Why Your Books are Actually Like Assets in a Portfolio
Every book you publish is a gamble. Will it sell? Maybe not, which is why I'm playing the odds.
What if your books were more than just stories? Imagine them as assets in a portfolio, each with the potential to yield steady returns. It’s time to see book publishing as more than a gamble and reduce the risk.
Think about the journey of an author with a debut novel that, despite its brilliant concept, ends up with only a handful of sales. It’s a gamble—sometimes it pays off, sometimes it doesn’t. But what if you could even the odds?
Facing the Odds: Why Each Book is a Gamble
As I uploaded my book to Amazon, I thought, I hope this book sells. That was followed by I hope it’s good enough, and, I wonder if I caught all the mistakes? Only time will tell if I did things right.
What if we back up a step? What if we started thinking of our books like investments in a portfolio?
There are steps you can take to ensure your book is set up for success. You can write the best non-fiction advice book in the world, or the best fictional story ever told. You can “write to market” and select the perfect niche. You can have a killer blurb and a professional cover.
You can do everything right and still end up with only a trickle of sales. Just like a stock pick, your book can tank. And most of us don’t get everything right, even when we think we have.
When book sales don’t take off, it can be crushing, and I get it. I understand feeling that way. We give up large blocks of time to the craft. We labor over our writing and pour enormous effort and emotion into it. To get little to nothing back from that is hard to take.
When book sales aren’t going my way, I reassess. I take the emotion out of it. Once you realize that your book, your marketing, and your entire strategy need work, you start to see things differently. Most of all, you need to zoom out and look at the process a different way.
The Mindset Shift: From Author to Publisher
There’s a character in the TV show Billions that comes to mind. Bobby Axelrod, the billionaire, commissions up-and-coming artist Nico Tanner to paint 8 paintings for him.
Suddenly, the artist is stuck and can't paint. His creative genius is being held hostage by his own twisted view of the world. The money has somehow corrupted and constrained his artistry, making it impossible to produce his craft.
Similarly, there’s a rift between creative work and business which lives in the minds of many authors. It’s an affliction that often hits creative types in general, including actors, videographers, painters, artists of all kinds.
Unfortunately, if you want your books to sell, you have to get past that, and that requires a mindset shift.
Make the mindset shift from author to publisher mode and your books start to look more like assets in an investment portfolio, and less like artistic creations.
I recently took a writing course where we started out with 10 to 20 story ideas. Why that many? Because not all stories are winners. Some are duds.
Think of each of your books as an investment vehicle, just like a stock. When you buy stocks, you diversify because not every pick will be a winner. Some are duds. Similarly, where one book falls short, another might outperform your expectations.
You’d be ruthless with your investments. Apply the same principle to your books—don’t keep investing time and money into a poor-performing book. Once you get to a certain point, you have to accept the reality.
The self-publishing business is, after all, a business. Consider book sales statistics like these:
Think about that. Read it again if you have to. Go read the whole comment linked in the quote above.
98% of those books sold fewer than 5,000 copies in a year.
This is from an industry analyst, not some random blogger who is guessing.
Realistic Expectations: Book Sales and Income
Let’s run some numbers. About 14 sales per day puts you at 5,110 books in a year. Congratulations and welcome to the top 2%! The other 98% are making fewer than 14 sales a day? I’d need to make far more than 14 sales a day to reach the income level I’m aiming for.
Let’s talk money. I’ll limit this to e-books on Amazon only, assume we’re selling full-length novels at $3.99, a 70% royalty, and ignore other expenses. Per book sale, that’s a royalty of $2.793. On 5,110 books, we’ll earn ($2.793 x 5110) = $14,272.23 per year.
With a top 2% book, you could bring home, before taxes, a whopping $14K a year. You could do much better than that, or much worse. When you look at the numbers in this way, though, it makes you realize that betting (and I do mean betting) on one book to carry you is crazy.
Can you create 10 top 2% books? That could bring in $140K per year in pre-tax income. Now we’re talking. But how likely is it you can achieve this?
That’s thinking like an author. Instead, think like a publisher. Publishers have a stable of many authors, each with one or more books. Only a small percentage of those books will do well. Many won’t and they can’t predict what will sell with certainty.
Genre, Genre, Genre
Niche Selection Is The No.1 Determining Factor To Your Success With Self Publishing
—Wesley Atkins
Creator of KindleSpy
Don’t forget, genre matters, too. A niche romance novel might have a smaller audience than a popular thriller. On the other hand, military thrillers became a hard to win niche because so many authors tried to duplicate what a few successful ones were doing. Tailoring your portfolio to trends can improve odds, much like tailoring stock choices to market conditions.
Important: I’m not saying to chase trends. Instead, you can modify your efforts if trends cause market conditions to change.
Spread the Risk
Since each book is a gamble, you need to spread the risk. Treat each book in your backlist like a stock in an investment portfolio. Some books will do well; some won’t. Give the ones that do well more attention.
Knowing this, you can work toward creating a portfolio of books that collectively reach your income target.
This is how Craig Martelle originally described the idea behind 20BooksTo50K. Write 20 books that collectively earn $50,000 a year and retire to Baja or Bali or wherever.
20BooksTo50K became a popular strategy among self-published authors. It encourages authors to aim for steady, incremental growth rather than banking on one blockbuster best-seller. By building a body of work, authors can achieve a relatively stable, cumulative income even if each book brings in moderate sales.
In other words, write 20 books that sell, on average, $2,500 per year, and you could earn $50,000 per year. That’s much more realistic, don’t you think?
Imagine starting with just five books, each earning $2,500 annually. You could expand gradually, reaching $50,000 annually with a portfolio of 20 books. Now, you're not dependent on one book to succeed. And, you have a repeatable system for success.
Using our numbers from before, we said if we made 14 sales of one book per day, we’d earn $14,272.23 per year on 5,110 sales. But that book has to be a top 2%er. We don’t want that kind of pressure.
With the 20BooksTo50K plan, we only need $2,500 per book per year, on average ($2500 / $2.793) = 895 sales per year per book. That’s just 2.5 sales per day per book.
Deep breath. All the pressure to make your masterpiece a best seller or create top 2% books is gone. We only need the average of the entire portfolio of digital assets to make enough sales to generate the kind of income we need.
I find this incredibly freeing. The shift into the publisher mindset means I don’t have to create the next best seller or anything close to it. It releases my creative freedom so I can create interesting books that my audience would like to read.
It’s like the lower stress version of a master plan for world domination.
Of course, there are some expenses we’re leaving out, and some sales from print and Kindle Unlimited. KU often accounts for a large portion of sales, but that just puts us closer to our goal sooner.
…write 20 books that sell, on average, $2,500 per year, and you could earn $50,000 per year.
Building a Book Portfolio Strategy
Don’t forget, building a backlist is a form of book marketing in and of itself. The more books you have out there, the more chances someone will find you.
Okay, real world example time.
I got a sneak peak at a successful author's book business. He has over $1 million USD in Amazon royalty payments for the year. After expenses, he earns over $400,000 before taxes. I'd call that a win.
Who is this person? I'm not able to say, but I'm sure you've never heard of him. No one has. He publishes under multiple pen names to Amazon only. He has under a hundred books and most of that income was from fewer than 40 books.
That is how you can even the odds and hedge against what is clearly a tough market to compete in.
The kicker? That guy doesn't write a single word. It's all ghostwriters and editors.
He's not an author, but he’s built a massive book business with a portfolio approach. He’s a facilitator. He’s a book portfolio investor and is strictly in publisher/investor mode. He pays others to write and edit for him and then hits publish.
Think about it. If a non-author who doesn’t write a single word can earn $400,000 a year, think of what you can do as an author.
Your turn. Are you ready to start viewing your books as assets? Create a plan for your book portfolio, set realistic income targets, and give yourself the freedom to write what your audience would love to read.
The benefits of viewing things this way are many. Among them:
No more worrying over one book’s performance.
Acts as a hedge against potential ups and downs.
Each book adds to the collective weight of the portfolio.
Each book becomes an opportunity for a new reader to discover you.
Here’s a simple checklist to help clarify:
Set your target income and calculate how many books at what price point you’d need to reach it.
Diversify your genres or subgenres and pen names to appeal to different reader groups.
Track sales data regularly and cut back on promotional costs for books that underperform.
Double down on books that are doing well.
Personally, I’m going all in on short stories (which some people claim don’t sell and therefore don’t make any money). We shall see. To do that, though, I need to streamline and speed up my writing process.