P&L sheets (in the publishing industry) are profit-and-loss statements based on the revenue gained and lost from comparative titles of a book undergoing the submission process.

Say you have a book that’s already written, edited, submitted to an agent, edited by the agent, and sent from the agent to the editor, and we finally move into the hardest stage of publishing – where the editor pushes to draw support from the rest of the editorial team and the publisher.

If they wish to make an offer and pursue the book, sometimes they will send the agent (me) a P&L sheet to negotiate the author’s advance & royalty rate.

I obviously cannot give any real-life examples as these are confidential statements shared only between editors, publishers, and agents, but generally they are:

Revenue (Profit):

• Projected revenue from book sales (based on estimated number of units sold and the book’s list price)
• Revenue from subsidiary rights (such as film or foreign rights)

Expenses (Loss):

• Author advance
• Production costs (such as editing, design, and typesetting)
• Printing and distribution costs
• Marketing and publicity expenses
• Overhead costs (such as salaries, office space, and utilities)
• Returns and allowances

It is essentially the numbers-crunching pragmatic view of the acquisition process. Of course, a lot of these acquisitions that happen are relatively dynamic and depend on intangibles like the editor’s taste and the ebbs and flows of the market. Weird trends and odd new genres, but when it comes to the money talk, money talks.

The author never has to deal with these, but yet these affect the author greatly because they play a significant role in dictating what advance level your book will sell for.

The agent will of course be negotiating on your behalf and fighting for favorable rates and pay advances, but like any negotiation, there are ground rules and ranges to stay within that are decided by the success of previous titles.

Editors look at books that are on the market now. They’re not going to look at the P&L of a Vonnegut novel just because you submitted a witty, anti-war speculative satire.

Say you’ve written a dude-bro real-talk self-help book on the topic of stoicism. Well, when you find yourself pitching, you’ll be pleased to know Mark Manson’s The Subtle Art of Not Giving a F*ck is spending its 293rd week on the New York Times Bestseller List as I type this. I don’t have access to the P&L sheet for that one, but I imagine it was a no-brainer.

That’s why, I encourage authors to do some numbers crunching themselves, and discover which books in their genre and sphere of influence are peaking right now. I mention in my blog about comparative titles why they are so important to the querying process when hooking an agent or a publisher, and this is just another example of it.

You can check out this interview with Scribner assistant editor Sabrina Pyun on the submission and acquisition process.

This Jane Friedman article also perfectly captures the essence of the P&L statement in bookmaking.