D.J. McPhee
28 November 2023
Posted inEconomics of Publishing Post authorD.J. McPhee
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Overhead Costs for a Journal

It is crucial to understand the definition of overhead costs. Knowing what these costs are, examples of overhead costs, and how they affect your journal can influence your success. Having a system in place to help you track these costs can help to position your journal for success. It can also decrease your stress as well.

Many businesses fail due to poor planning, and one thing you may have very little control over is what you need to spend money on. There are some things that you will need to always spend money on, other things will cost you money in a more variable way. In this article, we’ll go over some of the common overhead costs for a journal, and how you can prepare for these expenditures.

Definition of overhead costs

When tackling any subject, having a clear understanding of what something actually is (and what it is not) is important. So, what are overhead costs?

Generally speaking, overhead costs (sometimes referred to as “overheads”) are costs associated with the day-to-day operations of your business. But, not all costs are the same, and so we can further break this down into a couple smaller categories:

  1. Fixed costs
  2. Variable costs

There are other categories, but for this article we’ll be looking at these two in particular.

Fixed costs

One example of overhead costs are your fixed overheads. These are costs that your business has to pay every month that generally do not change. Fixed costs might include things like rent and salaries, but can also include things like any monthly subscription services you have. It is very important to have a very clear understanding of what your fixed overhead costs are, as these are things that you must pay on a monthly basis. Forgetting about a person’s salary or rent could be a disastrous oversight that can amount to tens (if not hundreds) of thousands of dollars every year. Careful planning can help to ensure that you do not have any unexpected surprises—variable costs, on the other hand, can change significantly.

Variable costs

Unlike fixed costs, variable costs can change (or even disappear) on a case by case basis. For running a journal, a variable cost might be the costs associated with mail and shipping, office supplies, or even something like the costs related to hiring a freelance English editor to edit manuscripts for you. For example, you might need an editor for two manuscripts one month. But you might need them for ten the following month. This variability is something that you should account for. Remember, unlike fixed costs, your journal’s variable costs might increase significantly the busier you get. Because of this, it’s important to understand how these costs can change over time, and how you can mitigate them.

Using overhead costs to help you plan

It’s important to remember: it is very challenging to turn a profit in your first few years as a journal. How successful you are in the long term will depend on your planning. Before you even start the journal, you should understand what your overhead costs will be. Once you’ve put together a list of examples of overhead costs, you can establish a framework for what your total costs will be. Knowing your total costs will give you a sense of what you need to generate profit. Making sure that you have competitive pricing for your journal is extremely important.

Once you know how much money you need to remain in business, you need to figure out where you’re going to get that money.

There are generally two different financial models for a journal. Within each of these models, there are also additional ways to generate income. Let’s discuss the two models briefly.

Traditional publishing

In this form of journal publishing, the income generated by a journal comes from institutions and subscriptions. Because content published traditionally is usually behind a paywall, anyone who needs access to it has to pay. Authors do not need to pay to publish under this model, but the readers do.

Open access publishing

Unlike the traditional model, under open access, anyone who wants to access and read the content can do so at no cost. The money generated in this model comes from article processing charges (APCs) and is paid by the authors.

What are your overhead costs?

We’ve talked about examples of overhead costs, but here we’ll get a bit more granular. By defining your costs, you can refine your APC.

Manuscripts require a few major things to be published. They need to be handled from submission to publication. During this time, they need peer review and decisions to be made. They also need layout work and English editing.

To accomplish these goals, you need staff, and staff need time. In addition, your staff many need an office space to work in (though there is a growing push towards virtual offices). Offices come with a number of fixed costs: rent, electricity, internet and phones, and so on. Virtual offices (or work from home) have significantly less cost associated with them, but you lose out on a number of benefits that exist with physical offices. It’s important to carefully consider which is better for you.

Layout and editing are two things that generally require expertise, and expertise costs money. Depending on how many manuscripts you are processing, it might be better to hire freelancers to do your layout and editing. If you are processing a lot, changing this variable cost to a fixed one and paying a salary might be a better choice.

Where to cut down on your overhead costs?

While the definition of overhead costs doesn’t really change, which ones you need to pay does. Where can you and your journal save money?

For a journal, saving money is very important, especially in the early months and years while your reputation builds. Can elements of your publication pipeline be simplified? Can some of them be outsourced? Can you use a journal management system to help you to stay organized and save money at the same time?

All of these questions are important, but there aren’t always universal answers. Fortunately, some journal management systems allow you to get services a la carte, and you don’t need to pay for the whole system. Other times, very careful management and a small team of skilled and efficient employees are more than capable. But because income will not be coming in regularly, knowing where you can cut costs is important. Almost as important as knowing where not to cut costs.

Generating income

We’ll go over this in more detail in another article, but another option that exists for you to secure your financial situation more effectively is to offer different services. What these specific services might be can vary, but they will often be tangentially related to publishing. Examples of this might include offering editing services or handling layout. They won’t generate the same level of income that your ideal article processing charge will yield, but when it comes to surviving while you’re establishing yourself, it’s important to keep all options on the table.

Handling your costs

With the definition of overhead costs now clear, it’s up to you to make decisions in your journal’s best interests. Some of the examples of overhead costs we’ve given might be things that you decide to hire an accountant to handle, but at the end of the day, it’s your company. Make sure you think about your journal’s reputation and success will follow. To learn about how JAMS can help you to save money and reduce your costs, book a demo today!

D.J. McPhee
28 November 2023
Posted inEconomics of Publishing
Post author D.J. McPhee
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