This is essentially the third time that I've
written this post, as Katie can attest to. Something very similar to this was
in the initial drafts at the end of two of my recent books. I ultimately
decided to pull the information back out of both books because it wasn't quite
the right thing to be including in a novel, but I haven't been able to quite
shake the urge to finish this post and put it out where you all could see it.
You may want to read the post immediately after this one before you dive into
this particular post. (I know that's backwards from what you'd expect, but I
didn't want this post to be the first thing that new arrivals see.)
Given that rather lackluster introduction, I'd like
to set out some ground rules before I get into the meat of the post.
1. This isn't going to be about my characters or
worlds, so please don't be disappointed when you get to the end of the post and
I didn't drop any tidbits about Alec and Adri or Va'del and Jain. There are
some interesting things in this post, but it's mostly interesting if you have
considered becoming an indie writer, if you have a background in business, or
if you just have one of those minds where you like to see how different things fit
together to create a cohesive set of rules or guidelines. This isn't
"required" reading by any measure. (Not that anything I write is
required reading, but hopefully you get the idea.)
2. This post is going to sound very mercenary. I'm
not sure that there is any way to avoid that, so I'm not going to try. As an
indie writer I have to wear two hats. The writer hat worries about art and the
publisher hat worries about making enough money that I can keep writing. Not
everything I do is motivated by money, but some things I do are motivated by
the thought of making money, and I don't think that is something that should
require an apology.
3. Like most things, this isn't a perfect science.
I don't guarantee that anything I'm saying here will work, but as I tried to
figure out the underlying principles to making a living as an indie writer, the
approach that I'm about to describe seemed to be the best balance when it came
to increasing my income to a sustainable level (and hopefully beyond as time
goes by) and trying to provide an honest product to my fans that they felt like
was a good value in exchange for what I was asking for.
Hopefully those ground rules help avoid any
misunderstandings!
Additionally, there are two business concepts that
need covered before we get into all of the writing stuff:
1. Customer Acquisition Cost or Cost Per
Acquisition (CPA)
2. Customer Life Time Value (LTV)
CPA is the cost to put your product in front of a
potential customer which then goes on to buy the product. If you buy a Super
Bowl add for a million dollars and it brings you a million customers then your
CPA is $1.
LTV is the amount of 'profit' you'll make on a
particular customer. If you sell a service where you make $.20 per customer,
then the million dollar Super Bowl add was a bad idea because you lost $800,000
on it ($1,000,000 in advertising costs minus the $200,000 you made in profit on
the customers). If you sell something
that gives you $2 per customer then your Super Bowl add was a smashing success
and you just made $1,000,000 ($2/customer * 1,000,000 customers - $1,000,000
add spend or alternatively $2/customer LTV - $1/customer CPA * 1,000,000
customers)
Now that we've got some of that business stuff out
of the way, I'll try to stay away from math for a little while. A writer/publisher
has several assets that they bring to the table in their efforts to make a
living.
I'm not going to get into the soft assets, like
dedication, the ability to write or a winning personality. Instead, I'm going
to focus on two 'hard' assets. The first is a marketable book or books, the
second is a fan base of people who like the author's writing to the point that
they have paid or would be willing to pay money to read it.
You can start with either of those assets and
under the right circumstances parley it into a living. There are plenty of
'famous' people who started out with a fan base before they ever had a book.
Given the size and excitement level of their fan bases these people were almost
guaranteed to make a large amount of money as soon as they released their first
book. Interestingly enough, 'traditional' publishing has spent a lot of time
and effort lately publishing books by these kinds of people because there is a
relatively high chance that the publishers will make their money back and then
some on these kinds of books.
One way of looking at this model of business would
be to say that this person has offset their CPA of acquiring their fans through
some other business and now they are looking for a way to increase the LTV of
those fans.
Most of us (me included) are coming at this from
the other direction. Instead of starting with a fan base and using it to sell
books, we are starting with a book or several books, and then trying to
leverage them into a fan base.
Once you have a book and are actively trying to
sell it, there are two broad categories by which you're going to try and move
copies. Active efforts and passive efforts. Active efforts would be things like
going door to door around your neighborhood with a stack of your books and
trying to sell copies of your book to your neighbors. Passive efforts
principally represent something that you do once, and then they continue to
create the possibility of selling copies. The best example of something like
this is the very act of uploading your book to Amazon or iTunes. Once your book
is up there it will get a certain amount of exposure (albeit sometimes a very
small level of exposure) without any further effort on your part.
On the face of it, it's pretty easy to see that
most 'active' methods of customer acquisition generally aren't going to be very
profitable when it comes to selling a single book for which the indie author
will make $2-$3.5 per copy. With all of the other competition out there for
people's attention, you're generally going to see CPA's on active customer
acquisition which are so high that you'll lose money on each new customer.
Given that, I'm going to focus for a few minutes on maximizing the passive
channels.
Passive
Customer Acquisition
Passive exposure can be broken down into a number of
components.
1. Number of locations in which product is
available.
2. Algorithm/positioning traction
3. Number of products available
Number of
locations isn't really just about the number of locations, it's about
the number of places your book is for sale and the aggregate foot traffic
across all of those stores. If one online store with a million customers is
good, then adding a second store with another million customers will generally
be even better.
What is
Dean doing? I'm distributed to Amazon (10 dedicated stores plus traffic
from countries that don't have a dedicated store), iTunes (50 stores at last
count), Kobo (1 worldwide store but they have major outlines in 50+ countries),
Smashwords(1 plus they get me to 7 more stores), and B&N (2 stores). And
I'm slowly starting to get out audio and print versions of some of my books.
I've tried distributing to some even smaller stores, but generally haven't seen
any results for having done so. At some point I might go back to trying to
distribute my work more widely, but for now I've grabbed all of the low hanging
fruit and once audio and print versions of everything are up, I'll feel pretty
good about this component.
Algorithm/positioning
traction is meant to be a
measure of how visible your book is inside of a given store. If your book only
shows up in someone's browser if they search for 'purple unicorns suffering
from persistent sinus infections' then you're product probably isn't going to
make it in front very many of the retailer's million customers.
What is
Dean doing? I've set the first book in 2 different series to 'free' at most
of the locations. This makes my books show up on more lists and in the 'also
bought' sections in more places. 'Free' also has the benefit of making the two
free books a more compelling value proposition (see below). There are other
tactics that you can take to try and improve your algorithm/positioning
traction, but you can waste a lot of time making changes to your keywords and
never know if the changes to your results were because of what you were doing
or because of something entirely unrelated.
Number
of products is basically the number of books you have available for
sale although you can repackage multiple stories into a single offering or do a
few other things that can increase your virtual shelf space. As a general rule,
the more products you have up in a given store, the more opportunities
customers will have to find you.
What is
Dean doing? I'm currently up to 20 titles of which 9 are novels, 10 are
short stories and one is a compilation of 5 of the short stories. I've got two
more novels that are in editing and I occasionally play with the idea of
dusting off two fan fiction novels that I wrote more than a decade ago and
re-writing them to the point that they could be published as well.
Value
Proposition
Even in passive acquisition strategies, just
having a prospective customer see your book isn't enough to ensure a sale.
Instead you have to 'convince' the prospective customer to take a series of
steps that ultimately end with them purchasing the book. Your cover and title
need to draw the reader onto the book's product page. Once the shopper is on
the product page then your blurb needs to be good enough to convince them to
either buy or download a sample, and if they download a sample, the sample
needs to be good enough to convince them to buy the rest of the book. I like to
think of this as a series of value proposition steps. If your cover looks neat,
then a reader will decide that there is value in spending thirty seconds to see
if the blurb is interesting. If your cover looks terrible then your prospective
customer will decide that there isn't much value in reading the blurb or the
sample.
What is
Dean doing? I try to make sure that I have clean covers and interesting
blurbs, but so does everyone else. I'd really love for the major retailers to
begin reporting conversion rate statistics to their authors on a book by book
basis so that we can see if a blurb change does a better job capturing the
imagination of a particular reader, but for now that's just wishful thinking.
What I have seen is that making a book free drastically increases its value
proposition for prospective readers. So by setting two of my books free not
only do I show up in more places and on more lists, people are more likely to
download my book and give it a try when they do see it.
Force
Multipliers
If that was where everything ended, then most
writers would be in a world of hurt, but luckily there are what I like to call
force multipliers out there that make a huge difference when it comes to
selling books. Three of my favorite are:
1. Complementary Books
2. Word of Mouth
3. Fan Base
Complementary
Books
When writing subsequent books there is always a question
with regards to what strategy the author should take. If you write a series,
then the second book is almost guaranteed not to do any better (sales wise)
than the first book in the series. Alternatively, a new, unrelated book may
always hit the publishing lottery and sell millions of copies and do vastly
better than an author's existing work.
What is
Dean doing? I would love to win the publishing lottery as much as anyone
else, but I tend to favor writing series over standalone books. From a craft side,
ultimately writing more words over more books gives you a chance to pack more
into a story arc. Additionally, my characters tend to do a lot of the driving
as far as where any particular story ends up going and it's always easier to
write if I've got established characters that can help develop the plot with a
minimum of heavy lifting on my side. From a business side, by continuing to
develop my existing series I create a high degree of correlation in my work. If
you liked Broken, you're likely to enjoy Torn. Once you read Torn you're
probably going to want to read Splintered, etc. etc. I'm firmly convinced that
my strategy of 'free' wouldn't work as well if I had two free novels and seven
other unrelated books.
Additionally, by writing in a series I get to
increase the LTV of each new customer. With one book my LTV of each customer
might be as low as $2-$3 dollars. If I have six books in a series, then my LTV
could be in the $12-$18 range. It still means that I've got to bring in a lot
of new customers each month to make a living writing, but it means that I can
look at a much broader range of marketing/customer acquisition activities. With
only one book available any marketing activities that have a CPA of $4 would be
a bad idea because I'd lose $1-2/customer. With six books a guaranteed $4 CPA
would be incredibly good news because it would mean that I would make $8-$14/
customer. If you could have that kind of LTV and CPA and then turn around and
use that marketing activity to generate a thousand new customers per month
you'd soon be sitting on quite a lot of money.
I'm not a marketer though, I'm a writer. So while
I might eventually be in a position where it would make sense to hire someone
else to do some marketing on my behalf, right now my time is generally better
spent doing the thing that only I can do, which is writing. This does mean
however that as each new book goes live I should generally see more value out
of my existing passive customer acquisition strategies.
Word of
Mouth
You could say that Word of Mouth and having a fan
base are just two sides of the same coin, but for definitional purposes, I'm
going to define word of mouth as an ongoing thing. Having people talking about
your work serves to function as a kind of passive acquisition source. It's one
that you can't really control, but it seems to have an almost exponential
impact on the acquisition of new fans. As more people are talking about your
books or talking more energetically about your books, you'll tend to see a much
higher rate of new customer acquisition than you would otherwise see.
What is
Dean doing? I have a ton of really awesome fans that have written me to let
me know that they've told friends and family to go out and get one of my books.
I'm incredibly grateful, and the only thing I've really been able to hit on is
to keep the price of my books affordable. I've toyed with the idea of a
full-sized novel being priced at $5.99 or $6.99, but although I think that
would be a very reasonable price for my books, for now I'm going to keep them
at $4.99 as a way of saying thanks to the fans that are helping spread the word
about my writing.
Fan Base
I mentioned fan bases briefly up above, but the
concept needs discussed in further detail. For purposes of this post, a fan
base is a group of people who will buy an author's work very soon after it is
released, and it is the most powerful asset that an author can have for two
reasons.
1. Multiplicative Revenue Recapture
2. Exponential Visibility Growth
In case you're wondering, I just made both of those
terms up, unlike LTV and CPA which have generally agreed upon definitions.
Multiplicative
Revenue Recapture Let's suppose that an author's first novel sold ten
thousand copies. If that author didn't manage to create a fan base in the
process of selling those books, then they may only sell a couple of hundred
copies of their second book. If however the author managed to turn half of the
ten thousand people who read their first book into an fan base that is eagerly
awaiting their second book, then the author stands to move the better part of
five thousand copies of that second book in a relatively short time with
corresponding financial gains as a result.
You could look at this as the author having
increased the LTV of their customer base (fan base), and you'd be right. You
could also choose to look at it as the author having recaptured a part of the
revenue stream that they would have likely achieved had the second book gone
live concurrent with the first book.
What you call it isn't as important as the concept
that a fan base represents a significant financial asset. If the author is able
to continue to provide a good value proposition for their readers then the fan
base should continue to grow as time passes and that asset will continue to become
more and more valuable.
Exponential
Visibility Growth You can point to a lot of differences between a
relatively unknown indie author like me and a big-time bestselling author, but
one of the most substantial is the fact that the best sellers have tens of
thousands or even millions of people who will buy the author's next book within
the first few days after it is released, and oftentimes they don’t even
consider any other course of action. They may not even bother reading the blurb
because they already know that the odds are heavily on the side of them loving
anything that author writes.
All of those purchases happening in such a short
time drive visibility for those authors. It may be because they end up on a
recognized bestseller list, it could be because they then rank highly on the
search ranking or genre lists at the big ecommerce sites, or it could even be
because potential readers see dozens of copies of the new book in the hands of
their friends and family. Whatever the reason, the very act of releasing a new
book for these authors results in new readers buying their work.
As if the success of the sequel combined with the
arrival of new readers wasn't enough, many of these new readers will go on to
become fans which means that the next
release will probably generate even more buzz, more money, and more new fans.
When you start putting this all together, there
can be an almost explosive growth in the sales of an author. Let's do some
math.
Author 'A' writes a book and publishes it where it
sells a very respectable 10,000 copies per year and earns the author $30,000.
At the end of the first year 'A' releases his second book which is highly
complementary to the first book (we'll say the two books are part of a series).
As a result, 5,000 fans preorder the first book and it shoots partway up
several bestseller lists. Not only did
'A' make $15,000 out of the gate on the second book, he also saw an extra 2,000
people buy the first book during the second year as a result of the buzz around
the second book. Additionally, because
'A' now has two books more people are stumbling across him and his baseline new
customer acquisitions for year two is 11,000 people, all of which buy both of
his books.
Year 1 income was 10,000 customers * $3 per copy for
a total of $30,000
Year 2 income is 13,000 customers (11,000 (new
baseline) + 2,000 (buzz related)) * $6 per customer (2 books $3 each) + 5,000 *
$3 (the preorders of the second book) for a total of $93,000
Let's say that the author releases a third book at
the end of the second year. 'A' has now sold books to 23,000 people (10,000 the
first year plus 11,000 baseline the second year + 2,000 buzz related in the
second year). As a result 'A' gets 11,500 preorders of their third book. Having
a third book out there for people to stumble upon gives 'A' an extra 1,000 new
fans to his passive acquisition efforts over the course of the third year, but
the real kicker is that his preorders pushed 'A' up to the very top of a couple
of bestseller lists and nearly to the top of several others and the buzz that
this creates results in another 8,000 extra customers deciding to pick up his
first book.
Year 3 income is 20,000 customers (12,000 (new
baseline) + 8,000 (buzz related)) * $9 per customer (2 books $3 each) +11,500 *
$3 (the preorders of the second book) for a total of $214,500. Even more
exciting 'A's fan base has quadrupled between the end of the first year and the
end of the third which means that his fourth book will be even more of a
household name.
Obviously there are a ton of variables that I'm
not accounting for there and the numbers are just meant to illustrate a concept
rather than provide any hard figures as to what to expect, but the potential
for this kind of explosive growth as my fan base picks up subsequent books and
my stories become more and more visible is what had me excitedly telling my
wife at one point that we were going to make insane amounts of money over just
the next few years.
What is
Dean doing? I wish that I could say that I was making hundreds of thousands
of dollars per year already, but the actual truth is that the last four books I
released created little if any visibility. I expected a little bit of that
because two of the books (Trapped and The Greater Darkness) introduced new
characters in the series that my fans hadn't had a chance to get to know yet.
Likewise Brittle Bonds was the third book in a series that hasn't sold as well
as my Reflections books. I did however expect that I'd see a really good uptake
of Forsaken. I told myself that I'd be happy with a 70% or so uptake by my
existing fan base (meaning that if I'd sold 1,000 books to date I'd be happy if
500 people bought Forsaken over the first week or two that it was live).
Secretly I was fantasizing of 90-95% uptake and excitedly imagining the
thousands of new readers that would come into the series as a result.
I actually saw about 10-15% adoption over the
course of a month and a half. It's hard to say exactly what the number was
because I had new people coming into the series during the month of release who
just naturally went on and purchased Forsaken because it was the next in the
series rather than because they had been eagerly waiting for months to get
their hands on it.
What do I think that means? Well for one thing I
apparently will continue to hold off on any plans for lavish trips to exotic
new locals. Obviously my expectations were way off. That may be in part to the
fact that Splintered (my third book in the series) ended on an…untraditional note.
It's possible that may of the people who purchased Splintered simply didn't
want to continue the series after the way Splintered ended. I don't think
that's a massive factor though because the reviews for the book have been quite
good. I've only seen one review where someone said that they wanted to throw
the book across the room in a fit of rage.
My suspicion is that most of the people who read
Splintered didn't know that Forsaken had been released.
Dean's
Grand Plan for World Domination
All of that leads to the question of where I go
from here as a publisher. I already know that Author-Dean is going to write
some books that aren't going to be as tightly correlated to my existing books
as Publisher-Dean would like, but given that fact I need to figure out a way to
get my income up to a level where I can make a go of this on a long-term basis.
I ultimately don't know how many copies I'd need
to sell of a new release to see the kind of visibility spike that would turn me
into an 'overnight' success, but I suspect at my current rate that I might be
5-10 years out before my releases generate any kind of real visibility.
That's not to say that I'm 5-10 years out before
writing is paying the bills necessarily because as I continue to release new
books my LTV of new customers will continue to climb, but given my pre-writing
background as an accountant it might not surprise you to hear that I'm fairly
risk adverse. That matters because until I hit a point where my fan base is
large enough that the 'new release' money is paying the bills, I'm to a certain
extent at the mercy of the retailers who are currently funneling new customers
my way.
Given that I really, really would rather not go
back to working a day job, I'm going to do an experiment to see if I can help
spike my release visibility faster than what I saw with my last few releases.
1. I'm going to have a firm release date for all of
my upcoming books and the date will be several months out so that people have
plenty of time to find out that the book is on its way well before it actually
goes live.
2. I'm going to post my announced release dates
prominently on my blog, and direct readers to my blog at the end of my books
for the specific purpose of making sure that they know when the next book in a
given series will be out.
3. I only send out e-mails to my mailing list to
announce new releases, but I'm going to make sure that I have a release
schedule at the bottom of each e-mail that does go out.
4. I'm going to incentivize people to sign up to my
mailing list by giving them a free copy of the second books in both of my
series. This is the first step that actually has some real risk to it because I
could end up giving away about a quarter of my income if everyone who currently
buys a copy of Torn or Thawed Fortunes instead just signs up for the mailing
list. I'm proceeding with it, on a short term basis at least, because I think
it will go a long ways towards starting to spike the visibility I'm after on my
new releases. I also like the idea that it is another small way of leaving more
value on the table which hopefully my fans will appreciate.
5. I'm going to discount the price of each new
release by about 20% for a period of one week to help encourage my readers to
pick up the new release over a short time period which will help drive greater
sales velocity and hopefully give me a higher (albeit shorter term) visibility
spike.
Ultimately I believe that having a strong
mailing list will be the best way to increase my revenue from my writing
efforts (for the publisher in me) and help get my work in front of more people
(for the author in me). It will be interesting to see over the next few months
whether or not my gamble pays off.
