Welcome to the P&L: a deep dive into the document editors must create in order to offer on your book, determine your advance, and convince their colleagues that you're a good bet
Editors create profit and loss sheets to quantify authors' platform and market in the present and make projections about the future. Our job is to make THEIR job easy.
Every time I spot new Twitter discourse about book deal finances, advances, and income disparities among published writers, I mutter under by breath: OH GOODY, ANOTHER GO-ROUND ON THE CAROUSEL OF PUBLISHING IGNORANCE.
It’s not that advance disparities don’t exist. They do, and I’ll unpack my thoughts on why in a future newsletter. It’s just that very few people who participate in these conversations seem to understand the underlying business mechanisms involved, starting with the fact that there even are underlying business mechanisms involved.
I don’t blame the ignorant; I blame Hollywood. (Imagine me shaking my fist “Old Man Yells at Cloud” style at the Hollywood sign.) An old episode of “The Affair” comes to mind: Dominic West’s character submits his unagented novel to one (1) editor, who then spontaneously offers him $400,000 for it. This Is Not How It Works.
In reality, editors use projected sales figures to calculate their advance offers (or—if they decide to shoot for the moon on a rocket fueled by bullshit and gut instinct—vice versa) on a multivariable spreadsheet known as a P&L—business shorthand for “profit and loss sheet.”
P&Ls contain a fair amount of bullshit, as all business forecasting must. Nevertheless, they also contain many fixed costs, known knowns, and standardized line items. And for the past two decades or so, editors have been required to put them together for every single book they acquire, no matter how obvious the commercial appeal. They are therefore very much worth studying.
A canny author and agent will not submit a book to editors unless it’s accompanied by substantive, robust, and plausible P&L fodder. We want to make it as easy and frictionless as possible for an editor to get from “this book appeals to me for vague and subjective emotional reasons!” to “…and I have the numbers to prove it’s a good business bet, too.”
With that goal in mind, what we’re going to do today is go through a basic P&L together, line by line.
I mean, we’re going to do that in a minute. First, a little background:
What you’re about to read isn’t a “real” P&L.
Every major publishing company 1. has its own template P&L and 2. guards it like it’s the freaking Treasure of the Illuminati. I have heard that different publishers’ line items and fixed costs vary, but I can’t personally verify that, because I have never seen a real P&L in my life. (Seriously: they’re that closely held.)
What I have seen is a kind of simplified, fake, non-proprietary P&L an editor friend typed out in Excel a couple years back for an industry discussion Slack community we were in, welcoming me to share it. That Excel sheet—plus some additional intel and line items I’ve gotten from editor friends over the years—are the sources I’ve used to put this sample together for you. (Huge thanks to the editor friends who made this possible. You know who you are.)
It’s also going to be useful for you to have a sense of the larger acquisitions process the P&L figures into, so let’s quickly go through that, too:
Here is a brief big-picture explainer on how editors offer on books.
When a book goes on submission, its agent does not send it to “publishers.” She sends it to list of specific, individual acquiring editors who work FOR publishers.
If an editor who gets the submission likes what he reads, the next thing he will do is share it with colleagues from different departments—editorial, marketing, subrights, publicity—to see if they like it, too. Editors need broad enthusiasm in-house in order to acquire anything, even though every submission they receive and acquire is fundamentally “theirs.” Still with me?
There are two big reasons why editors send submissions around to “get reads,” as they say. First: they need to demonstrate colleagues’ enthusiasm, getting a little cheer section together so the imprints’ executives see the entire team is getting behind a project. Second: certain colleagues in sales, subrights, marketing, and publicity are going to be very helpful as they put together their P&L.
Editors might not know where to begin valuing the academic market potential for a book, for instance, but the executive in charge of academic marketing or sales probably will. And since their long-term career depends on their ability to make savvy financial bets, they want to get those P&L numbers just right.
Okay, now we’re heading down to P&L town.
Join me as we watch a hypothetical editor—let’s call him Ignatius Fortescue—put together a P & L for a debut literary novel called THE LIFE AND DEATH OF MAYOR MCCHEESE by Trout Bassman.1