Been seeing some interesting conversations and one that I wanted to discuss was a very simplistic (in my view) review of streams of income and return on investment (ROI). Basically, a lot of questions / answers end up reviewing if they should do X (when X is often audiobooks or paperbacks or another form of their work) on a straightforward ROI basis.
Rather than talk generalities, I’m going to use an example
Audiobook Example.
I have a book that is 100k words long. It sold 2000 copies in the first month. I earned $5000 in total from this book.
Now, based off a rough estimate, I’d make… 200 copies in audiobook format (10:1 ratio). That means, I’d earn roughly $840 (200 copies * $4.20 per copy) in the first month.
Cost of creating audiobook is $350 * 10 hours = $3,500.
So I should NOT make an audiobook based off those rough numbers. Simple math.
Here’s the but;
What if say, afterwards, I sell 20 copies a month of the audiobook. That is $84 more each month. That is still a very, very long way to breakeven (about 32 months). At the same time, I sell 200 more books each month, so that’s say $500 more in monthly income.
That’s still not a great amount, I can’t really go full-time at $584 (if I did audiobook and ebook) and my net income is actually less ($5000 – 3500 to make the audiobook = $1500. Minus whatever production cost the ebook generates).
So, overall, this doesn’t seem like a good idea, does it?
Maybe.
Let’s add another few assumptions. I need $4000 a month to survive as a full-time author. That’ll let me pay for edits, covers, rent, etc.
Let’s further assume that your on-going income doesn’t drop (unrealistic, but stay with me here please).
One last thing. Let’s say it takes you 4 months to write and publish a book.
Assuming that is the case, to make $4000 with just ebooks (ignoring first month sales bump and using ONLY on-going income); you need to wait 30 months (or, 29 if you get out the month you release) to hit $4k in passive income.
In that time, you’d have earned (including 1st month income of $5k), $100k in total by month 30. Book 1 would have earned you $19,500 of that amount. Excluding editing / cover costs, you are up $100k.
Now, let’s say you use your first month income bumps to make audiobooks. Each book released now grosses $584. So, it’d take 7 books and 26 (or 25 for 1st month) to be done. Still only earlier by 4 months (or 1 book).
Total income from audiobook & ebooks though is now $94,024 (in 26 months of income). In 30 months of income, you’d be $116,800 more.
In fact, your net income in 30 months is ($116800-$28,000 for audiobooks=) $88,800. $11,200 less. Which is, realistically, the difference between what you paid for the audiobooks and what you’ve earned just from audiobooks.
Still doesn’t look great, no?
Some of you might have noticed the difference though. The gap between the two income streams will continue to expand as you release more books and audiobooks. At 20 books released (just about 6.5 years worth of writing at this pace), the monthly incomes for ebook and ebook & audiobook only are $10,000 and $11,680. Nearly $1680 more. On top of that, over half of the income from the audiobooks are pure positive ROI since their cost have been paid off. And in fact, with 20 books at $84 a month each, in 2 months you’d be able to pay for a new a audiobook production using just audiobook income.
But books stop being popular after a while
Very true. You do still need to market your books, but that doesn’t really change either way. And yes, this is a straight line number and it assumes you don’t need any of this money to survive, so you can afford to reinvest the amount.
But my point here is that, over a time period, the more items you have, the higher your monthly income. If you can afford to not worry about your monthly expenses (say you’ve got another full-time job or you earn enough as it stands that you can afford to survive off your current income); more SKUs and product types can only add to your total income amount.
I constantly see people talk about how paperbacks aren’t worth it, but ever since I increased both paperback and hardcover numbers at the start of this year (2020), I’ve seen paperback numbers go up by a few hundred percent. I make over $100 a month off paperbacks.
I make $30-60 off my comics a month. And even if I never breakeven on them, I’ll still earn that amount.
A lot of small streams can make a big difference.
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