{"id":25186,"date":"2022-05-13T03:00:17","date_gmt":"2022-05-13T10:00:17","guid":{"rendered":"https:\/\/writersfunzone.com\/blog\/?p=25186"},"modified":"2023-11-15T16:25:17","modified_gmt":"2023-11-16T00:25:17","slug":"applying-accounting-concepts-to-an-authors-world-by-d-f-hart-mba","status":"publish","type":"post","link":"https:\/\/writersfunzone.com\/blog\/2022\/05\/13\/applying-accounting-concepts-to-an-authors-world-by-d-f-hart-mba\/","title":{"rendered":"Applying Accounting Concepts to an Author\u2019s World by D. F. Hart, MBA"},"content":{"rendered":"<p><a href=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Applying-Accounting-Concepts-to-an-Authors-World-by-D.-F.-Hart-MBA.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-25216 size-thumbnail\" src=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Applying-Accounting-Concepts-to-an-Authors-World-by-D.-F.-Hart-MBA-300x300.png\" alt=\"\" width=\"300\" height=\"300\" srcset=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Applying-Accounting-Concepts-to-an-Authors-World-by-D.-F.-Hart-MBA.png 300w, https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Applying-Accounting-Concepts-to-an-Authors-World-by-D.-F.-Hart-MBA-80x80.png 80w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>Today we welcome a new guest writer to Writer\u2019s Fun Zone, D. F. Hart who is stopping by to chat with us about \u201cApplying Accounting Concepts to an Author\u2019s World.\u201d Enjoy!<\/p>\n<p>***<\/p>\n<p><span style=\"font-weight: 400;\"><strong>As an accountant,<\/strong> I get asked a lot of questions from fellow authors once they realize that my \u2018day job\u2019 and background deals heavily with numbers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Below are two common questions I\u2019ve fielded over time. Hopefully, at least one answer here can help you on your author journey.<\/span><\/p>\n<h2><b><i>Q. What types of data should I be tracking?\u00a0<\/i><\/b><\/h2>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">A. While you want to track production costs (cover design, editing, proofreading, formatting, etc.) you <\/span><i><span style=\"font-weight: 400;\">also<\/span><\/i><span style=\"font-weight: 400;\"> need to keep track of your overhead costs (website build\/domain, newsletter list builds, any money you spent to set up your business structure, etc.).\u00a0<\/span><\/p>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">I call these things &#8216;<\/span><i><span style=\"font-weight: 400;\">the costs of doing business<\/span><\/i><span style=\"font-weight: 400;\">&#8216;. The things that you&#8217;re going to spend money for, regardless of how many books you publish and sell, even if you don\u2019t publish and sell any.\u00a0<\/span><\/p>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">You&#8217;re also going to want to allocate that overhead against your books.\u00a0<\/span><\/p>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">By &#8220;allocate&#8221; I mean, make each title &#8216;carry its fair share&#8217; of the overhead cost by portioning out that expense across your revenue streams. If you like, you can take each title&#8217;s portion and split it out even further against each of that title&#8217;s <\/span><i><span style=\"font-weight: 400;\">formats<\/span><\/i><span style=\"font-weight: 400;\">. Such as applying a portion of expense against Z title\u2019s eBook, paperback, large print, and audiobook.\u00a0<\/span><\/p>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">As your number of titles and formats increases, the \u2018overhead\u2019 costs assigned to each will go down.<\/span><\/p>\n<h3><strong>The Allocation Example<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">I spend $300 per year for my website, and I currently have sixteen titles out on the market.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">$300 \/ 16 = $18.75 <\/span><i><span style=\"font-weight: 400;\">per title<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s say for each title, I offer them in eBook, paperback, and large print. So, I could take that $18.75 per title, and put one-third toward each <\/span><i><span style=\"font-weight: 400;\">format of each title<\/span><\/i><span style=\"font-weight: 400;\">:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">$18.75 \/ 3 formats = $6.25 per title\u2019s <\/span><i><span style=\"font-weight: 400;\">format<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">In other words, each of my 16 eBooks would be responsible for helping me recoup $6.25 of my annual website costs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Then, when you run a break-even calculation, you can be more comfortable knowing that once that title (or title&#8217;s format, if you broke it down to format level) reaches that # of units sold, it&#8217;s operating in the black (absent any recurring ad spend <\/span><i><span style=\"font-weight: 400;\">specifically for that title, <\/span><\/i><span style=\"font-weight: 400;\">that is).<\/span><\/p>\n<h2><b><i>Q. What&#8217;s a good way to help me decide how to spend my budget dollars? Where should my focus be? <\/i><\/b><\/h2>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">A. I believe first and foremost in running a break-even point calculation for every revenue stream that I do or am considering.\u00a0<\/span><\/p>\n<p style=\"padding-left: 40px;\"><span style=\"font-weight: 400;\">Once I know the number of sales past which something would become profitable for me, then I compare results to help me decide where best to focus my budget dollars \u2013 and my time.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">The break-even formula<\/span><\/h3>\n<p><b>Break-Even Units = Total Fixed Costs \/ (Sales Price per Unit &#8211; Variable Cost per Unit).\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Or in plain language:<\/span><\/p>\n<p><b>How many units I need to sell = My total costs to produce \/ My net royalty per sale<\/b><\/p>\n<p><span style=\"font-weight: 400;\">For example, I have book one of my thriller series out in eBook, paperback, large print, and audio formats.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I know the break-even &#8216;magic number&#8217; for each one and I can tell you that by far, eBook is the best performing with regards to how quickly it surpassed its break-even point (no big surprise). But large print\u2019s second place ranking <\/span><i><span style=\"font-weight: 400;\">did <\/span><\/i><span style=\"font-weight: 400;\">surprise me, as did audio coming in dead last.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Those trends tell me that right now, I&#8217;m better off not worrying so much about audio for other books in that series just yet.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition to different formats, some authors also have things like merchandising in place. And once again, break-even point calculation is a good place to start.\u00a0<\/span><\/p>\n<h3><strong>Merchandising\u00a0<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">A custom-designed pin costs you $500 for a set of 100, and you sell each pin for $7. <\/span><i><span style=\"font-weight: 400;\">You&#8217;d only have to sell 72 of them to recoup your $500<\/span><\/i><span style=\"font-weight: 400;\">. (Formula: X units = $500\/$7, or, X=72). The other 28 out of the 100 you bought would be 100% profit for you when they do sell.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But you also need to ask yourself: <\/span><i><span style=\"font-weight: 400;\">what is the <\/span><\/i><i><span style=\"font-weight: 400;\">demand<\/span><\/i><i><span style=\"font-weight: 400;\"> for that pin versus a custom bookmark, or mouse pad &#8211; or hardcover, or translation, or audiobook?\u00a0<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">And that&#8217;s going to vary from audience to audience.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Acctg-for-Authors-Cover.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-25188\" src=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Acctg-for-Authors-Cover-194x300.jpg\" alt=\"Acctg for Authors Cover\" width=\"97\" height=\"150\" srcset=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Acctg-for-Authors-Cover-194x300.jpg 194w, https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/Acctg-for-Authors-Cover.jpg 353w\" sizes=\"auto, (max-width: 97px) 100vw, 97px\" \/><\/a>Scented candles might work well for a romance audience.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Urban fantasy? Maybe not so much. Hardcover formats might be a better investment.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\" data-wp-editing=\"1\">So,<\/span><\/i> <i><span style=\"font-weight: 400;\">learning your genre\u2019s fan base matters just as much as knowing your break-even numbers<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Want more accounting knowledge to add to your business toolkit? Grab D.F. Hart and Mark Leslie Lefebvre\u2019s book <\/span><a href=\"http:\/\/books2read.com\/accountingforauthors\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Accounting for Authors<\/span><\/a><span style=\"font-weight: 400;\"> today!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">***<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">About the Author\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/DHart.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-25187\" title=\"DHart\" src=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/DHart-300x225.jpg\" alt=\"DHart\" width=\"200\" height=\"150\" srcset=\"https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/DHart-300x225.jpg 300w, https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/DHart-768x576.jpg 768w, https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/DHart-640x480.jpg 640w, https:\/\/writersfunzone.com\/blog\/wp-content\/uploads\/2022\/05\/DHart.jpg 960w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/><\/a>D.F. Hart holds an MBA with accounting concentration and has worked as an accountant for over twenty-five years. When she\u2019s not helping her fellow authors become better business owners, she\u2019s writing mystery\/thriller as D.F Hart and contemporary and suspenseful romance as Faith Hart.\u00a0<\/span><\/p>\n<p><strong>You can find her at:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Her main website: <\/span><a href=\"http:\/\/www.2ofharts.com\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">www.2ofharts.com<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Her accounting page:\u00a0<\/span><a href=\"https:\/\/2ofharts.com\/welcome-to-accounting-for-authors\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/2ofharts.com\/welcome-to-accounting-for-authors<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Facebook: <\/span><a href=\"https:\/\/www.facebook.com\/D.F.HartTx\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/www.facebook.com\/D.F.HartTx<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Goodreads: <\/span><a href=\"https:\/\/www.goodreads.com\/author\/show\/18999540.D_F_Hart\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/www.goodreads.com\/author\/show\/18999540.D_F_Hart<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Bookbub: <\/span><a href=\"https:\/\/www.bookbub.com\/authors\/d-f-hart\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/www.bookbub.com\/authors\/d-f-hart<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Authors have many production expenses and it\u2019s important to know how to allocate those expenses to each publication for record keeping. <\/p>\n","protected":false},"author":12,"featured_media":25216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[1581],"tags":[4934,49,4935,4937,4932,4795,624,4933,4938,4936,2525,4939],"class_list":["post-25186","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-author-entrepreneur-2","tag-accounting","tag-author","tag-business-expenses","tag-calculating-expenses","tag-d-f-hart","tag-independent-author","tag-indie-author","tag-mba","tag-merchandising","tag-overhead-costs","tag-publishing","tag-self-employed"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Applying Accounting Concepts to an Author\u2019s World by D. 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