Managing Indie Income
That’s right; I’m doing another blog about the business side of being a writer. If you went back in time and told my parents I’d grow up to write blogs about money management, they’d yell at you for invading their home and accuse you of being a time-traveling witch with your strange future garb. Once you’d been taken away for breaking and entering, however, they’d laugh quite a bit at the nonsense that time traveler was spewing. But necessity forges strange friendships, and over the last decade I’ve had to learn to balance a budget well enough to pay for rent, booze, and food, usually in that order.
Much of that training came when I was doing sales for a living, which prepared me for my current job as a full-time author better than I’d have expected. I’ve talked before about how writing full-time is a lot like being in sales because it revolves around managing a pipeline of your work and making sure you’ve always got irons in different stages of the fire. Today, however, I wanted to talk about the other side of that equation: how to handle the money you get when there’s no set amount coming from month to month. And trust me, its’ very different from working a job with a set salary.
Know the Cycle
Although there are some variations, for the most part book releases of authors with established catalogs tend to follow a predictable cycle. A new book will launch, dedicated readers will pick it up and spread the word that it’s either good or bad. Regardless of whether the book is a success or not, or even part of a series, that first month will generally be among the highest for its particular sales. The next month will also be elevated, and a bit of a bump on the third can sometimes be found. After that the book will level off to whatever amount your books usually sell in a given month. Now those can be spiked with promotions and marketing, but for this blog we’re going to focus on the natural cycle and not get into manipulating it too much.
So, the cycle of a new book is Month 1: Biggest sales, Month 2: Big sales, Month 3: Small elevation of sales, Month 4: Back to normal. That’s really important, because those release months will often also lift your other books too, leading to them being the points where the large chunks of your income come from. And having inconsistent income requires you to view your revenue stream in a slightly different manner.
Don’t Spend What You Make
While I won’t get into real examples here because every author’s journey is different, I do need to use some financial examples, so we’ll pick some big numbers that are easy to work with. Let’s say romance/Lovecraftian author Svetle Thruster has a stable series with happy readers. In a normal month, he makes $3,000. On release months, however, he makes $9,000. So Month 1 is 9k, Month 2 is 6k, and Month 3 is 4k before going back to 3k as usual. Now you might look at that and think Svelte is going to rent himself the biggest cocaine fountain he can find in Month 1, a smaller one in Month 2, and maybe just eat out a little more in Month 3, but that would be a terrible plan.
You see, Svelte actually needs $4000 per month to cover rent, food, car, and other necessities like his passionate love of fancy cheeses. So rather than spend the extra he makes in those 3 months, he puts it away to cover for the normal months when he’d be coming up short.
This takes a little getting used to, especially when you come from hourly or quick-cash jobs such as bartending that make living paycheck to paycheck easier, which I did. The goal here is to look at income in terms of what you’ll make all year rather than month to month. Trust me on this lesson I learned during my sales days: It’s really easy to have a big month and think the money will never stop flowing, but it will. The key to lasting in jobs like this is to use the big months to cover for the lean ones, because sooner or later they will be coming. For authors and salesman alike, they will be coming. When you look at your income over a year, balanced against the monthly budget you have, it gets easier to see how one month is filling in the gap from another, allowing you to balance your schedule and bank account without ending up short and selling blood to make rent.
Pro Tip: Blood places know if you try to sell them animal blood instead of yours, no matter how ethically it was obtained. Don’t try it; they are a little too free with those lifetime bans.
Track Your Money
When people write in to ask me how they know if they should do the writing thing full-time (I know, those e-mails surprise me too) one of the first things I tell them is to get all their sales records in order and try to put together some averages of what they made. Assess the release months and the slow ones, try and figure out how often their releases will be coming and what the average amount on the slow months is. If they haven’t got enough data to do all of this, the my advice will be to wait, because unless they hit the author-lotto chances are no one will be making enough to quit before they’ve been at it long enough to have this sort of information.
Assuming they do have it, however, then the next step is for them to look at their bank statements and figure out how much they spend, and then to split it off into essentials versus non-essentials. Not just the obvious stuff like rent either, but the things you know you’re going to spend money on whether it’s responsible or not. Like Svelte and his love of cheese, we all have weaknesses and you shouldn’t assume future you will suddenly develop better self-control. Once they have the numbers for average spending broken out by essentials and non-essentials, they can take a real look at the situation.
At this point you have to look at how much cash the books are bringing in, and how much is from the release months vs. the normal months. Do you have enough to cover your spending? Does it depend on wild upswings, or do the usual amounts support it? Will there be new expenses (like health insurance) you have to account for when working for yourself?
I’m not going to have an answer to this part; it’s a decision you have to arrive at on your own. But by laying out the facts and taking a hard look at them you can at least figure out what amount you need to be working toward. Whether it’s by producing more work or cutting back spending, you’ve got something to shoot for and a good foundation for how to handle income once you make the jump.
Common sense as I know this is for some of you, I personally wish dearly I’d gotten this explained to me when I was first on my own and doing sales. Because let me tell you, it doesn’t matter how much you sedate them or what gauge needle you use, cheetahs wake up pissed when you steal their blood. Sluggish and easy to outrun, obviously, but pissed nonetheless. Don’t steal cheetah blood; just learn to manage your cashflow.