Guide to business plans and costs from an independent magazine
How much does it cost to make an independent magazine? It is a question that sometimes comes to us both from those who have a project in mind and would like to publish it, and from the readers themselves who wonder about the sometimes "high" price (compared to a newsstand magazine) of the magazines they find on our store.
We have decided to prepare a guide on the costs of an independent magazine by discovering the cards of what lies behind ours and many other independent activities, and perhaps clarifying why the economic return cannot be the first goal for those involved in publishing. .
Let's start with an interesting case: a few days ago we received the 20-page zine called Bum, finely printed in risograph and produced in only 100 copies, which we sell on Frab's for 25 Euros. Why? Because the price has been established by the publishers who they also broke a taboo of the really big ones: they wrote down, in black and white, all the expenses for the creation of the magazine:
"Risograph Printing Costs: ~ € 7.50 / copy
Contributor's Fees: ~ € 7.50 / copy
Packing Costs: ~ € 1 / copy
VAT: € 6 / copy (VAT is 24% in Finland)
Editing, Design, Prepress, Administration, Marketing, Illustration: € 3 / copy"
It left us stunned to read it, it is very rare to see them specified so precisely. This also made us reflect on the fact that this is probably just another step forward for healthy publishing, with probably smaller numbers, but capable of generating sustainability and above all quality.
Somehow this example gives us the opportunity to answer the question: qHow much does it cost to make and sell independent publishing? Why don't these magazines cost 2/3 Euros like when you went to newsstands to buy magazines made mainly of advertising?
The question is very timely, for us it was a real puzzle before launching Frab's, but especially when we started Urbarïum Semen, the first publication of Frab's Publishing. Since we think it can be useful to many who want to approach their first publication, as well as to readers who inevitably have to pay an economic value to have a paper magazine, let's try to answer through a concrete example.
Let's imagine having to publish a magazine with a price to the public of 20 Euros and a circulation of 1,000 copies.
1) Printing and binding: one of the main costs, but not always the highest. It is about 25% of the retail price and can really vary a lot depending on the refinement of the product, the type of papers, inks and binding chosen (in some rare cases of magazines we have on Frab's it is 50% of the retail price) . It should be noted that the plant costs are the highest: preparing the machines and preparing the tools for printing and binding has a fixed cost that cannot be changed. So the more copies you print, the lower the cost per copy.
2) Authors: it is a cost that varies significantly depending on the number of authors and the work they have lent (drafting of articles, photographs, editorial design, illustrations and various contributions). In a journal, contributions are often calculated in absolute value (example: payment per item, for graphic design, per photograph), and overall the project may be worth on average 35% of its retail price. However, keep in mind that in the independent world this cost item is not always foreseen, many zines are in fact based on voluntary (unpaid) contributions from artists and editors.
3) Marketing: Attending fairs and events, organizing presentations, printing posters and flyers, sponsoring on social networks, is an important cost to take into consideration. Here too we are talking about absolute values, but compared to the cost / copy we are around 15% of the value to the public.
4) Administration and transactions: the accountant at the end of the year, the receipts, the transaction costs for online payments and the fees for card payments if payments are accepted with this card are altogether around 8%.
4) VAT: In Italy the VAT on periodical publishing is 4%.
5) Shipping + packaging: to send online means to properly package the magazine so that it does not get damaged. On average, packaging costs 5% of its value (well-finished packaging can reach up to 10% of the cost). If you decide to pay all or part of the shipments, these will be an additional cost to be added.
Here we summarize the income statement of our ideal publishing project, in which we consider to be able to sell all the printed copies:
|Value per copy||Value for 1000 copies||% for 1000 copies|
|Printing and binding||€5,8||€5800||29%|
|Administration and transactions||€1,6||€1600||8%|
|Remaining value (final "gain")||€1030||5%|
If you manage to sell all the copies, then, you will have around € 1,000 left that you can reinvest in your business. Yes: "if" you manage to sell them. Because in a small market, getting the public to appreciate your project is always the hardest part. And of course, any unsold copy negatively affects the little margin you have left at the end of the project.
There are basically three channels to sell the magazine:
1) direct sales
2) sale through distributor
3) sale through reseller
It is exactly the scenario described above: the publisher directly sells all copies to end customers.
SALE THROUGH DEALER
Between publisher and reader, at least for a part of the printed pieces, a subject is added that can be a library or, in our case, the work of Frab's. The retailer allows readers to have a point of reference in which to find more titles and have more choice. This will allow a new title to have more opportunities to be known than the direct sales channel. In this sense the reseller can be useful to the publisher to have a higher potential audience and to print more copies by lowering the print price.
When dealing with the reseller, the publisher will have a certain number of copies on which he should not:
- invest in marketing (15%)
- invest in online transactions (5%)
- invest in packaging (4%)
The cost to the publisher is a discount on the cover price paid to the reseller. The latter, to allow bookstores or other subjects such as Frab's to survive at least, is around 30% and can reach 40% for already established bookstores and retailers able to purchase a high number of copies. With this discount the retailer in turn will have to pay local rent and bills (in our case software for the management of the online store) which affect around 5% on each title, administration and transactions with cards and online (8%), marketing ( 15%), library management staff (10%) and maintain a small final profit margin to reinvest in their business (about 3%). This, obviously for the absolute account, or for the direct sale of the product without the right of return.
As we have often told you, unfortunately in publishing there is the bad habit of the "consignment" formula. In this case the publisher assumes the risk that the copies, after a certain period of time (on average 6 months for a magazine that comes out twice a year), will be returned to him and not paid for if unsold. In this case, the average discount recognized by the publisher to the retailer is 20-25% on the cover price, understandable because it assumes the risk of non-sale, a figure that does not, however, allow the sustainability of the retailer at all (it will see some liquidity in the first period, only to be unable to pay the costs in the medium term). Better to print fewer copies, but without the sales account formula.
SALE THROUGH DISTRIBUTOR
A distributor of publishing products is a logistics company that allows bookstores to deal with a single entity in the purchase and administrative management of the procurement of publishing products. Dealing with a distributor means that two parties are added between the publisher and the end customer: in addition to the retailer, also the distributor.
To allow both the distributor and the retailer to have minimum sustainability margins, the average discount on the cover price requested by the distributor from the publisher is 60%. This discount will pay half the distributor costs and half the retailer's costs, with very low margins for both.
HOW TO DECIDE THE PUBLIC PRICE AND RUNNING OF A MAGAZINE
To decide the retail price of your magazine, once you have collected all the estimates of the authors, contributors and printers, we recommend that you create a real income statement, that is a diagram on an electronic spreadsheet. Here you will have to put the fixed costs that you will have for printing, binding and authors, and then add in percentage all the other costs that we have indicated above. The retail price must take all these into consideration and, as a precaution, estimate 10-15% of unsold copies, in addition to a share of copies sold to retailers. In this way you will get an indicative price below which you should not go down to define your retail price.
Now only one piece is missing: the edition. This part is very complex for those who are at the first publication and a little less for those who already have other editions behind them. For those who have to start, usually between 300 and 500 copies, trying to understand if by printing a few more copies the fixed costs are lowered.
THE ROLE OF ADVERTISING
Finally she: advertising. It is mainly thanks to this that magazines in the 90s cost so little on newsstands: with the contributions of the sponsors all other costs were covered, triggering a downward competition that was often also senseless on the price to the public. The problem is that, at a certain point, advertising revenues have become so important that even the contents have prevailed and influenced.
An independent magazine has no one to influence its editorial line and is often free of advertising. But we consider an "independent" magazine even if there is some advertising printed inside which however adapts perfectly to the content and has no power to influence the context and editorial line of the magazine. What is the role of advertising in independent magazines? To support the costs described above in an organic and clean way. If you find a sponsor who helps you cover some of the costs, that's good for the project. However, we advise you to be very careful and cautious both in the choice of the subject, in line with the ideals of the magazine, and in the way it is advertised, so as not to ruin the editorial harmony of the magazine.