Lightning Source Books on Demand Cost and Profit — Part 4

In Part One I dis­cussed how we deter­mined one-time costs to pub­lish our gluten-free cook­book called Gluten-Free with Love using Light­ning Source.   In Part Two I talked about how much it will cost to print each book.  In Part Three I went into more detail about deter­min­ing price and cal­cu­lat­ing profit from your book sales.  In this part I would like to delve into how you can use Google Adwords to adver­tise your book on a pay per click basis.

You are prob­a­bly already famil­iar with Google Adwords but in case you are not, Google Adwords are the “Spon­sored Links” ads that appear on Google Search Results pages (as well as on their ad part­ner sites).   Adwords give you the capa­bil­ity of cre­at­ing those ads and hav­ing them appear when users search for key­words related to your ad.

You bid a cer­tain amount of money for each time a user clicks on your ad and in return Google sends (hope­fully) highly rel­e­vant traf­fic to the web site where you are sell­ing your book.  Learn more about Google Adwords at their tuto­r­ial site.

Here are tech­niques for fig­ur­ing out how much to bid for your Adword ad and how to cal­cu­late your expenses and prof­its from your book sales.

First, deter­mine how much profit you make on each sale.  For exam­ple, for each Gluten-Free With Love book sale we retain about $6.08 in profit (as explained in Part Three), since Amazon.com pays Light­ning Source our whole­sale price of $10.97 and deducts their print­ing costs of $4.89:

Whole­sale Price ($10.97) minus Light­ning Source Print­ing Fees ($4.98) equals $6.08

The profit is really gross profit since it doesn’t take into account adver­tis­ing costs.  When deter­min­ing your adver­tis­ing bud­get, think about how much net profit you would like to make after adver­tis­ing costs.  We decided we need to make at least $2 per book to make it worth our while.  So, our total adver­tis­ing can’t exceed $4.08.

Gross Profit ($6.08) minus Net Profit ($2) = Max­i­mum Ad cost per book ($4.08)

Now esti­mate a click to buy ratio — in other words, take an “edu­cated” guess as to how many peo­ple will buy after click­ing your ad.  Our orig­i­nal esti­mate for our book was that one in fif­teen clicks would result in a sale.  Adjust your ratio accord­ingly.  You will prob­a­bly have a bet­ter idea after you have been adver­tis­ing awhile and be bet­ter able to esti­mate future sales.

Your click to buy ratio will vary depend­ing how good your “land­ing site” (your book sell­ing web site that Google Adwords sends clicks to) and how well you tar­get your ad to your audi­ence.   Try to pick ad key­words that are as spe­cific and tar­geted for your book as pos­si­ble but gen­er­ate enough clicks to make sales.  Google’s Adword tuto­r­ial pre­vi­ously men­tioned explains more about how to set up a highly rel­e­vant key­word ads that should increase your click to buyer ratio, assum­ing you have a good prod­uct that peo­ple want to buy.

Based on your click to buy ratio, you can cal­cu­late the max­i­mum bid per click that you can afford.  In our case, it is $0.27/click.

Max cost Ad cost per book ($4.08) times click to buy ratio (1/15) = $0.27/click

Your key­word bids will need to be at or below this max­i­mum amount in order to retain your net profit goal.

I rec­om­mend set­ting a max­i­mum daily amount for your Adword cam­paign to:

1. test out your ad
2. guage the mar­ket demand for your book
3. keep your costs under control

I wish you all the best in your efforts to make money from your books with the help of Google Adwords to get the word out about it!

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