I was fresh out of college when the internet tech bubble burst – and I’ve never forgotten the lesson of that time. There were all these websites – producing awesome content and getting millions in venture capital. Then poof, suddenly they all collapsed. Why? They got popular, they got funding, but then when it came time to figure out how to monetize they were like, “Um ads?! Let’s try ads!”

They put the concept first, thinking they could monetize later, after they got popular. Almost entirely without exception, these big websites all failed. A year earlier they were running Superbowl ads. It was a crazy time.

So now I start every project the same way: show me the money. It’s like baking a cake. If you don’t add in milk or eggs when you start, it’s impossible to cram that in once it’s cooked.

The Magazine

This summer I decided to create a print magazine. That was the first step– just finding clarity and making the decision. Then I thought: “Wait, how much is this going to cost?”

I’m going to show my work here not because I’m an expert on budgeting for a print magazine, but instead to show how you can create a useful financial model, even before starting, using the best-you-can-find numbers out there and then rounding up to give yourself some breathing room.

The Costs

We’re going to bootstrap this production but I did work at a small academic publisher for a stretch in my early twenties, so I have a pretty good idea of what it takes to create something for print.

Design / Layout: To combat costs we’re going to do this in-house (my husband is a graphic designer and illustrator – bonus!).
Initial cost: Free

Writing: Paying the highest possible amount for writing and photography will drastically change the quality of the articles you receive. Good writing can make or break your publication. So, I took a look at averages in the industry (Media Bistro and Who Pays Writers) and I think the lowest acceptable rate (and still attract pro-writers) is about 50 cents per word for print. That will still exclude a number of writers who won’t write for less than $1 or $2 per word, but it’s a good start.

So how many words are in a print magazine? I did some rough calculations based on other magazines but I think it’s about 20,000 words per issue.
Initial cost: $10,000 per issue

Photography: Since we’re bootstrapping, a large amount of our photography will come from iStock, which is the royalty free arm of Getty. That’s $189/mo for 50 images/mo. We’re a quarterly magazine so that’s $567 per issue. However we will want at least the cover image or our feature profile to have custom photography. I don’t have a good way to calculate this, so I’m just taking the writing budget and cutting it in half. $5,000 for photography. That might seem high, but with travel expenses and hiring a photographer for a 1 day shoot, this can quickly get expensive. Even a wedding photographer is going to range $2,500 – $10,000 for a day.
Initial cost: $5,000

Editing: Someone has to choose the stories and assign them. Right now that will be me.
Initial costs: Free

Copy Editing: I think a good copy editor is freelancing for about $50/hour. You can get someone cheaper, but they’ll take longer and the work will suffer. How long does it take to copy-edit 20,000 words? I’m going to guess one hour per page. That is just a guess. A page is 250 words, so about 80 hours of editing per issue.
Initial cost: $4,000

Printing: I just googled “how much to print a magazine” and came across a Quora article, leading me to this South Korean printer. I plan to print in the US and to use recycled paper and eco-friendly inks, and I have a company that will do that but they don’t have a nice online tool for calculating costs, so I’m using this to start.

To even do this calculation I have to know 1) the number of pages and 2) the number of copies. I’m going middle of the road with 100 pages – picked purely on feel and by comparing different magazines. I’ve heard that’s about 40 pages of ads. If we don’t sell 40 pages of ads, we won’t print those pages. Then for the number of copies, the minimum is 500. The number of copies is a big factor in cost:

500-  $2,200 ($4.40/each)
1,000- $3,143 ($3.14/each)
5,000- $5,714 ($1.14/each)
10,000- $9,106 ($.91/each)
20,000- $16,071 ($.80/each)

As you can see the price is five times higher for the small print run. If you’re selling a magazine with under about 5,000 subscribers it because extremely expensive.

This was the most challenging number to settle on, but I ended up with 10,000 because even though the cost at 5,000 is almost the same, the ad revenue at 10,000 doubles (2x as many readers). So if the cost of printing is the same, but the revenue is twice as high, you start to see that it can all work. So let’s plug-in 10,000 copies for now as a placeholder.
Initial cost: $9,106

Shipping: This is postage, plus sorting, mailing etc. I thought we could do this in-house, but I’m adding $1 per issue just in case.
Initial cost: $10,000

Customer service: This will be handled on the website but we’ll do the email responses in-house.
Initial cost: Free

Ad Sales: Someone has to sell these 40 pages of ad space, right? My husband has volunteered for now.
Initial cost: Free

The First Run Costs

Design / Layout:  Free
Writing: $10,000 per issue
Photography:  $5,000
Editing:  Free
Copy Editing: $4,000
Printing: $9,106
Shipping: $10,000
Customer service:  Free
Ad Sales: Free
Total: $38,106

Calculating Income

So far we’ve plugged in 10,000 copies at $3.81 each. If I sell my magazine for north of $3.81 I should make money, right?

Well, here is the thing that I have learned from my time at a small publishing house: you always print way more than you sell. Most outlets will have a return policy with publishers that means Barnes and Noble might order 1000 copies of your magazine for their stores but after 30 or 60 days they are going to send back all the unsold ones and expect a refund. That’s just how publishing works. Also as a new magazine you have to get it into people’s hands – thousands of people, ideally – who are likely to subscribe. That might mean working with a conference to put a copy in swag bags, or leaving copies at certain hotels to place in the rooms or doctor’s offices or other places you think your audience might find it.

Plus I like to plan for failure. I will aim for 10,000 copies but I know it’s extremely hard to push print copies of anything. What I want to know is this: what is the bare minimum I need to be successful? What’s the bar for me to get to do issue 2?

There are two main income sources for magazine – ads and subscriptions. The industry standard is 50% income from ads, 50% from subscriptions, so let’s see how that breaks down.

How much do you sell an ad for?

Well, since I plugged in 10,000 as my number of copies, I can reverse engineer the price based on the media kits of popular magazines. Outside magazine is charging $101,000 for a one page ad. They have a circulation of 395,000. The cost per 1,000 subscribers is about $40. If I have 10,000 subscribers I can charge $400 for a full-page ad. If I have 100 pages, I can have 40 ad pages, or $16,000 in ad revenue. If I have a hard time placing 40 ads – as I likely will – I can offer web-based ads with print bonuses to raise that revenue. To be honest, $400 is not anything in terms of ad cost, I can practically toss the print ad in free for an website ad purchases to raise that amount.

How Many Subscribers Do I Need?

If the total cost of the magazine is $38,106, minus the ad revenue of $16,000 and I sell each magazine at $6 each (the price when you buy an annual subscription, the per issue will be higher), then:

Cost: $38,106
Ad Revenue: $16,000
Subscription Revenue: $22,000 divided by $6 per issue…

I need 3,666 subscribers for issue one.

Gut Check

Do I feel good about the idea of getting just shy of 4,000 subscribers? Well, I know it’s possible. I am coming into this with a large web presence. But no, having 4,000 people sign-up to just break even, to get permission to do another issue, for free, does not make me feel fantastic.

There is plenty of room in my budget to squeeze it down… I can easily cut my costs in half if I needed to … and if I only sold 150 copies in advance of printing, I could do a very small print run and use completely in-house talent for it and still break even. I am not tied into that number as the only strategy.

The Upside

What happens though if I sell 10,000 subscriptions? Let’s take a look at those numbers:

Costs: $38,000
Ad Income: $16,000
Sub Income: $60,000
Profit: $38,000

The numbers work…  If I make $38,000 profit on a single issue that means I can hire in-house staff and drive down some of the freelance costs. It means being able to pay myself for my time. 10,000 subscribers for a year looks like this:

Income: $288,000

Costs:
Design / Layout:  in-house still
Writing: $40,000 freelance budget
Photography:  $20,000
Editing:  hire an editor at $60,000 (incl benefits)
Copy Editing: $16,000
Printing: $36,000
Shipping: $40,000
Ad Sales: hire a sales/ cust serv person at $40,000 (incl benefits)
Total: $252,000

We’d be able to hire two staff, plus pay ourselves $36,000 for the year. That would be amazing!

Plus we haven’t dipped into other methods of monetizing.

The thing that weighs heaviest on my mind is not if running a small publishing house can work financially, I think it clearly can. It’s just getting to that 10,000 subscriber base that feels incredibly daunting. There are ways to get there, but we’re talking about doing it with little-to-no marketing budget. The way I’m structuring this is for long-term growth – so I want to invest in hiring staff because I want to grow into a publishing house with multiple titles. But as you can see, I have to control costs extremely carefully and put all of my effort into growing that subscriber base – above all else.

This is why doing your financials upfront changes everything: my entire strategy is now centered around those numbers. Every decision I make will be framed by these realities. The end result is that I’ll have baked-in my monetization strategy from the beginning, rather than trying to add it later.

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This is the second post in a series about my process going from a narrative blog to a magazine publisher. I’m calling it #maglife. Want to receive updates just when there’s a new post in this series? Subscribe here.