Friday, March 19, 2010

CreateSpace versus Lightning Source - Payment Schedule and Cash Flow!

I have spent the afternoon of my day off reading Aaron Shepard's new POD for Profit, an excellent guide to using Lightning Source as your POD printer to self-publish. I do want to say this book is for self-publishing authors even if you don't use, or intend to use, Lightning Source for your POD printing and distribution through Ingram. This book has moved onto my list of must purchase books for anyone considering self-publishing.

In reading the book though, I did pick up a fact that makes me glad I have used CreateSpace as my POD printer and distributor.  The very first book I authored I used an author services company, Dog Ear Publishing, to get my book into print and distributed. Dog Ear was great to deal with. I felt like I more than got my money's worth from the services they provided. Dog Ear has always communicated well with me. If I  ever use an author services company again, it will be Dog Ear. What's more, Dog Ear rectified one of the two issues I had with them. They now provide a means to track actual sales numbers through your account on their website. The other issue I don't think Dog Ear will ever be able to change and that is the 3-4 month wait to get paid from the previous quarter.

For example, I am still waiting for payment from Dog Ear for sales of my book during the 4th fiscal quarter. I am happy to say the check is going to be sizable and will fund my current business projects that are waiting to go but just need funding. I could have used the money two months ago and would have been able to launch another book and another business project with the money. Dog Ear is not really to blame for the delay, Lightning Source does not pay Dog Ear for nearly three months after the quarter is over and then Dog Ear has to process payment to its authors. If you publish with Lightning Source, you will be paid four times a year, several months after the end of the fiscal quarter you are being paid for!

CreateSpace on the other hand pays much quicker. For example, I am paid, by direct bank deposit, for sales in January at the end of February. In both instances, the reason for delay is so adjustments for returns, which I don't allow and other book keeping and accounting issues can be resolved.

Regardless, for my fledgling business, the cash flow is better getting a monthly payment instead of a quarterly payment. After the initial one month delay in payment, I will have funds from my book sales deposited on a monthly basis.

I am fully aware I can make more money per sale using LSI and setting a short discount than I can using CreateSpace with its 40% discount for sales on Amazon. But, and I desire to point this out, for some authors or businessmen, the cash flow issue might be more important for a variety of reasons than the amount of profit generated.

The sale of my self-published books are only part of my business and part of a long term strategy. In building the business I have fixed operational costs that are monthly, larger costs that are seasonal, and costs that are tied to specific projects. Other than the initial investment made in getting the business started, all costs, future projects and expansion of the business must be generated by income from the business, making cash flow an issue. In addition, the initial investment must be recouped as quickly as possible.

CreateSpace also allows me to track sales easily by simply logging into my Member Dashboard. One of the tracking features provides me a complete breakdown of the books sold, the cost per copy, the day the book was sold, my net profit for each book sold and totals to date. This is valuable information that updates ever few hours.

I will say I have a book I am working on with potential for good sales by any measure. Because I anticipate this book will be the most successful one I ever author in terms of sales, making the potential for profit the greatest of any book I self-publish, I will use Lightning Source to publish this book. By the time this book is finished the business should be in better shape financially making the need for monthly cash flow less important and the generation of more total net profit a more important issue. Until then, CreateSpace will be my POD printer and distributor.

I believe this is an issue self-publisher's should consider. If, like me, you do not want to borrow money to start your business, cash flow will be an issue. It will be an issue regardless if you plan to self-publish as a business and not a hobby. I consider the difference in profit like paying interest. In fact, that is a topic that someone with an accounting background should look into. Maybe a topic for a future blog post.