I want to talk about loss; forgetting, disappearance, ends, deficits.
It’s been two weeks since my last article. I apologize for my tardiness. I had a feeling that I shouldn’t put a timeframe, but in a way it’s a continuation on the theme. I’m not being paid to write this series. And why should I be? No one else is being paid to do Paperweight. That’s fine. But I’m two weeks late and no one bothered me because I’m doing this for free. Or maybe no one bothered me because we (all 100 of us) were busy buying and selling artifacts at the NY Art Book Fair.
In business, profit and loss are related concepts. Income minus expenses equals profit (or loss). The helpful, but terribly written, how-to book Accounting Comes Alive defines income as “value generating activity” and expenses as “value sacrificing activity.”
It’s taken me a while to truly understand that “value generating activity” always comes with expenses. “Mo’ Money Mo’ Problems” is a pop song about cost of goods. You have to breakeven before you can profit.
Breakeven Point (BEP) is calculated using the formula below:
Breakeven point = fixed costs / (unit selling price – variable unit costs)
Let’s say I’m making a book. Each book cost me $5, I plan to sell it for $15. My fixed costs (editing, graphic design, marketing, etc.) are $2,000.
$2000 / ($15-$5) = 200.
My breakeven point is 200 books. But what if I only make 200 books? I won’t make a profit. What if I really want to sell my book for $8. I’ll need to sell 667 copies and expand my edition size, or lose money. What if I want to maintain a small edition size and make a profit? I’ll need to raise my selling price.
It may already be clear that art publishing has two major barriers to profit: 1) the audience is extremely small and 2) within that audience only a select group of people are willing to pay premium. I believe this despite the NY Art Book Fair’s attendance of over 20,000 visitors. While those numbers are promising, I’m more interested in the conversion rates. I’m proud to say that Golden Age maintained a 30% conversion rate. Unfortunately, our volume was too low for it to matter.
Last Time: Business Models
Next Week (Maybe): Success, that distant apex