In my last article I explained how to calculate the direct costs of creating a new article and promoting it. But as a publisher you also have to earn enough revenue to cover your indirect costs to earn a profit. These are bills you typically have to pay every month regardless of how many articles you publish. So I’m writing this article to explain what these fixed costs are and how you can estimate how much revenue you need to cover them.
SaaS Subscription Costs
One category of indirect costs is your subscription costs for SaaS apps. For example, the lowest tier Ahrefs subscription costs $99 per month. It’s likely that you’ll need a tool like Ahrefs to do keyword research. If you get a discount on the price by paying for an annual subscription instead, you can divide that price by 12 to calculate the monthly cost of the app.
Professional Fees
If you’re paying monthly membership fees for access to online courses or membership in professional communities, these are also indirect costs related to your publishing business and you should include these fees in the calculation as well. I’ll add an estimated monthly cost of $35 for monthly professional fees, although this cost also depends on what communities you’ve joined.
Depreciation on Fixed Assets
Another category of indirect costs is depreciation on long-lived, or fixed, assets. It requires some additional calculations to figure out how much owning these assets costs your business every month. For example, if you buy a laptop for $1,200 and you expect it to last for 5 years, you don’t record a $1,200 expense for the laptop when you buy it. Instead, you record depreciation costs as the laptop gradually loses value.
For example, if you used straight-line depreciation the laptop would lose $240 in value each year until its book value dropped to zero. You could also record this depreciation expense as $20 per month. While depreciation is a concept used for tax reporting and you can still use a fully depreciated laptop with zero book value to publish articles, it’s likely that you’ll want to buy a new laptop after 5 years.
Office Rent
You also need to generate enough revenue to pay for the cost of your business office. This is typically the monthly rent for your office, although if you’re paying rent annually you can also split the annual cost of rent into monthly payments. You can rent a desk in a coworking space for about $400 per month although this depends on where you live. It costs more to rent your own office.
Even if your office is a room inside your own house, it’s still possible to write off the cost of a home office on your taxes. And if you’re using a room as an office you can’t do other things with it like using it for storage space or renting it out either, so this is a real business expense.
Administrative Costs
If you have a bookkeeper or VA who isn’t directly involved in publishing articles but still works on tasks related to your business, you’ll need to generate enough revenue from publishing to cover their salary as well. For example, you might hire a part-time assistant and pay them $1,000 per month. This salary also increases the amount of revenue you need to earn from each article to break even.
Adding Up the Indirect Costs
Apps | $99.00 |
Professional Fees | $35.00 |
Depreciation | $20.00 |
Rent | $400.00 |
Salary | $1,000.00 |
Total | $1,554.00 |
Allocating Indirect Costs to Your Articles
In this example, you spent $1,554 on indirect costs during the month. In my first article about this topic, I used a batch of 10 articles as an example for the calculations. And I’ll do this again here. If you published 10 high-quality articles during the month, you would incur indirect costs of $155.40 per article.
These indirect costs are fixed and aren’t directly linked to the number of articles you publish. So if you published 20 articles during the month instead, your indirect costs would be $76.70 per article. And if you only published 5 articles you would have indirect costs of $310.80 per article.
Again, to earn a profit as a publisher you have to earn enough revenue to cover both your direct costs and your indirect costs. In my first article I estimated that the direct cost of publishing a high-quality article was around $230. If you add indirect costs of $155.40 to the estimate, that’s a total cost per article of $385.40. That’s how much revenue you need to earn from an average article to break even using these assumptions and your profit is any revenue above that break-even point.