or Replica than any other way I'm aware of, but bookstores (with the exception of Amazon) will NEVER stock your books at a short discount. On one hand, a guaranteed profit on every book sold, on the other hand, potential stocking in stores. Which way to go depends on your business model.

You might think that you can use Lightning Source or Replica for print on demand and have the same chance at bookstore stocking as if you printed offset by simply assigning the trade discount (55%) and accepting returns. All other things being equal, that would be true, but why would all other things be equal? If you've studied up on how to start your own publishing company, you've learned that the start-up model for an offset driven operation has completely different economics, driven by the logic of the big print run. The most obvious difference is the big, expensive, prepublication push to generate book store orders. If you're successful, you'll want to print thousands of books to meet that sell-in demand, and it makes no sense to use print on demand for that application. If you're not successful generating pre-press orders, you're much better off with print on demand, but you've already blown a lot of money and effort on marketing for the wrong publishing model.

Print on demand creates terrific flexibility for new publishers when it comes to launching new titles, but it's just not suited to traditional bookstore stocking economics. Before you start your own publishing company, you need to get clear in your mind which path you are pursuing, or it's going to cost you a lot of extra money. While this post is coming dangerously close to repeating by missive about starting your own publishing house earlier this week, I think the point about matching the approach to the technology could stand repeating.

While the traditional offset approach is superior in terms of quality, cut size and quantity prices, it demands the big marketing budget to justify the big print run. If you go ahead and print a lot of books on offset without having orders in hand, you'll likely end up owning those books for the rest of your life. Most books are not like wine, and as time goes by, it gets harder and harder to unload them, even as gifts. On the other hand, if you start out with print on demand, giving the trade discount and accepting returns, you may achieve some bookstore stocking if your marketing and sales are warrant it, but you'll be fortunate to earn a profit.

If you have ambitions of taking over the publishing world but you don't have deep pockets, my advice on how to start your own publishing company is this: Start with short discount print on demand and find out if you actually have the ability to market books and whether or not a market for your title (or titles) exists. If you want to reinvest all of the profits from your sales into marketing and run a break-even operation, go ahead, and you'll find out quickly if your marketing approach is scalable if your market is deep enough to absorb more than a couple hundred books.

If your increased marketing efforts and word of mouth start build your book sales into the thousands, you're faced with a gamble. I don't have any magic way of determining how many more books you would sell if they were stocked on book store shelves. If you move to an offset run at this point, you'll almost certainly earn more per sale than if you increase your Lightning Source or Replica discount to 55% because of the higher POD printing cost, but you'll also be assuming much more risk. It depends on the cover price, page count, and what discount you end up having your offset printed books distributed for, normally 60% or more. Keep in mind that stores only accept books for stocking on a returnable basis, and industry wide returns in bad years can run over 30%. However, if you follow this gradual approach, you'll have a much better handle on what your sales are likely to be than guessing or canvassing industry "experts" about how many books your title is likely to sell, if you do it "right."

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