The following P&L is my creation-a from-scratch, stripped-down version of the form a publisher might use. While no author should ask her publisher to see her book’s P&L, understanding the principles of a P&L can help you better appreciate what financial pressures publishers are under, how a book can quickly become a financial liability if the first print run doesn’t sell through, and why advances might look low to you, but high to a publisher. For starters, more than half of book sales now happen online-but the underlying math remains the same.
Things have changed dramatically in the 15 years since I saw my first P&L. (This isn’t the case at every publisher, but I worked for a fiscally conservative house.) When I started negotiating author contracts, my marching orders were to ensure the author advance didn’t go beyond what the P&L indicated would be earned out through sales of the first print run. Pub board was a weekly assemblage of key company players in editorial, sales, and marketing who gave the green light to contract authors and titles. (At the time, this publisher sold many books through its own book clubs and specialty retailers.) By 2001, P&Ls were required for every single title, partly because the publisher went from family ownership to corporate ownership-and because the book business was changing.Īs an acquiring editor, it was my responsibility to put together the P&L for every title I proposed and to make sure it would hit the target profit margin before wasting the pub board’s time with a proposal. When I started working at a mid-size book publisher in 1998, P&Ls weren’t required before signing a book unless the book had to survive primarily on bookstore sales. Nearly every established book publisher uses a proprietary P&L that it doesn’t disclose. It’s a mixture of the predictable (such as manufacturing costs) and the unpredictable (namely, sales). However you refer to it, the P&L is a publisher’s basic decision-making tool for determining whether a book makes financial sense to publish. His boss told him, “Well, do a P-and-L for it and we’ll see.” In a widely shared excerpt from his memoir, My Mistake, publishing industry veteran Daniel Menaker described his first experience trying to acquire a book at Random House. It has been edited and updated for my site. Note from Jane: In 2014, I wrote and published the following article in Scratch magazine.
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