You say that you have to consider the market when you acquire a book. I read somewhere that this involves a P&L. What is a P&L and how does it help you decide to acquire a book?
The sad truth is that a P&L does not help an editor and the publisher decide if a book can be acquired; it makes the decision. P&L stands for profit & loss. It’s an accounting spreadsheet (mine is in Excel) that we enter relevant data into. We approximate sales and expenses, and then the various formulas calculate whether or not a book will be profitable. It does not take into account overhead, so conventional wisdom says that a small publisher needs to have a profit margin of 30 to 40% per title to stay going. This can be difficult to do since a publisher receives less than 35% of the cover price. Factor in a 10-12% royalty, the cost of printing and shipping, and a 30% return rate, and making even a 20% profit can be difficult.
So even a brilliant book that an editor absolutely loves will end up rejected if the editor can’t prove through the P&L that the market will support the book.
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