Gordon Woolf's Blog

How to work out what to charge for ads

Magazines provide a fascinating problem for anyone interesting in the mathematics of costing production. That's because there are so many variables.

Think of this: you plan a new magazine and you follow the usual practice of giving discounts for larger advertisements. Or maybe you work it out the other way: $500 for a full page, $260 for a half, $150 for a quarter, $80 for an eighth-page. Now you reckon that most of your ads will be small sizes, but then in come the orders for full pages and someone asking what's your discount for a double page spread (a "truck" they may call it). Instead of celebrating you suddenly realize that instead of getting upwards of $650 a page, you are giving discounts below $500.

That truck is driving straight through all your cost estimates, accompanied by a dozen Humvees. You may save a little on the time of putting one ad on a page instead of placing 6 or 8 little ones, but you may also find that the advertisers or their agents are ultra critical on proofs and the quality of the final job. Then you realize that those full page advertisers placed orders for 3 or 6 or even 12 months and your revenue is disappearing fast. Your costs may be going down a little, but they'll still want to keep changing their copy.

Fortunately there is a calculator around to help. The Adrates calculator is not completely free - it comes as a free download with copies of How to Start and Produce a Magazine or Newsletter and is an Excel spreadsheet that lets you do all those what-of calculations before you start telling people what your rates are (or helps you work out what they will have to become if you already have a publication).

Enter your suggested full page rate and the percentage extra you will charge for smaller ads and the discount you will give for series ads. Guess the percentages you may get in series bookings (you can play around with all these figures as much as you like) and the spreadsheet will give you a guide to what your rate card might look like.

Then, and this is the clever part, it will tell you, based on what percentage of pages you intend to devote to ads, how many pages of ads you will need. Then you can enter all kinds of combinations of the sizes they might be. If you go over the total it will tell you and it will give a cumulative total as you enter the numbers of ads.

Finally it gives you the total income at full rates, and then, the really important figure: based on your previously entered proportions of repeat ads, it gives your likely revenue per issue. And that is the figure which may come as a shock.

Of course you can then work out what happens if you get an extra full page. Sure, the revenue will shoot up but there is the calculation this spreadsheet does not do for you: what effect does it have on your printing and other production costs (especially if it takes you into the next postage category and you have a lot of mail subscribers).

This isn't a magic solution, but it will help with calculations that every magazine and newsletter publisher has to do at some stage, even if it is on the back of an envelope.

The book is available from Worsley Press or from Amazon, at US$26.95 and there's a lot more help than just this spreadsheet.

But first, have a look at the Adrates file (Download Adrates) which shows how the spreadsheet works.

 

Oh no! Not the 'Under New Management' Sign

In my book Success in Store both I and my co-author separately berated anyone who'd even consider a sign stating Under New Management.

If the business was good then you do not want to make a point of saying that the old owner has gone; customers, even those who are not actually dissatisfied, may take it as an opportunity to just drop off, to try that other shop they've been thinking of going to.

If the business was bad, then if a sign with those words is all you can do to make it appear that things have changed, then you may appear to be doing the same old things in the same old way.

But this sign is a play on the theme. It's big, on a busy road where it stood out even to people like me who had not noticed the business as it was. But it makes a strong point and it is in a field where many such businesses in Australia were taken over by huge groups who seemed to have money to burn but then burned out. It can therefore be a good idea to promote the benefit that the "new" owners are in fact the old owners who knew what they were doing.

We hope it helps. 

A real reason to publish it yourself

Some people publish their own book because that's the way they want to do it -- to retain control, regardless of the effect that has on sales.

But take a look at this blog interview with someone who has seen both sides. (And with 25 books published, mostly by big publishers, he has major experience!) In 10 years, and with new editions as needed, John Bear sold more than 200,000 copies of his guide to distance learning for degrees; then it was taken up by a major publisher . . . which just did not do as well as he continued to do with his own edition which, through a stroke of luck in contract wording, he was able to continue to sell direct.

Such direct comparisons are rare, but it shows what a small publisher can achieve with a book that fills a need. I quote:

"It's so easy to get carried away, as I was, by the heady feeling of being published by someone big and famous. Perhaps that ego boost is reason enough. It is fine to hope for big sales, but one should not hold one's breath."

He adds:

"Even with more than 25 books published by the big guys (Ten Speed, Time Life, McGraw-Hill, Harcourt, Price/Stern/Sloan, Career Press, Prometheus), the most fun I had, and, by far, the biggest profits I had, were from the self-published, self-promoted books. While Bear's Guide was the most enduring, the most successful (over the short term) was one I bet you don't know about: Mailing from Mexico. Boy, talk about finding a niche. This was a 64-page 'manual' with information you couldn't get anywhere else, so my co-author and I sold it for $100, and we sold 1,000 of them from just two ads in Entrepreneur Magazine."

And that is also an important point: books are information and their possible sale price is related to the value the prospective buyer will put on them. In a book store books tend to be compared, even subconciously, with other books: why does this one cost $70 and that one, which is bigger, only $30? By mail and email and internet order you are selling the information. If you can find that niche, it becomes less a book and more a study guide, a manual, and some may prefer to put it out in a report format.

With one of my books, an early version of the one on PageMaker, I put out two versions: the normal book and the same information as a looseleaf manual for several times the price. Why I didn't stick to that format is anyone's guess. The numbers sold were smaller, but the profit per sale was very high and there were no middle men; every copy sold directly to a newspaper somewhere in the world.

Incidentally, that interview is on the Small Press Blog, run by Thomas Nixon, and though he now posts infrequently, it is still a good site for information on the small publisher world. And note that Mr Nixon calls it the "small press" blog with the subtitle "Your guide to independent publishing". There are mentions there of the dreaded term "self-publishing" but presumably they are to give the important keywords which will bring those who think it is the right term to his sites.

My own book on publishing your own book is Publish Your Book and though it is available from a publisher, Worsley Press, that is the publishing firm which I started and where I first produced that book on a copier, bound it myself, guillotined it to size and packed copies to mail out.

Do-it-yourself publishing

"I've just got a price for laying out my new magazine/book/other printed project and it is a lot of money. Should I buy InDesign or QuarkXPress to do my own layout?"

That's the kind of email I get directly or see on email lists and forums just about every week. I'm an enthusiastic user of InDesign but the last thing I'm going to do is tell such a potential publisher is to rush off to the Adobe web site and buy it.

The first thing I'll ask is: "Have you costed in the time and training (either personal or by means of reading and practising)?"

I'm all for such a person learning to use InDesign if he or she will take the time to learn to use it and, in the case of a book, will use it for many other tasks in future.

After many years of using Ventura, then PageMaker, I did not do a book in InDesign until I had worked on a number of smaller jobs to make sure that I could work efficiently in the program. It is a very powerful program, but that makes it very easy to do a bad job.

There is also the likely situation that a newcomer will get quoted a lot more for a layout job by a designer than an experienced publisher would be charged for the same work. The book layout jobs I take outside of my own books, I do only for experienced publishers and know that, most times, I will only have to do the job once, so can quote lower prices. As an extreme example, when I did tabloid newspaper layouts I quoted $20 a page for work from newspaper publishers -- and $100 a page for anyone else. Subsequently I just stopped doing the $100 a page jobs as they were not profitable, whereas the $20 a page was.

Yes, the would-be publisher should by all means buy InDesign but should also realize that this involves learning yet another skill. Do you have the time for that? In general the answer has to be "no" unless you can find a skilled person who is prepared to charge you on a basis that they are also teaching you to do the job. That designer will expect and deserve a high fee -- but it may be the cheapest long term solution for the publisher.

Planning for success

Any would be publisher is usually exhorted on the various discussion lists to "do a business plan".

I've sometimes joined that exhortation but when I was writing Success in Store: How to Start or Buy a Retail Business, Enjoy Running It and Make Money, I told my co-author that I've never had a business plan.

He then took me through how I'd started a couple of businesses, and justified his own "always have a business plan" position. He claimed I'd had quite a detailed plan in each instance -- it was just that I had not written it down! So, as a writer, the one thing I've never written down, is my plan for success. However, more of those businesses have gone according to plan than those which have not.

You will need a formal plan if you are going to borrow money. However, even then a business plan can be drawn up on the back of an envelope.

A nice restaurant I used to go to had paper tablecloths and marker pens in a glass on every table because the owner said her original business plan was drawn up over a meal in another restaurant and she had to appeal to the manager of that restaurant for some paper to write it down.

It also helps to include, in advance, what you will consider to be failure. ("I will have failed if I do not publish two books in the first six months, sell 1000 copies or not be within a few hundred dollars of breaking even in the second six months").

Too many people struggle on because they attempt to justify the changed cicumstances.

There's no reason why a "business" plan can't be that within 12 months "I will have published Uncle Joe's memoir, sold 20 copies and he'd added me to his will".

You could probably carry that one in your head.

What is a self-publisher?

(I admit I wrote this 5 years ago, but it is no longer available from the original blog site and I was asked about it this week.)

Why would any self-publisher go around saying they are a self-publisher unless he or she has no intention to ever do more than publish one book and disappear? (And there is nothing inherently wrong with that!)

"Small publisher" includes everything from one book upwards. Surely that single book is just the first book, and if you've found out how to do it and done it successfully, is it not likely that you may then do the same for an even more struggling author?

I'm not even sure I like the term "small publisher" except that it does distinguish us from the big boys in New York who try to rule the world of books and do it so badly. In that sense small publishers include firms employing hundreds of people, firms I'm proud to be numbered among, firms like the publisher Lonely Planet built in this same city by two people who wrote, edited, laid out and hawked their first travel guide and which is now a world-wide employer.

I did it differently -- my business was me alone, working from home, but giving employment to others via contract work, and I was proud to be among other home workers such as the magazine publisher couple I know who turn over more than a million dollars a year from four titles. When I sold my publishing business I had eight current book titles and five authors.

Step one in publishing is to divorce you the author from you the publisher. I don't mean hiding that you are both, but, with all that effort which has to be put into publishing a first book, some of that effort should be put into building a publishing name that can be used in future.

I have sympathy for the reviewers who won't handle "self-published" books. Even if the quality is reasonable, it still says "I don't really know what I'm doing". There is a big difference between self-published and the first book published by a new publisher owned by the author.

My "small publishing" business is still successful. I sold it to one of my authors, Geoffrey Heard, and became one of his. It's web site is still at www.worsleypress.com

How to start a publication

I get asked this question every month. The latest was:

I’m in a church that does not have a magazine and they want one. Can I start it? All I have ever produced is a sales newsletter for a firm I work for.

My reply is that I would be surprised if, in a typical organization of a few hundred people, I would be surprised if there are not other people who have had at least as experience as you -- perhaps for a school, business or service group. They may be a starting point and you can share your past experience.

Also look at what is being produced by other organizations -- and it is common for copies of locally produced publications to be sent to local libraries, so the librarian may also be a good contact. And while you may decide that your needs can be served by a home-produced publication, perhaps photocopied, a call at local printing businesses may also produce samples of publications, and an indication of other services, such as someone who can set up templates in a word processor or page layout program and help train in their use.

This kind of enquiry may also help to give some idea of costs, depending on what services have to be paid for and what can be done on a voluntary basis. You also have to make choices on whether a publication can be at least partly financed by advertisements, and how you will obtain editorial: can it be all produced by you and your members, or will you need to seek outside contributions.

Several of the chapters in my book "How to Start and Produce a Magazine or Newsletter" look at various ways of organizing a magazine and at the many levels of production from photocopying or laser printing to digital printing and to the uses of commercial and specialist printers.

Why is debt supposed to be good?

Why is debt supposed to be good? I had an accounts program for my business once which would warn me, whenever I did a "health check" on the business, that my level of debt in comparison to capital was "below an acceptable ratio". I did not take any action at that time, but have since noticed that the software company is now out of business. Debt is not necessarily bad, but there does seem to have been an assumption leading up to the present crisis that companies should have debt to optimise their profits. Now many of those businesses which had followed that trend are scurrying to replace debt with capital. I had four mailings from companies last week suggesting how I could benefit from buying additional shares in various lots from $500 to $10,000. They seem to have discovered that it takes only 100 small shareholders with $10,000 each to give them a million, 10,000 to give them a billion. One even suggested that I might like to reinvest dividends in new shares -- something I used to do but which most companies had stopped offering, presumably feeling that all those little transactions were not worth bothering with when they could go out to world investment banks and funds to borrow. I have to disappoint them. I started slowly converting from shares to cash around two years ago and am not planning to go back just yet. However, I am still reinvesting dividends with those companies where I have kept shares following the basic principle that Warren Buffett espoused of buying shares only if you'd want to buy the company if only you had enough money. But what of the smaller business? Basic principles remain as they always have. If you can buy something and then sell it for more and cover the total of your costs, including your own living costs, then you have a good business. Whether it is a market stall, an agency, a magazine, a newspaper or whatever, then a good business will survive. Some may have to adapt, but, for example, I continue to puzzle over why people will spend hundreds of dollars on a coffee maker for their own kitchen when for that they can buy hundreds of expertly made espressos and cappuccinos from friendly locals in their own high street. When families do not have the funds or security to go on an overseas holiday, they may well spend more on a coffee and cake and the occasional meal at a local bistro. And a business which starts now, offering goods and services which people want, will be ready to show its expertise when the good times return. That is, provided the business does not borrow beyond its means. Debt is for use when money is needed short term, such as for a new commercial coffee machine which will immediately boost daily turnover, or for other equipment or even premises which will continue to have a value greater than the amount borrowed. Just as a home mortgage remains a good debt provided you can meet the repayments and know that at worst you can sell up and have enough for the rental deposit on an alternative place to live, then debt is good for business if it is kept within similar bounds and you still make a profit after paying the interest charges. I mention in one of my books the colleague who sold his car replacing it with a new one on lease in order to get cash back to buy a piece of equipment. And that was someone who had worked in the finance and banking industry... who obviously did not know the difference between good and bad debt.