I get asked for advice from prospective authors a lot. The purpose of this post is to consolidate that advice into one handy to read place. If you came here for mean variance optimisation in the presence of uncertainty - skip this post.
Am I qualified to answer this?
(This is more from people finding this post randomly). I'd say yes. I've written five books, with total sales of over 40,000 copies (more statistics later) in the eleven years since my first book came out.
A list of my books is here: https://www.systematicmoney.org/.
But bear in mind my experience is with a single publisher, writing in a specific genre. So I'm not an expert. This is very much my personal take.
Why write a book?
Broadly speaking, I'd say people write non fiction books:
- to make money
- to indirectly make money by getting people to buy their course, hire them as consultants, to help get a job (probably only academics get jobs from writing books and not even then!)
- to boost their fragile egos
- out of a burning desire to teach as many people as possible
Note that 2 and 3 are all about writing a book to boost or burnish your profile in some way; whilst 1 and 2 are about making money. You are unlikely to make a lot of money directly from book royalties - it's a very long tailed, positive skewed call option.
Of these I'd say 3 and 4 were definitely my main motivations up front; I have had a bit of 1 and 2.
It's really important to understand why you are writing this book, as it will determine what sort of book you write, and what route you go down. For example:
- to have an outside option of making a ton of money write a more popular book through a 'big' publisher or self publish; for a lower standard deviation option write a less accessible, more technical book.
- for course selling you probably want an accessible book that you self publish and give away, for more esoteric technical purposes like consulting and academia you want a fancy sounding book through a reputable publisher.
- and 4. If you want lots of people to worship you write an accessible book, but you will probably want to do it through a decent publisher to get them to listen to you.
What area and level are you pitching at?
Often trite advice that is given is to imagine exactly who you are writing the book for. It helps if it's a real person! That person is your market. As already noted there is an obvious relationship between market size and accessibility. There is also a relationship with price. Books likely to sell in smaller numbers will have their prices set higher by publishers to cover the fixed costs.
(Of course you can ignore this advice if you self publish, but you'd be stupid to do so...)
I'd describe my books as 'mid market' in terms of technicality, accessibility and price; ranging from LT (£30) up to AFTS (£60). Something like 'the blue book' would be an example of a highly technical with a very limited market. It's over £100 and has probably sold only a few copies outside of universities. Something like this would be 'mass market' (disclosure: I am in a chapter of that book). It's £30 and has probably sold a zillion copies. You can pick up paperback 'trading' books for £15 to £20.
Publish or self publish
I've published through a publisher for my entire career, whilst my mate Andreas has self published his last few books (disclosure: I wrote a chapter of one of those books).
The main benefit of self publishing is financial; you keep the net sales proceeds rather than just getting a royalty (more of that later). However you will have to pay all the up front costs, plus the production costs on each book. The maths of that means that self publishing won't break even until you've sold a fair amount of books. It's also more work. Although you can outsource most of that work it's a hassle up front to find decent people to do it (editors, designers ...), and they are not cheap. It costs money to do quality work.
There is nothing worse than a self published book that has been done on the cheap; the lack of quality really shines through. People might put up with that for a cheap fiction novel in kindle version, but I think they are less likely to accept it for a non fiction book; particularly in finance. I think it would be okay if you're creating something to give away to sell your dodgy forex course, otherwise quality is important.
I'd say for a first book definitely go through a publisher (which Andreas did, FWIW). Then you can make your own mind up afterwards.
Which publisher?
I've been with Harriman house since the beginning. They are now part of McMillan. They have been great for me, but there are obviously other very good publishers; in particular for more technical books Wiley are the G.O.A.T. whilst O'Reilly are good for tech focused stuff. The academic imprints are also good for textbook adjacent work.
If you're unsure about a publisher, have a look at their other books. There is a specific publisher I am constantly being spammed by on LinkedIn. Their books are of very poor quality. People are probably going to assume yours is as well.
Also, watch out for scams. There is a real trend for authors and potential authors to be scammed. I get these messages about once a week. There is an account of one attempt here.
Money, sales ... what can I expect?
Let me share with you some figures for my 1st book, Systematic Trading (ST) which came out in October 2015. It's sold a total of 20k copies which averages out to 1800 per year. In fact the sales are lumpy, from 1k to 3k copies in a given year. Generally books have a big initial sale period then slow down. ST's initial sales weren't spectacular as I wasn't very well known to begin with. ST did then have a slowing down period, but has since accelerated in the last few years.
ST is an outlier however; my 2nd book Smart Portfolios didn't sell as well (my only book on investing rather than trading... hmm) and my 3rd book initially sold at a similar rate to ST but has since slowed down. My 4th book had really strong year one sale, much better than ST, but is now selling at a similar rate. Whether that's because I'm more well known now, or because it was a book with a naturally bigger market, I'm not sure.
According to the internet anything selling more than 5k copies in it's lifetime is 'very good', whilst over 10k lifetime copies would be a 'strong success'. Even if all my books were at end of life stage, which hopefully are not, all are in the 'very good' category whilst ST is a 'strong success'. I am a relatively succesful author in terms of my point on the distribution. Most books don't sell that well. There are many, many books with near zero sales.
To repeat you'd have a chance of higher sales with a more accessible book; but also a higher chance of very low sales. These sort of books are very much shit or bust. Sometimes there is a breakthrough and an esoteric book will sell a lot of copies to people who pretend to read it, but that's rare.
My sales are split around 35:65 between kindle and hardback; but I get higher royalties per book from Kindle sales (zero cost of production). Mass market books would have more ebook sales; more technical books would have more hardback.
In an ideal world all copies of my book were sold at full price by the publisher. However books get discounted and book sellers take a cut. As a result the net revenue is lower than the cover price. Books tend to get discounted more as they get older, and more expensive books also get discounted more as a percentage.
Book royalties are eithier paid as a % of the full price, or as a higher % of the net revenue. I can't disclose my royalty rate, but you can ask your favourite LLM for some figures.
Anyway, in real terms I've made £223,000 from book royalties in the last eleven years. Again, that's lumpy - it will bump when a new book comes out - and it's also been higher in recent years as I've been selling four books at once rather than just one. Because most books slow down in sales (though not, so far, ST...) you really need to keep writing one every few years if you want to maintain a constant income.
I would say each book takes me about a year of working on average 70% of the time. Call it 2000 hours. That means I've earned about £53 per hour from writing my first book and about £16 per hour from my 2nd and 3rd (my fourth lies in the middle; whilst my fifth isn't out yet). Obviously over time those figures can only go up assuming the books continue to sell. My books do require a fair bit of work and you could write a simpler book in less than 2000 hours; but to repeat they are relatively good sellers.
I'd imagine the median author does not earn minimum wage. The lower figures there are slightly above that, but not by much! Of course even the higher figure is only a fraction of what I would be paid if I had continued working in a hedge fund...
Bear in mind I also do other things, mainly for free, which promote my books. That bumps the hourly rate down (and I have a few expenses like web hosting fees...). On the other hand, I have perhaps derived some other financial benefits from writing which don't show up in those figures. My hourly rate from consulting is many multiples of the figures above, and arguably I wouldn't have got most of that consulting work without writing the books.
Summary
Write a book! But don't do it for the money. If you have any more questions please comment below and I'll put the answers in the body of the post.
