Let me start by saying that writers don’t have to be starving artists to be successful. Today, in this blog, we’ll be talking about financial tips for writers.
The fact is, you’re a business owner, you are self-employed, and you’re actually running the business of you. To run a business, you must have some money. When people say they just want to write and not worry about the money, what they’re saying is, I’m not interested in, protecting, growing, and developing the business of me, which is the income and revenue-generating source of my business.
With that in mind, here are some financial tips for writers
Have a monthly budget and put away enough of your advance or royalties to cover 3-6 months of expenses
In the book writing world, your royalty checks are held anywhere from 2-6 months after books are sold. That’s a long time to wait to get paid. I know that many writers have a feast and famine cycle in their financial lives for this reason. One of the best ways to break that cycle is to make sure your personal expenses are covered every month and the money is in the bank. This will bring some security and can support your ability to create by removing financial stress. Calculate the costs of your food, utilities, rent or mortgage and transportation every month and squirrel away the amount you need to pay a few months of your expenses.
If you are freelancing or writing for a magazine or other organization that pays regularly, know what you need to bring in every month, and price your articles and projects accordingly. Make sure you can cover your monthly expenses. As soon as possible create an emergency fund and squirrel away a few months of income to prevent the feast and famine of the publishing world.
Think of your labor in a book as a sunk cost
It is very hard sometimes to imagine recovering some financial benefit to all the hours you put into developing your work. It is much more difficult than somebody who, say, a jewelry designer, who knows that it takes an hour and a half to make a certain piece, and we can put a direct dollar figure to what they want to recover. So, I’m going to start by saying I understand that writing is hours and hours and hours and having an hourly rate that you recover actually could be very difficult to calculate. This may give people a little bit of a pause about using a formula because it may seem more complicated.
But just pricing a book and hoping to sell a bunch of copies isn’t necessarily the best business model, because you don’t know whether or not you’re actually making back what you’re putting in to generating the work. It’s smart to have a sales goal; a financial goal, for the work.
think about pricing accordingly
There are two considerations you can use for this. The first one is you need to know how much you need to recover for your personal money. During the time you spent writing, on average, what do you need each month for food for your rent or mortgage for your transportation for all your utilities? Having that as a base as an operating figure that you would use?
Then, how many months did it take you to write this particular piece of work? How many months of operating expenses? Did you basically put out during the time that this was in development and being written, so having that number there gives us a place to start for you to recover money for your personal needs. If you were to consider your operating costs, let’s say that it took you five months to develop this particular piece of work, and your operating costs every month are $3,000, you’re looking at $15,000 as the minimum that you need to make back in order to cover your own time. Time that in reality you “loaned” the book to write it.
The second consideration is to come up with a number or percentage of costs that are profits. Adding a little bit of extra money to the cost of a book for profit is important, but in all honesty, I get a lot of pushbacks from creatives on generating profits.
Don’t let your love of writing overshadow your need for profits
It isn’t just writers. For some reason, many creatives want to be the altruistic entrepreneur. The fact is that the more profit you make the more impact you can have. Price your books and services and deals for profitability.
If you’re not making a profit, you can’t have a level of impact above anybody else. How can I say this? Well, how can you be insanely generous and donate to the causes that mean something to you?
How can you create opportunities or hire people? Whether it’s a cleaner for your home, or an editor, or an assistant? You can’t do those things without making a profit. In some ways, profit is your duty. As a business owner, you really are the only engine that is going to generate additional money in the marketplace; support other people and causes, or allow you to do volunteer work. When you look at profit as an impact you can see that it’s okay to make a profit.
Writers have unique gifts and storylines to bring to the world. But the vision of the starving artist does a huge disservice to craft. Follow the tips I had discussed to make sure you make money while doing what you love.
Are you ready for business mentoring in your writing pursuits? Check out Success Studio.