OK, $15 an hour. We can work with that. Please keep in mind, everything here is entirely hypothetical. Plug in YOUR numbers, not THESE numbers.
Good thing Kevin added that last line. His numbers are a crock of something unprintable.
You write a book. It is 60k words long.
The minimum length for a modern hardcopy book. Most non-YA books are longer.
It took you sixty hours to outline and write the draft. It took you another 60 to revise based on some beta reader thoughts. That's 120 hours or $1800 you owe yourself.
Occasionally, a decent book gets written in three weeks. Most books take far longer than that, especially the ones that are worth reading. A professional author who can reliably write two books a year is doing very well. One book a year is considered a reasonable rate of production.
You then sent it to a copy editor, who proofread it for $250.
I laugh at this derisively. Kevin has skipped editing (his own or anyone else's) and rewriting, and gone straight to copy editing. A professional copy editor would charge at least three times that rate, and more if the book is longer, is complicated or messy, or has other issues. Kevin has also left out the days you spend going over the copy edit and making corrections.
Other parts he's skipped: book design. Backmatter and frontmatter. Proofreading and further corrections. And that's just for starters.
You make a cover, which takes four hours and you pay $10 for some base art to modify. Total cost $70.
The cheap-out cover looks completely amateurish and offputting, and it lacks cover copy. The book also lacks sales copy and review quotes for Amazon and B&N. They're important.
You upload the book, which includes a $10 fee to get an ISBN registered to your publishing company on Smashwords.
Anyone who thinks the ISBN is registered to the publishing company doesn't understand the process.
Reality of model so far: not very.
Over the month following release, you spend twenty hours doing targeted advertising via social networking and forums.
Which is completely ineffectual, and gets you banned from several of those sites as a spammer.
Since these are taking time away from writing, they cost your company money; cost, $300.
For month two and three, you spend five hours a month keeping some minimal mention of the book going, continuing to send copies to reviewers, etc. All free stuff, but time is money: $75.
These methods are also ineffectual ways to sell books.
By month four, your next book is due out and you're promoting that instead (new balance sheet). Sales of that work should help sales of your past work as well.
Have you ever actually done any of this?
Rental of unicorn to touch finished manuscript with horn: $12 if virgin; otherwise $2,000 - $2,300.
Additional fairy dust: $55/oz.
Cost to send follow-up press releases to Oz, Cockayne, Utopia, and Big Rock Candy Mountain: nothing, but time is money: $30.
Your book is selling for $3.99. You make $2.80 a sale.
Only if you make your Mom buy her own copy.
You need to sell 901 copies of the book over its lifetime to break even on your costs, including time spent (although personally, I think you're underpaying yourself - I use $50 an hour in my own calculations).
Odds that the procedure as described will result in the book earning out: Zero, unless you've written a one-hit wonder like
How to Good-bye Depression: If You Constrict Anus 100 Times Everyday.
The big problem - and this is a problem for big publishers as well as small ones - is figuring out how long it will sell.
This is irrelevant. The marginal cost of keeping it in print is next to nothing.
Or to put it another way, how fast you need to make back that money. There's just not enough data yet. Nor do sales follow predictable patterns. One book with a big early push might sell a couple thousand fast, then drop to fifty a month and stay there for years. Another might sell a couple dozen, then slowly build until the book is selling a thousand or more a month, and stay there for years. There's just not enough data collected to make reliable predictions.
I know what real sales patterns and sales predictions look like. Dealing with them is a complex and arcane professional skill. What Kevin has just given us is the Lego version of a jet engine.
But you can do a cost and profit analysis on each book over time. Look back over the last three years of sales, and determine if you made your target or not.
Three years takes you back before ebooks started selling in significant numbers.
((((***Stressing this again - the above numbers are made up and not meant to be demonstrative of actual costs for a book. They might be radically different from your own costs. I know I would never consider a $15 an hour job successful, for myself. Plug in your numbers, do your own cost and profit analysis.***))))
The above procedures and pricing structure have only a superficial resemblance to real writing and real publishing.
Do not listen to this man.