For the past 25 years, I have earned a good living as a legal and tax writer.
On Friday, I closed down the larger portion of my business. My business has two parts: the books I have written for others and receive a yearly royalty and books I self-publish.
Most book writers barely earn their expenses back. I know: I have written eight books and only two have been profitable. One book, written for West Legal Publishers, has been out 20 years and I am currently working on the 44th update. The other book is one I self publish. It does not have a large subscriber base but for years it sold for $1,400 a copy. At that price you either needed it or you did not. Last June I published the 17th edition and I also have a web version.
This story concerns the self-published book. It was my major income source.
As I said I published the 17th edition. Once you buy a copy, you can call me up and utilize my expertise. In this field, my knowledge base is a foot wide and 10 miles deep. This book was primarily sold to in-house tax departments, academic libraries, large accounting firms, and CFOs.
This book is extremely profitable. It costs me $2,500 in marketing expenses to acquire a new customer (remember this is a niche product). Total production costs are $50 a unit. So once you have been with me three or more years, you, as a subscriber, become very profitable.
Over the past few years, I lost a few subscribers every year. But new word of mouth subscribers replaced most of them. As I said it was a good living.
About two years ago, a few of the larger corporate subscribers did not renew. These are companies who have been customers for 12-15 years. I would call up my contact and asked what happen. I always got the same answer: corporate cut our budgets.
Then in June, 2008, my market collapsed: I sent out the June 2008 edition and 35% came back canceled. Again I would call the customers and ask what happened. This time, the answer was: it's the economy.
Starting in late July, my phones went QUIET and I mean QUIET. Not a single order for the paper edition. Then in August, my web book renewals died. Not a single web subscriber renewed. I had one subscriber who would call with a technical question every other week. When she did not renew I called her. Half of the tax department (it was a large company) had been let go!
Then a month ago, I got two calls. Both subscribers wanted to cancel their subscription and receive back the unearned portion. One was an academic library. I told them as a yearly publication, the subscription was earned the moment they paid for it. This is unheard of in my publishing niche. To me, it means it is really getting nasty out there.
At the diminished subscriber base, the book is still profitable in that I will cover my expenses and still make a livable wage. But nothing like it was three or four years ago.
So I got out my magical crystal ball (aka my gut feeling) and looked into the future. I could do some marketing but it would cost me around $100,000 to replace the lost customers with a normal market. If I lost another 25%, it would cost another $100,000 ($200,000 in toto) to replace all of the cancellations. However my magical crystal ball also tells me given the overall state of the economy and my market, I cannot expect to acquire a new customer for only $2,500. Probably closer to $5,000 a customer.
At a $5,000 customer acquisition cost, I was putting too much of my other assets at risk.
So I decided to throw in the towel. I closed down the self-publishing part. I will continue to support my current customer base until their subscriptions expire.
In closing this portion, my freelance copywriter will get no more business from me, the printers I use will get no more printing orders, etc. (I am sure you get the picture.)
At least I am lucky. I saved like the dickens the past 30 years, and I can get comfortably buy with just my royalty income.