Small publishers may not have all the resources of bigger publishers, but that doesn’t mean they don’t come with plenty of advantages for writers.
Unlike the “Big Five” publishers, smaller press companies may be more willing to go to bat for their writers while taking a chance on an unknown.
But how do small publishers make money?
Small publishers are often known as stepping stones for unknown or unpublished authors to get their start, leading them to go on to bigger things. This means small publishers often discover new talent (or stumble upon them) and make money.
But they also have other sources of income available to them.
In this article, we will review some of the ways in which small publishers can make money.
How Do Small Publishers Make Money?
Small publishers are usually focused on only a few genres of books, with limited resources compared to big publishers. Still, they need to make money somewhere. Let’s find out how they do it.
Here are the top 5 ways Small Publishers make money:
- Funding from Grants
- Markup on Books
- Subsidies
- Having Small Staff
- Selling Digital-Only Books
#1. Funding From Grants
Small publishers are more likely to be invested in supporting causes and voices that aren’t given bigger platforms. Since this can often equate to less financial backing, funding from art grants is a way that small publishers can make money to run their businesses.
The catch for receiving funding from an art grant is that the publisher usually must be non-profit. If the small publisher applies for a grant from the National Endowment of the Arts, and they qualify, they are likely to get backing to publish books with particular importance and meaning.
#2. Markup on Books
Small publishers markup their books in order to make a profit, but the markup is often less than what larger publishers charge. The suggested retail price (SRP) is what the author and publisher agree upon together and is generally 20-40% below what the book will actually be sold for.
The publisher will then sell the book to a retailer, such as Barnes & Noble, for a higher price with the understanding that the retailer will sell it at the SRP. The retailer gets a discount for buying in bulk and hopes to make up the difference by selling more units. In this way, the publisher, author, and retailer all make money off of each book sale.
#3. Subsidies
Some small publishers are owned by larger publishers with much more capital. When this is the case, small publishers can make money through subsidies from their parent company. While the smaller publisher may still be focused on specific projects that may not be top earning, they can afford to take on new writers with some backing from above.
Many small publishers under larger umbrellas may be willing to take the time to invest in unknown authors without the risk associated with independent small publishers. This can be a boon for new authors as well as for the publisher who might serendipitously discover the next big writing talent.
#4. Having Small Staff
Running a small company with limited staff will save a small publisher lots of money. A small publisher with limited employees can spend more of its money publishing books instead of paying salaries. In return, when a book is published, the overall return will be greater for the company.
Of course, less staff means harder work for everyone, but this is often the exchange that is made to keep prices low and make more money. Many small publishers will optimize their internal processes to make the most of a small staff.
#5. Selling Digital-Only Books
Instead of putting money into publishing hard copies of books, producing digital-only publications is another way to keep costs low and make more money for a small publisher.
In today’s digital-friendly world, many people read books on their phones, tablets, and kindles, making it possible for a small publisher to offer digital-only copies.
While this isn’t the traditional way of doing things in the publishing world, it is certainly a good way for a small publisher to stay afloat while keeping their customer happy.
The other advantage of publishing digital books is that there are no printing or shipping costs, so the publisher can keep more of the sales price.
Conclusion
Small publishers play an important role in society by giving a voice to those who might not be heard otherwise. While they don’t always have the capital of the big publishers, they make up for it in other ways. So how do small publishers make money?
Small publishers find various ways to make money in order to keep their businesses running, including receiving art grants, marking up books, and receiving subsidies from larger publishers.
Additionally, small publishers can save money by having a small staff and publishing digital-only books. These may not be traditional methods, but they allow small publishers to stay in business and continue to provide an important service.
