Saturday was a financial admin day for me. Oh, the heady world of being a writer! For me, Saturday marked the start of the 2019/2020 financial year, and therefore the end of the last financial year. While many people use the end of the calendar year to look back on their achievements, I also use the end of the financial year to look back too.
The last week of March is a popular royalty statement payment period. Many of the traditional publishing houses issue author royalties for the last six calendar months of the previous calendar year (July to December 2018). For authors, this can be a good pay day, because it includes all the book sales in the run up to Christmas.
I know I say it every year, but I continue to be astounded by the sales of my very first book: One Hundred Ways For A Dog To Train Its Human. Sales in all formats and editions (print, group special deals and ebook) now stand at an incredible 271,234 copies. Gulp!
I have certainly benefitted from the advice I received from the Society of Authors on that contract. When I sent it to them asking for their feedback, they suggested I ask for a royalty escalator. This is where the royalty rate increases as sales increase. So instead of getting a flat rate of 10% on all paperback book sales, I get a rate that increases each time a new threshold is reached (10%, then 12.5%, then 15% and so on).
It’s a useful business point to consider, because from the publisher’s point of view the more copies they print, the better economies of scale they receive (the cheaper it is to print the book, and therefore the more profit per copy they make). And yet, if sales are poor, agreeing to such an escalator hasn’t cost them anything. If sales don’t reach the first threshold point then the higher royalty rate won’t be paid.
Thankfully, I took the Society of Authors’ advice and sixteen years after it was first published, I am still reaping the benefits. (It’s a useful reminder that business decisions you make today about your writing can have consequences far into the future.)
I also use the opportunity at this time of year to review who have been my best customers. Where has most of my money come from in the last financial year? It draws upon the old Pareto Principle, also known as the 80/20 rule: that 80% of our income will come from 20% of our customers.
It’s easy to think that we know who our best customers are, however it’s not until I stop and look at the spreadsheet I maintain that records payments from each customer that I really see from whom I’m getting most of my money. Our 20% most profitable customers change over time, and this year I can see another magazine has been favouring some of my articles. So not only can I see that I should be doing more to cultivate that particular customer further, but I can also see whom I’ve been neglecting. It won’t do any harm to pitch some more ideas to some of those customers too.
Standing back like this helps you to see the bigger picture of your writing business.
Getting a broader picture can help put things into perspective, too. For those clients whom you regularly sell to, it’s possible to do a bit of financial forecasting. If I sell them 5 articles this year, I’ll earn XYZ income from them this year. I decided to approach a couple of my longer-serving customers to enquire whether there was an opportunity for an increase in payment rate, just to see whether I could increase my writing income without having to increase my productivity.
One editor said no. That’s a shame (obviously!) but at least I now know. It was something I’d been considering for some time, and it wasn’t until I looked at my income from this client that I decided I did need to ask the question. (I’m a firm believer in ‘don’t ask, don’t get’ so I knew I definitely wouldn’t get a pay rise if I didn’t ask in the first place.)
However, another editor said yes. And I was a little surprised at the size of the increase. More than I expected. So I’m sure you’ll understand when I say that I’m planning several more pitches to that magazine in the near future.
So if the beginning of April happens to be the start of your new financial year too, then take half an hour to look back at what your writing business has achieved in this financial year. You might find it reveals some interesting data, as well as some opportunities.
And here’s to a successful 2019/2020 financial year!