What is the difference between a small publisher and a large publisher? Should you go with a small publishing house if given the opportunity?

We’ve discussed the Pros and Cons of Traditional Publishing and the Pros and Cons of Indie Publishing. Since those episodes aired, many authors have contacted me over email and in person at writers conferences and said, “What about small publishing houses? Because what you said about indie and traditional doesn’t really apply to small houses.” And they were right.

But before we talk about small houses specifically, I’d like to explain how traditional publishing works in terms of a business model.

Publishing companies act like venture capital firms. They are taking big risks on books and expect to lose money on most books they publish with the expectation that a handful of those books will make so much money that the revenue from a few will cover their losses and bring in a profit. In publishing, a tiny fraction of published books published earn the vast majority of the money.  Each publisher wants to publish that tiny fraction, but they can’t predict which books will be hits.

They can guess by using science and measurement, and sometimes they’re right, but sometimes they’re wrong. The future is uncertain. To handle that uncertainty, they use their best judgment and bet on lots of books.

Where do traditional publishers get the money to “bet” on new books?

For most traditional publishers, the money comes primarily from their evergreen backlist and bestselling frontlist. If a publisher has published a book that is number one in its category, the income from that top-selling book provides the money to take risks on additional new books.

Many publishers have a solid evergreen backlist. For example, HarperCollins owns the rights to C.S. Lewis’s backlist. Every time you buy a C.S. Lewis book, audiobook, or ebook, HarperCollins gets the majority of that money. That backlist money provides the funding for their imprints, such as Zondervan, to take risks on new books.

Some of these new books may not recoup the investment, but the publishers have the funds to take that chance. In a way, they’re essentially playing with house money.

What is a small publishing house?

A small publishing house is like a traditional publishing house, except they don’t have that evergreen backlist or the income that comes with it.

They’re like a bank with almost no money in the safe. Some small houses have a small evergreen backlist that only brings in enough money to keep the publishing house active. They rarely have a bestseller on their front list, so they don’t have much money to work with, and that’s why they’re small.

Not all publishing houses start small. Some are founded by organizations or backed by investors, giving them a large amount of capital from the beginning. You’ve likely heard the old saying: “How do you make a small fortune in publishing? Start with a large fortune.” Many publishing houses got their start with the help of substantial funding. However, some of today’s medium and large publishing houses began small.

Today, most small houses use the same tools indie authors use. They use print-on-demand printing and freelancers for editing, cover design, and interior design. However, like a traditional publishing house, they still do that work for you and pay for it up front.

I’m not talking about co-publishing or subsidy publishing, which I generally don’t recommend. And I definitely do not recommend hybrid publishing. I recommend that authors either go full indie or full traditional.

Small publishing houses are often started by an author, a successful writer, or an agent who wants to help their friends get published. This is especially common in Christian publishing, where many small houses emerge. Typically, a charismatic founder manages almost everything. In fact, I know of small houses where a single person does it all—editing, cover design, interior layout, typesetting, and proofreading—working themselves to the bone and often earning little to no money. Sometimes, they’re working for minimum wage or less. Running a small house is a tough job. I’ve consulted with publishers in this situation, many of whom wonder whether they should continue.

Of course, not all small houses struggle. Some small houses are on the brink of bankruptcy while others are on the brink of transitioning into a medium-sized house because they’ve had a couple of hits.

How is a small publishing house different from a medium publishing house?

Medium publishers act like traditional publishers. The main difference is the size of their backlist and the advances they can offer. They still have evergreen titles that keep them funded. Once a publisher has a solid evergreen backlist, it’s almost impossible to go out of business because they have guaranteed revenue from a classic they published 20 years ago that brings in $50,000 a year. If you have ten of those, you have $500,000 coming in every year to cover your expenses, and operating your business becomes much safer.

Different Strategies

Big publishing houses often poach authors away from the medium houses. In fact, poaching is the primary strategy for at least one of the top publishers, much to the chagrin of those medium houses.

Some big publishing houses treat the medium houses like the minor leagues in professional baseball. A professional baseball team has feeder teams, and as players get really good, they’ll move into the major league. A similar thing happens with medium and large houses.

Small houses generally are different. If the medium-sized publishers are like the minor leagues, small publishers are like the church softball league. There are no talent scouts in the bleachers, only friends and family. In some ways, it’s a completely different game. Medium houses typically are signing new authors. Occasionally, they’ll bring up an author from a small house, but once an author has sales numbers, publishers don’t care about your platform much because your sales history is much more meaningful.

Different Sales Numbers

Typically, an author’s next book will have sales numbers similar to their last book. It’s not always true, but publishers rarely care about other factors or excuses. They care about how much revenue a book earned.

If your last book only sold 500 copies, a publisher won’t be interested in publishing you because they’re pegging you as an author who only can sell 500 copies. Even if you improve your sales by 50% and sell 750 copies, that’s still not enough to be interesting to them. That’s why there are no talent scouts in the bleachers. The typical book published by a small house sells around 500 copies, give or take 500. Some books sell 1,000 copies, and others only a dozen.

Different Lifespans and Valuations

It’s difficult for small publishing houses to stay in business for more than a decade. The charismatic founder runs out of money and energy, or they find success. If a small house stays in business, it often grows and transitions into a medium house.

It’s also hard for a small publisher to sell the business because if the charismatic leader is doing everything, they don’t have much of a business to sell.

One key aspect often discussed by business professionals and venture capitalists when evaluating a company for investment is the company’s potential for a successful exit. They often ask, “How will this company exit?” or “How can we get our money back and achieve a significant return?” A major factor in this assessment is how critical the founder is to the company. The more dependent the company is on its founder, the less valuable it becomes without that founder.

Different Advance Payments

If you’re getting a triple-digit advance, you’re working with a small house. Even a $1,500 advance is probably from a small house.

Pros of Publishing with a Small Publishing House

Easier to Get Noticed by a Small Publisher

Small houses are looking for and often desperate for submissions. Fewer authors know about the small houses, so fewer authors submit manuscripts.

Easier to Submit a Manuscript

A small publisher often has an easy and obvious way to submit a manuscript through its website. Large publishers offer no way to contact them and only receive agented submissions. Medium-sized publishers often bury their submission form deep within their website. Small houses make the submission process easy and obvious.

Less Likely to Require an Agent

Small houses are less likely to require you to have an agent, although some small houses do prefer agented submissions. Typically, the gatekeepers at small houses are less picky.

Founder’s Expertise

When you publish with a small house, you get access to the charismatic founder and all their expertise. She or he has published dozens, maybe hundreds of books, so they bring a lot of experience to the table.

They also regularly work with vetted freelancers, which saves you from having to search and find your own.

No Out-of-Pocket Money for the Author

Another key advantage to a small house or traditional publishing, in general, is that money only goes one way. The publisher pays the author. Even though you are expected to do the marketing, you don’t have to pay to be published.

Prestige

The fact that you’re published with a traditional, royalty-paying publisher offers a degree of prestige amongst the general population. Publishing insiders, however, are less impressed.

Access to Competitions

Publishers typically pay to have a book submitted to a competition, and many of the top award competitions exclude indie-published books.

Larger Royalty Percentage Potential

Small publishing houses can offer authors a larger share of royalties, particularly for ebooks. They’re typically more willing to negotiate generous ebook royalty rates and, in some cases, higher royalties for print books as well. However, this usually means a smaller advance. Since smaller publishers are not in a strong negotiating position, they tend to be more flexible and willing to make concessions, which can be good for the author during negotiations.

Cons of Publishing with a Small Publishing House

Tiny Budget

We’ve alluded to the problems this creates. Even if your book shows potential, they can’t drop $50,000 in promotion to help you hit a bestseller list because they don’t have the $50,000 in the bank. They’re hand-to-mouth. They can’t apply the business principle that says, “Throw good money after good money; don’t throw good money after bad money.” If a book is selling well with the money you’ve invested so far, you invest more money into it. However, small houses typically don’t have additional money to invest, even in a book that is selling well.

Additionally, that charismatic founder’s time is limited. She’s working on typesetting the next book and approving the cover for the one after that. It’s like a restaurant with one person running from the kitchen to the tables to the point of sale.

Small Advances

Some small publishing houses offer a two-digit advance, which is the legal minimum for an advance.

No Audiobook Production

Even though the audiobooks market is booming, small publishers rarely have the funds or expertise to produce audiobooks. It’s unfortunate because audio is the fastest-growing, most vibrant part of the market. It’s also the highest-paying part of the market. Audiobooks cost around $15.00, but they hold their value in the market. By contrast, readers expect to spend only $4.00 on an ebook.

It’s easier for an indie author to publish an audiobook

Small Margins

Another downside is that with a small publishing house, you’re only earning about $0.75 to $1.50 per paperback sold. Even if you negotiate a better deal with a small publisher, you’re still not making as much per book as an independent author would because the small publisher also needs to recoup their investment. Additionally, you lose control over important aspects like the cover, typesetting, and marketing—similar to working with a large publishing house.

With a small publisher, you don’t receive marketing data either, but you’re still expected to spend your own marketing dollars because they often don’t have the budget to support you. This is a worst-case scenario.

By contrast, if a large publisher sees potential in your book, they may invest heavily in its promotion, sometimes spending six figures to ensure its success. I’ve spoken with publishers who spend $100,000 or $200,000 on top-performing books. With that kind of budget, significant marketing is possible. Large publishers have the data to know which books have potential, and they use that data to make informed marketing decisions.

Small publishing houses, however, tend to withhold marketing data. They often use platforms like Kindle Direct Publishing, so they can’t share data without revealing information about their entire catalog, including other authors’ sales. As a result, you’re left without the marketing data but are still expected to invest in marketing your book. It’s like being asked to drive without being able to see through the windshield. It doesn’t make sense. To make smart marketing decisions, you need access to data.

No Control Over Pricing

Publishing with a small house keeps you from being able to control the price of your book. This is why indie publishing is growing year over year. Indies are taking away ebook market share from traditional publishers. While traditional publishers are losing market share in ebooks (ebook sales are flat or down for traditional publishers), ebook sales are growing by 20 or 30% year over year for indie authors because they have the data, the margins, and control of the pricing. Those advantages allow them to be experimental and aggressive with pricing.

With a small house, you have none of those advantages. You have all the cons without any of the pros.

Financial Instability

A small publishing house often lacks financial stability. Unlike larger publishers, they don’t have steady evergreen sales generating revenue with little effort. As a result, small presses operate in a hand-to-mouth way, always a few unsuccessful books away from shutting down. It’s not uncommon for small presses to go out of business or quietly stop publishing new titles due to financial constraints. When that happens, they focus on squeezing as much as they can from their existing catalog because they can’t afford to invest in new projects.

Small publishing houses often rely heavily on a single person, typically the charismatic founder. If something happens to that individual—whether it’s a scandal, illness, death, or simply becoming too busy—the entire operation can quickly fall apart. Without that key person, everything holding the business together can come crashing down.

I’m not saying that every small house founder is ripe for a scandal or ready to close, but be aware of how critical that one person is. Certain large publishers have almost a revolving door for staff. Every three years, the entire staff has turned over, and they replace someone every month. But they can manage it because the large staff makes it easier to manage the turnover.

Slow Payments

Even large publishers are slow to pay authors, sometimes only paying royalties every six months. Small houses operate under the same constraints. However, small houses that are strapped for cash pay even slower because they don’t have a financial reserve.

Again, it depends on the publishing house, but if they’re slow to pay you, that’s a big red flag. Late payments indicate they’re struggling to pay the bills, and that’s not a good sign for the company’s longevity.  

Publishing with a Small Publisher Limits Future Publishing Options

Going with a small publisher often prevents you from ever going with a big publisher. Since the small publishing house doesn’t have a big house’s marketing budget and expertise, your sales will likely be small. Those small sales numbers with a small traditional publisher make it almost impossible to get a big publisher interested in future books. There are exceptions, but it’s super rare.

With most small publishers, you get the worst of traditional publishing and the worst of indie publishing. In my opinion, small publishing has become the new vanity publishing. It’s what people do when they want to get their name and face on a book, and they want the prestige of a traditional publisher.

With that said, small presses are not always a bad idea.

When does it make sense to publish with a small publishing house?

Strong Branding

When a small publisher has a strong, focused brand, it may be a good choice for you. Enclave Publishing is a good example of a small publisher with a strong brand. It only publishes Christian speculative fiction, fantasy, and sci-fi. That’s it. That strong, focused brand has created fans. Enclave has its own email list of fans who want to buy Enclave’s books.

Enclave also has a track record of sending authors to bigger publishers. In fact, Nadine Brandes started off as an Enclave author writing Christian speculative fiction, and now she’s writing speculative fiction for HarperCollins. She’s gone all the way to the top.

Publisher Has Retail Store

This is something I didn’t even know existed until I went to the ECPA conference, which is a conference of all the publishing executives. I ate dinner with a guy who ran a small press for a megachurch. Their main church and network of satellite churches attract tens of thousands of people on Sundays. They only publish books written by staff members from either the main church or one of the satellite churches in their network.

In a conversation about book sales, he mentioned that they typically expect around 5,000 sales for any book they publish. However, if the pastor mentions the book from the stage, sales usually jump to 30,000 to 35,000. These are impressive numbers, and they rarely have any flops, thanks to their passionate following and access to exclusive bookstores.

When you walk into that megachurch, what books do you see? As you pass through the coffee shop, you’ll notice books published by the church’s own publishing arm. They’re making excellent margins because they’re not just the publisher but also the retailer. So, as you grab your coffee on the way into church, you might also buy a book written by the pastor, youth pastor, or another staff member.

If you’re a staff member writing on Christian living, choosing that small publisher is a smart move. It offers exclusive access to a highly engaged audience (attendees) while making the book available on Amazon and other traditional channels.

Publisher Controls a Literary Universe

I haven’t seen this done much in Christian publishing, but it’s very popular in secular publishing for a publisher to control a literary universe that all their authors write in.

A literary universe is like a print version of a cinematic universe. In a Marvel movie, Iron Man will fly into Captain America’s movie because they’re all in the same universe. The Guardians of the Galaxy will land on Earth, and suddenly, they’re helping the Avengers fight off the bad guy.

Connecting books in a common literary universe where characters go from one book to another is popular right now. It’s been happening in comic books for decades, and it’s really lucrative. Suppose somebody is a passionate fan of the literary universe and loves the main characters. In that case, they’ll often buy another book by a different author simply because it has the same characters and world.

A secular example of this is the publisher Sterling and Stone. It began as a group of independent authors who became so successful that they founded their own publishing company. Their small press is now focused on publishing books within the literary universes they’ve created. They approach it almost like a TV show, with different writers working together in a writing room, each person handling specific tasks. It’s more of a streamlined, factory-like process. This model is quite innovative, and I believe there’s potential for Christian publishing to adopt it. I think two or three companies could easily replicate the Sterling and Stone model and find significant success.

The Author is Already Successful

If an author is successful and well-known in one genre but wants to write a book in a different genre under a pen name, the risk is minimal. The author already has a strong relationship with their major publishing house. For example, if you’re known for writing popular Amish books but want to try writing your big sci-fi idea, it may make sense to go with a small publisher for the sci-fi book under a different author name. Since the book isn’t meant to fund your family or change the world, going with a small house could make sense, and it would be an easy sell. The small house would be happy to

publish you under a pen name, potentially.

Learning independent publishing for a single book may not be worth the hassle. The learning curve of independent publishing starts to pay off on the second book. Big publishers won’t be interested in your book if you only have one book idea that you just want to get “out there.” Large publishers want a long-term relationship with career authors. But a small publisher would happily publish your magnum opus.

Sales, Income, and Impact Are Irrelevant

If you’re not concerned about the money, sales, or impact of the book, it might make sense to go with a small publishing house just to get it out there. Maybe you’re a speaker and can only secure certain speaking gigs if you are traditionally published. In that case, the purpose of this book is to unlock that door for you.

Access to Focused Audience

The examples of small publishers like Enclave, the megachurch press, and Sterling and Stone each have a focused group of passionate fans. Their devoted readers will read anything in that literary universe, or published by that church staffer, or published by Enclave.

Unless you fall into one of those categories, I don’t recommend publishing with a small publishing house. I think it’s a vanity play. Not always and not for all presses, but for the majority. I feel this way partly because I’ve talked with so many discouraged authors who went with a small press and now feel trapped. They can’t get anybody to talk to them. Agents won’t talk to them. Publishers won’t talk to them because their sales numbers are so bad that they’re basically forced to go indie.

No one told them on the front end that this would be the result. The author’s hands are tied, and the small publisher’s hands are tied by their small budget and frazzled owner.

If you want to choose a small publisher, go into the relationship with your eyes wide open. Know the risks as well as what they do and don’t bring to the table.

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