How to Earn Passive Income Through Self-Publishing

I could literally sum this up in one sentence: publish a book that people want to buy.

Of course, most financial stuff could be summed up in a single sentence.

Don’t spend more than you earn.*

Look for ways to increase your income.

Invest your extra earnings in something that is likely to increase in value over time.

A self-published book, in most cases, will not increase in value over time. There’ll be a spike of sales in the first few months, followed by a slow decline. (My most recent monthly Amazon royalty payment was for $6.51, for example. Last July, when I released the second volume of The Biographies of Ordinary People, my monthly ebook royalties hit $203.84.)

However, a self-publishing career might increase in value over time. As you build your readership over subsequent books, each individual book is likely to generate more sales—both at the time of publication and afterwards, as new readers catch up on your back catalog.

There is no guarantee that you’ll be able to build the type of self-publishing career that generates a sustainable passive income stream, so don’t go into self-publishing just because you want to make money. As I teach in my self-publishing classes, there are many ways to define self-publishing success, most of which are a lot easier to achieve than a passive income stream.

If your definition of “self-publishing success” equals “building a readership, going on book tour, seeing your book in bookstores and libraries, and winning awards,” well… all of that is a lot easier to achieve than developing a passive income stream of any significance. You’ll still sell books, and you can even earn back your expenses if you’re thoughtful with your budget, but you’ll find yourself in a situation where you earn, like, $5,000 in royalties in Year 1 and $500 in Year 2.

Yes, that $500 is technically passive income because you didn’t have to work for it (you already published the book and did the marketing, and at this point you’re getting paid whenever someone finds you online and decides your book looks interesting), but you can’t live on $500 a year.

So you have to write another book.

(Really, for most authors, it’s “you get to write another book.” The writing is the fun part!)

A publishing career, whether you work with a publishing house or become your own publisher, is a long-game endeavor. You get big chunks of money all at once and then little dribbles of money here and there, and in an ideal situation you’d release enough books to keep bringing in occasional big chunks of money while simultaneously earning passive income from all the little dribbles of money.

However, this system doesn’t work out for everyone. If you’re not writing books that people want to read (see the opening sentence of this blog post) you won’t build the readership that turns the long game into a sustainable passive income stream.

Sure, you can write a book that a small subset of people want to read. I’ve done it, and it can be a very satisfying process. Getting the right book into the right hands is always worthwhile.

But if you’re trying to maximize your income while also standing out from all the other writers trying to do the same thing, well… you can either hope you’ve got the kind of book that’ll appeal to a wide range of readers and that you get lucky enough to release the book at the right moment for it to become a bestseller (e.g. Andy Weir publishing The Martian), or you can focus on building your online presence first and then publish your book after you’ve become well-known for being yourself (e.g. insert your favorite celebrity/influencer here), or you can focus on a narrow segment of the long tail and publish hyper-focused genre fiction like “older woman younger man humorous romance where the younger man has a really cute dog.”

Ugh, that sounds discouraging, right?

Here’s the secret.

YOU DON’T HAVE TO MIN-MAX YOUR ART.

In other words: the odds of you successfully reverse-engineering a bestseller are so small that you might as well write what you want.

(Especially in the early stages of your career, when you don’t have enough of an audience to know the type of book they’re hoping you write next.)

Yes, it’s nice if what you want to write lines up with what someone else wants to read.

Yes, it’s worth learning how to build an audience and how to make money from your creative work (luckily, I have posts on that here, here, and here).

Yes, it’s also a good idea to structure your budget in a way that allows you to make a profit on every book you self-publish, though I haven’t been able to do that for every book I’ve published and I do this kind of thing for a living.

But it isn’t the only thing I do for a living, which is one of the reasons why I’m able to keep doing it. This isn’t just a self-publishing thing, btw; the majority of traditionally published authors have additional income streams as well.

So go after that self-publishing passive income if you want, but try not to focus on how much passive income you’re likely to earn from your first few books. Instead, think of the money you put into your self-publishing career as an investment—not just in your bottom line, but also in yourself and your readers—that might increase in value in the future. ❤️

*Don’t spend more than you earn is actually a terrible financial platitude. It really should be more like “don’t spend more than you earn UNLESS you need to go into debt to survive OR that debt will help you earn more in the future OR this is a once-in-a-lifetime opportunity that you can pay off with future earnings OR other valid reasons that I haven’t thought of.”

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