A magazine for people who love to read and to write.

Are eBooks The Ultimate Asset?

Are eBooks The Ultimate Asset?
books as assets

In these times of economic difficulty, any asset with the potential to yield 5% returns or more is of interest (if you’ll excuse the pun). With yields of 10%+ a very real possibility, self published ebooks could be your most valuable asset yet.

Just ten short years ago, the real estate boom was in full swing. Particularly in the UK, buy to let mortgages were all the rage. The average man or woman in the street could wander into their high street bank and walk out with a 100% mortgage ready to pick up an over-priced apartment. A quick dab of paint later, and the property could be rented out for a tidy profit.

Those days are long gone, with banks now reluctant to lend to even their wealthiest clients. But rental property remains attractive as an income generating asset. Yields of 5% a year or more are not uncommon. Plonk down a hundred grand on a house, and you can reasonably expect to get back around ten thousand a year in rent. Even allowing for repairs, insurance, and other sundry costs, the return on investment is better than the banks are offering from any of their boring savings accounts.

I mention this simply to put into context a revelation I had recently whilst discussing publishing with a friend. As a self published author, my ebooks are assets that are generating me decent returns. The yield on my written words is far in excess of anything any real estate I could purchase is capable of producing. I’m talking double digit percentages here. And I don’t need to sell a ton of books for this to be true.

Maths Alert: Sums Approaching

An ebook that sells for $2.99 on Amazon’s KDP program, provides a royalty of a shade over $2 per copy, we’ll call it a nice round $2 to keep things simple. If the book sells an average of just one copy per day, that’s an income of around $56 – $60 a month. An ebook is not a free asset though, so to work out the yield we need to know the cost of creating that asset.

As a writer, my time has a value. I don’t write particularly quickly, nor unusually slowly. A 60,000 word novel can be outlined and written to a fairly decent first draft state inside a month. Let’s assume another month of work for editing, proof reading, more editing, formatting, cover design, and publication. Working six hours a day for five days a week, that’s 240 hours effort to create a new book from scratch. If I value my time at $30 / hour (more than three times the US minimum wage in most states), the cost of writing and publishing a book is $7,200.

Remember, assuming just one sale a day on average, the book will generate $730 in a year in revenue. $730 is 10.1% of the $7,200 cost of producing the book. In other words, a self published ebook could provide a yield of more than 10%. And that’s without ever having had to shell out a dollar of capital up front.

Now before you jump down to the comments and start ranting “Yes but that assumes you’ll sell a copy a day and that might never happen!”, let me just say that I agree entirely! Plenty of authors put out great quality work that for whatever reason, just doesn’t find an audience and doesn’t sell.

However, it is also true that most authors who keep writing and build a portfolio of books, do sell, and they sell more than a book a day. The more books an author puts out, the more chances they have to get found by readers. If those readers like the first book they read by a new author, they will probably buy more.

So whilst there are no guarantees that you can write a book and generate regular income from it, the numbers I have suggested are far from unreasonable. Indeed in my own experience, and that of many many writers I’ve spoken with, my numbers are on the pessimistic side.