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Indie Insights: On Setting Your Price

Written by Ken Eppstein on Tuesday, August 23 2011 and posted in Columns

Ken Eppstein returns to explain how publishers price their comic in the latest edition of Indie Insights!

Ken Eppstein is the editor, writer and publisher of the independent comic Nix Comics Quarterly, a small press anthology.

OK class! Lets talk about putting together part of your business plan!  Today's lesson is setting the price of your self published comic book!  (Not into it? Blame James Moore from Two Headed Monster Comics.  He told me he liked when I talk business planning.  If he had told me that he wanted to hear about the Monkees, I would've wrote about Mike Nesmith's hat.)

There are of course as many different ways of valuing art as there are artists.  What I'm going to present to you is more or less a standard means of coming up with a price point based on production costs and, in the case of ongoing projects, overhead expenses.  There are other ways of doing it and they are all just as valid as the rest.  Heck, you could pull a number out of a hat and hope for the best, if you wanted to.  What matters in the end is that you're satisfied with the amount of money coming in as it compares to the amount of money going out.

Direct Costs:

If you're doing a one shot type deal, you'll need to figure out the direct cost of the book. In this case, your direct cost would be the total of everything that goes into the production of the print run for your book.  (And don't be silly.  At the very least keep this info in a spreadsheet or some kind of off the shelf accounting software.  Above all, keep your receipts!!!!) The cost of printing, paying artists, shipping the books, buying an ISBN for distribution; EVERYTHING that'd you'd like to have reimbursed to you when the book sells.

Divide this total by the number of books printed to give yourself the bare minimum you'll need to charge to break even on each book.   (So, if you print 500 books and spent a total of $834 dollars getting the job done, the break even point for each book is $834/500= $1.67 per book.)  

Mark up from your book from that amount, bearing in mind that most distributors want a discount of 60-70% off of cover price.  So whatever you charge for the book wholesale needs to equal or exceed that break even number.  (In our example, for instance, you'd want to set a cover price where you're getting at least $1.67 from the distributor as the wholesale rate.  So, if you set the cover price of the a nice even $5.57 you'd get to that magic number.  And probably confound anyone looking at the cover price.  Go for a nice round number somewhere beyond your break even point instead.  The goal is to make at least a little money, right?)

Indirect Costs & Overhead:

(Fair warning, this gets a little thick.)

If you're doing an ongoing series or several books under the aegis of a single press, things get a little hairier: You'll quickly notice while you're tallying up expenses you'll run into vexing expenses that don't tie neatly to a specific issue.  Say you're running a website to sell all of your books, for instance.  Which issue gets the cost of hosting?  Well... all of them.  You've just ran smack into the nearly invisible menace named overhead

I say nearly invisible, overhead leaves a tell tale shadow in the form of indirect costs.  Indirect costs are the things that you have to pay on a recurring basis for the overall good of the series/business.  Web hosting fees, advertising costs, table costs at fairs and cons, and vendor license fees are good examples.  How do you determine what's an indirect cost as opposed to a direct cost? A good rule of thumb is if an expense could arguably be applied to more more than one issue of your comic, its an indirect expense.  

Now that you know what an indirect cost is, its time to remove that cloak of invisibility from your Overhead.  Total up all of your direct costs like before, and then do the same with your indirect costs by making a total of all the other expenses you expect to incur for the year.   Be comprehensive in your speculation of both what your direct costs and indirect costs will be.  List out anything and everything you can think of. Then add at least 10% to that total because you're gonna miss something.  

Once you have these separate totals, add the direct and indirect costs together and divide that sum by the direct costs (only).   If you were looking for an equation, it'd be Overhead = (Indirect costs+Direct Costs)/Direct costs, dig?

So, going back to our example above, say that comic that costs $1.67 per book to make is a monthly series.   The total direct costs for the year would be $10,008.  ($834 for one single issue multiplied by 12 months.) Lets say that for the sake of our example that indirect costs of the book would total $2,000.  That would get us an overhead percentage of ($2,000+10,008)/$10,008 which equals roughly 1.20%

What do you do with the overhead number?  Well, its the number one indicator of how you need to be marking your book up.  That $1.67 per book isn't a good break even number anymore because it doesn't reflect the overhead costs.  However, if you multiply the overhead rate by the old break even number, you'll get a new minimum price point that accounts for those hidden expenses.  ($1.67*1.20% equals approximately $2.00 per book minimum that you should be charging.)

Is this method perfect?  Nope.  The most basic problem with this method is that it only provides a Break Even number based on selling 100% of your books.  That ain't gonna happen, so you're going to have speculate on how many you think you can sell and adjust your price accordingly.  Its a lot of research and math work to get you to the point that you can make an educated guess at what you should charge.  But hey, like I said, there are other ways to model your biz.  

Frankly, this model particularly appeals to me because it makes my business plan feel like an old Champions character sheet. Man, I loved working those old RPGs with point systems.  Spend points to raise my END score? No way man... If I use the same points to buy up my CON score I'll get the same effect plus extra ED, REC and STUN.  (If you understood that, you have the stuff to figure out overhead.  And you're a old nerd like me.)

The important thing is to pick a method and stick to it.  They all have perks and pitfalls.  (Want make yourself cry?  Assign what would seem to be a reasonable hourly pay rate for the work you've put into your comic and use that to figure what you should be charging per book.)

For more information about Ken and Nix Comics Quarterly:

Written or Contributed by: Ken Eppstein

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About the Author - Christian

Christian is the exasperated Abbott to the Outhouse's Costello. When he's not yelling at the Newsroom for upsetting readers or complaining to his wife about why the Internet is stupid, he sits in his dingy business office trying to find new ways to make the site earn money. Christian is also the only person in history stupid enough to moderate two comic book forums at once.


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