Your math seems to be quite a way off, David.

First their ACE grant was over 3 years, and paid out in instalments, so you need to assume £60k p.a. Second, we publishers sell books at wholesale prices, not at retail (except when we sell direct through our own websites), so an £8.95 volume would, in Salt's case, probably have sold through the POD channel at 60% of retail, direct to wholesalers from pre-printed stock at 65%, from which P&P costs have further to be deducted, leaving you a net of around 50% of retail. Sales to Waterstone's are likely to have been at 45-50% of retail, or they wouldn't have been able to get W to play ball, but W operated a central buying office at the time which meant there were economies of scale at both ends.. The hardbacks were in fact priced at £12.95 for the average poetry collection, but the above discounts still apply, barring POD, which wasn't available for those hardback editions.

They outsourced typesetting to India, but I don't know what the cost was. Figure £250 per title? Printing of initial stock of hardcovers:  I really don't know, but they would have needed an initial run of at least 300-400, I would think, and I would assume a raw cost per volume of around £3.00 each. (I used the same hardback printer for one book back in 2008, 100 copies only, and got a unit price including shipping, of just over £4. They should have been able to better than that as a regular customer with larger production volumes.) So I assume they had an up-front investment per volume of, say, £1200. Multiply that by 60 and you have £72,000 p.a. Obviously you also have sales which will offset those costs, but they had an office to pay for as well, equipment, overheads, and salaries -- their own, as well as those of the staff. (Alongside this they would have had a POD operation, which I assume to have been self-sustaining, partly because of the backlist, and thus no drain on the operation I've just described.) I seem to remember sales back in 2010 or 2011 were up to £150/160k for the year, but I think that was driven by fiction by that stage. They must have been doing hardcovers since 2007, through Biddles of King's Lynn (now defunct, or at least its parent is), as I tried it out in late 2007 after seeing Salt's products and being impressed by the quality. I didn't repeat the experience, because I couldn't make the two different lines work the way I do things.

Salt's problems at 2 different times were caused by cash-flow irregularities, as far as I'm aware. I.e. they had sales but couldn't paid quickly enough, and couldn't delay the printing invoices any further. A Micawberish situation: it's lack of cash that kills small companies, nit lack of profits.

Oh, and The Cover Factory is a company owned, I think, by Chris & Jen H-Emery; Chris does the designs for it, and sells its services to other publishers too. He's good at it.

Tony


On 19 Jul 2013, at 21:58, David Lace <[log in to unmask]> wrote:

> Mark, ok, let’s assume that design per book is £200; stamps and envelopes and postage cost per book to send out review copies and complimentary copies is £5 per book; and about £10 to do each POD (I don’t know how much PODs cost so this is a blind guess). If they, say, published 60 books a year, which I read somewhere this was about the number, the total cost of production for each book comes to £12,900 a year. That leaves £167.100 change, which must have been spent on salaries and hiring some staff. Let’s assume that Salt hire two staff, that this £167.100 is divided equally between these two staff and Hamilton-Emery and his wife. This comes to £41,750 each. I only divide it equally for simplicity purposes, obviously Hamilton-Emery and his wife would have the bigger share. This is a good income indeed--especially as it was given to them.
> 
> Let’s say each book was sold for £8.99 and only 500 were sold a year, this comes to £4,495. They may have sold more, though, which is likely given their success in the early days. So this £4,495 is not a bad income on top of a large grant. As they would not have to sink this back into production costs it could be added to their salaries.