Let’s make some assumptions:

• hardback (aka hb) release first, list priced at $30. (Stores often sell it for less than this, but the publisher is paid based upon list price.)
• trade paperback (aka tpb) comes next, list priced at $15
• (tpb means the larger sized paperbacks that are usually sold through bookstores of one type or another, while mass market paperbacks are the smaller ones you find sold everywhere)
• tpb sells twice as many copies as the hb
• ebooks released simultaneously with the hb, and priced so that the contribution margin is the same on both formats, then the price is dropped with the release of the tpb so that the contribution margins are again the same as the current format.
• you’re asking about the publisher’s break-even point, not when the advance earns out.

NB: Most large publishers routinely pay big-name authors an advance that is not intended to earn out. It’s a way to pay the author more than the standard royalty rates, without setting a precedent for other, less-prominent authors. When the advance earns out has nothing whatsoever to do with whether or not the publisher makes a profit.

So: some hefty algebra will follow.

Let N be the number of copies sold of the hb, and 2N be the number of copies of the tpb.

REVENUES:

• The bookstore gets a discount of 40% of the list price.
• The wholesaler gets another 15%.
• Average discounts given are about 50% of list.
• Stores return a book like this about 30% of their gross purchase, and the stores etc get a full refund, regardless of the time of return or the condition in which they are returned.
• So: revenue will be .7*.5 of the list price times the units sold initially, or .35 times list times gross units sold.

For hb: .35 * $30 * N = $10.50 N and for tpb: .35 * $15 * 2N = $10.50 N also (convenient, but also pretty realistic). Total print revenue is then 2* $10.50N, or $21N.

FOR EBOOKS: this will have ebook to print sales ratios of about 40%, so the unit sales there will be about .4N and .8N during those time periods. We use this to add to the contribution margins at the end, because the pricing is set to match margins.

COSTS:

• Printing of the hb, in these size print runs: about $1.50 per copy, so $1.5N in total
• Marketing: 10% of revenue or $1.05 N
• Edition costs, including design, editorial, etc: $250,000 for hb and $150,000 (not as much editorial) for the tpb.
• Royalties: $65,000,000 unless the books earn out. In which case, it will almost certainly occur during the tpb part of the sales history, and the royalty will be another $3 N

There are, of course other factors, but these are the big ones.

Contribution to profit and overhead on print then is a little less than:

$21N - ($1.5 N + $1.05 N) - $400,000 - $65,000,000, or $18.45N-$65,400,000

Breakeven on the print edition would happen at N=3.54 million hardbacks and 7.1 trade paperbacks.

But in actuality, it’s more like 2.13 million hb, 4.27 million tpb, and 4.24 million ebooks.

For a total unit sale of a little less than 11 million copies.

Unless the royalty advance earned out: then it’s higher.

The hb royalties earned would be $4.50 for almost all of the hardback copies and for the ebook copies during that period, or roughly $16 million during the hb, and $11 million during the tpb period — so it would earn $27 million of the $65 million in advance, and it would not earn out.

Any copies above the 11 million breakeven would start to earn the publisher significant profits. If it sold only 15 million copies (and it’s likely to be higher than that, especially since President Obama is one of the very few Presidents we have ever had who can write books really, really well — no ghost writer needed!)

then the publisher would have a contribution to profit and overhead of something like $21 * 4 million or $84 million.