The four classes of business authors — and where you belong

One of my favorite charts from the Business Book ROI Study is this log-log plot of investment vs. revenue. Each dot represents the most recent book of a single published business author. The axes are logarithmic because the spending and revenues vary over several orders of magnitude. The red dotted line is the profitability line: dots above the line are authors who made money, and those below the line are authors who lost money. Based on the stats for their most recent book, 64% of the authors were profitable. As I’ll show in this post, the chances of profitability are similar at different investment levels, but the magnitude of the payoff is typically higher for bigger spenders.

(The Business Book ROI Study was sponsored by Amplify Publishing, Gotham Ghostwriters, Thought Leadership Leverage, and Smith Publicity based on data collected from 300+ business authors between April and August 2024. You can download a free copy of the results at AuthorROI.com.)

Several things are immediately noticeable. There is a significant correlation between investment and revenue (for you stat geeks, that’s R=0.243, p<.01), but even more noticeable is the wide variation in results. It’s not as if all the books fall anywhere close to a straight line. There are plenty of authors who spent a lot and didn’t profit, and many who spent a little and did.

As we learned from the study, there are several factors that are correlated with profit, including executing well on a revenue strategy, using a ghostwriter, and using a launch PR firm, but these are very general patterns, not necessarily causal relationships.

After reviewing the data, I thought it would be instructive to analyze subgroups. In my experience, the amount authors spend is one way to classify them into groups, and those groups have very different behaviors and results. If you are planning, writing, or promoting a book, you can use this analysis to decide what kind of author you are, and what your strategy should be.

The cheapest quartile of authors are have random results

The 25th percentile of spending in our survey was $700. I’d describe these authors as cheap and lazy, because of their failure to invest significant amounts in their books (or perhaps, in filling out the cost parts of our survey).

Here’s a chart of the spending vs. revenues for the bottom quartile, authors who spent $700 or less on their book (with the log scale only on the revenue axis).

Of the 301 published authors in our study, 19% reported investing nothing at all in their books. Almost inevitably, 82% of the lowest-spending authors showed a profit, because at these spending levels your book is almost guaranteed to make a small amount of money. Yes, there is an book in this quartile that reported generating a million dollars, but most of the books generated $10,000 or less. Here are some statistics about this bottom quartile in spending:

• Their median investment was $0, and their average investment was $118.
• Half of them were traditionally published, and 26% were self-published.
• Their biggest expenditure was copyediting, but only 9% spent money on that, for an average of $425, a pathetically low amount to pay a copyeditor
• Their median revenues were $8,350, but there was a lot of variation.

The second quartile of authors were mostly do-it-yourselfers

The second quartile of authors by spending includes those whose spending exceeded $700, but not $7,000. This is a fascinating group, because my analysis shows that they’re working very hard to be successful, mostly without a traditional publisher. Here’s a chart of their investments and revenues (log scale on the revenues only):

As you can see from the chart, there are plenty of books in this quartile that generated revenues in the tens of thousands of dollars. There’s no guarantee of success: 63% of these books were profitable. But there were some interesting patterns:

• The median investment in this group was $3,000.
• Only 15% had a traditional publisher. In this group, 21% were hybrid published and 59% were self-published.
• They were most likely to spend money on copy editing (71% of them, average cost $1,455) and graphic design (48% of them, $1,281 average cost). But 19% of them had writing coaches at an average cost of $2,968 and 15% had a developmental editor at an average cost of $2,355.
• Their median revenues were $8,425, with a median profit of $5,800. The median return on investment was 185% — that is, the typical book in this category generated a profit of 1.85 times the original investment.

The third quartile of authors had higher risk, but greater returns

The third quartile of authors by spending includes those whose spending exceeded $7,000, but not $25,500. These authors were putting significant effort into boosting the success of their books, and were far less likely to be self-published. Here’s a chart of their investments and revenues (log scale on the revenues only):

The stakes are higher at this investment level. There were plenty of books with revenues exceeding $10,000 or even $100,000, but others that never made back their investment. At this spending level, 59% of authors were profitable. Here’s a profile of these authors:

• The median investment in this group was $15,000.
• They mostly had publishers: 38% had a traditional publishing contract and 38% had a hybrid publisher. Only 20% were self-published.
• As with the second quartile, they were most likely spend money on copy editors and graphic designers. But 25% had developmental editors (average cost, $5,294), 24% had writing coaches (average cost, $10,220), and 23% paid for a PR agency to launch their book (average cost $10,750).
• Their median revenues were $27,250, with a median profit of $13,400. The median return on investment was a healthy 104%.

The top quartile of spenders saw some outsized returns

The top quartile of authors by spending includes those whose spending exceeded $25,500. At this level, publishing a book is a high-stakes effort with a significant chance of a major payoff. Here’s a chart of their investments and revenues (log scale on the revenues only):

Authors who spend more than $25,000 on their books tend to have clear revenue objectives. Although there were a few outliers with low or zero revenues reported, 60% of these authors generated a profit despite their high spending, with about half generating in excess of $100,000 in revenue.

• The median investment in this group was $61,000.
• A majority in this group — 57% — invested in a hybrid publisher, while 40% were traditionally published. Only 7% were self-published.
• Their spending patterns in the top quartile were quite different from other authors. Their biggest-ticket items were ghostwriters (26%, $42,000 average cost), book launch PR (50%, $25,000) and book coaches (25%, $18,000).
• Their median revenues were an even $100,000. Their median return on investment was 48%, but at this level of investment, that represents a lot of dollars; the median profit in the top quartile of spending was $32,000.

What I learned from this analysis

It was fascinating to me to see that the chances of making a profit were pretty similar across different spending classes — about 60%. But the amount of profit is of course much higher for those who invest the most.

This suggests that as an author, you need to decide what type of game you are playing. If you want big returns, you’ll likely have to spend significantly. For the best returns, invest across the board, in content, coaching, and publicity.

There’s no way to know if your book will pay off. But don’t invest like a miser and expect a big payoff. While that sometimes happens by chance, it is the professional authors who invest wisely that tend to see the biggest successes.