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2009 Formula

I was reading this interesting book on benchmarking (which if you have spent more than a few hours with me over the past few years, you would know I'm a little metrics-obsessed) and it had an interesting/simple formula to use as a guide (as this was a sales person tool, I had to tweak a little for publishing -- all flaws are, then, obviously my own): 

The number of projects you send out (each month) x the sale-through percentage (the average percentage of successful sales) x the average amount per sale x the number of months you are actively submitting (10... approximately, in our case) x  1/2 your percentage = your income.

This stuff is kind of obvious, right? Obviously you're not going to sell more than you send out and obviously if you send out more, you have the opportunity to sell more.

What this basically says is that if you send out two projects each month, and you sell 50% of the material you send out (...math? that's 1) and then the average you sell those projects for is 50k x 10 months (500k) -- you sold $500 worth.

If you then multiple that by your percentage (15% -- or 10%, let's use ten, it's easier) that's 50k for that year, except most payments are split up, so let's do an average on signing amount which is half.

So the agent who sold 500k worth of books, made approximately $50k that year.

Which is a nice amount of money (unless you live and work in NY). 

Let's say you want to make $75k a year, you can't really add more months to the year (let's stick with 10 to counter the "deader" months of August and December, projects sold in those months will be "bonus") - so that number stays the same. Then what you have is: 

# of projects out x % sold x average amount per sale x 10 months x 5% = 75k

To make 75k this year, you'll have to sell approximately $1.5 million in deals (if my math is right...).
((if you're feeling sadistic, go check out Publisher's Marketplace and see how many agents would have made over $50k their first year))

Anyway, these are the numbers I follow to see how many projects I need to send out on a monthly basis - at which point, you always realize you need more clients...

((of course, there is another formula for how much time you can spend on each client, how much time you have at your disposal, and what types of clients you can take on because of that: "Do I have time for a client that will need multiple massive revisions?" -- or is this a project I can hip-pocket? (i.e. send out in almost the same version it comes in as). ))

I think every agent does something like this - mostly in their heads (unless they are as nuts as I am, and fill their books with goals and numbers and little calculations... I like seeing how tweaking one number will change the bottom line, it helps you work smarter).

But, I find that most people who BECOME agents don't think about this their first year. They are thinking about their love for books.
Trust me, the love for books is great and awesome and will carry you through the times when you are thinking, "I could have become a lawyer/hedge fund manager/doctor/garbage man and made more money than this!"  but knowing what you have to do to achieve your goals can be a great motivator (or it can keep you in a safer, more traditional occupation).

---

For any writers reading this post -- I have to admit, this isn't really a post for you. Most of these posts won't be "for writers" - I used to blog for writers and had a lot of fun doing it... but there are so many other great agents out there blogging about how to write an awesome query letter, etc... that I didn't want to add to the internet-noise.

But, I hope that anything I write here can be applied to you too... I hope that if you figure out your own formula (how many books can I write each year x how many can I actually sell/should sell x how much will they sell for x what percentage of the money will I receive each year) you will start getting closer to achieving YOUR goals.

If that means writing a book that will sell for $100k rather than $10k. If that means completing a novel rather than submitting on partial. If that means writing for multiple houses. If that means that you won't be able to become a career-author until you can live off your royalties (this is the best advice anyone can give you, fyi)...

Figure out your own formula and see where it leads you.

Comments

( 1 comment — Leave a comment )
jillcorcoran
Mar. 11th, 2009 11:58 pm (UTC)
Thank You
Thank you for this post, Nadia.
Perfect timing:)
( 1 comment — Leave a comment )

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