Many businesses fail due to poor planning, and in particular, because of overhead costs. These costs are something you may have very little control over, but are what you need to spend money on. Some things will always need you to always spend money on, after all, that is part of business. Other things, however, will cost you money in a more variable way.
Here, we’ll go over some of the common overhead costs for a journal. Understanding how you can prepare for these expenditures can help you to succeed in a competitive field. Knowledge of these overhead costs is crucial for many reasons. They affect your journal and can influence your success. Having a system in place to help you track these costs can also help to position your journal for success.
Running a journal can be stressful, and people often are worried about finances. Having a strong understanding of what you need to pay, to whom, and when, can help you lower your stress as well. After all, no one likes unexpected bills.
Using overhead costs to help you plan
It’s important to remember that it can be 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. And this includes knowing what your costs are. Before you even start the journal, you need to 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. As part of this strategy, making sure that you have competitive pricing for your journal is extremely important.
Figuring out your total costs is an important start. It’ll let you know what your baseline needs are. Once you know how much money you will need to remain in business, you need to figure out where you’re going to get that money. While this is for another article, it’s important to touch on the two primary models of publishing, as this is where much of your money will come from.
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.
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), which is paid by the authors. These APCs are the primary, but not always sole, income stream for the company.
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.
Additional income sources
This can be a bit tricky to set in stone, but many publishing companies have assorted fees that they can charge at different stages of the publishing process. Two common examples for this sort of income are language editing services and layout related charges. While many companies include these as part of the publishing process, there might be cases where (due to poor language/layout) a fee may be charged. In addition, these services might also be opened up so that even if a manuscript is not being submitted to the journal in question, the language/layout service might still be used regardless. As a business, finding income streams above and beyond the standard ones can help protect your long-term viability.
What are overhead costs
Having a clear understanding of what something actually is (and what it is not) is important. And when it comes to your business, you should have a strong understanding of where your money is going. So, what are your journal’s overhead costs?
Generally speaking, overhead costs (sometimes just referred to as “overheads”) are costs that are associated with the day-to-day operations of your business. That doesn’t mean that all costs are the same, though. In fact, we can further divide overhead costs into:
- Fixed costs
- Variable costs
There are some other categories, but here we’ll be looking at these two in particular as they’re the most important ones.
Fixed costs
Fixed overhead costs are an example of overhead costs. These are the expenditures that your business has to pay every month. Generally, they don’t really change meaningfully either. Fixed costs might include, for example, things like rent and salaries. Rent might change over time, but won’t be radically different month on month. These fixed costs can also include things like any monthly subscription services you have. Again, subscription costs might change over time, but are not highly variable and can be planned for accordingly.
It’s very important to have a very clear understanding of what your fixed overhead costs are. You must pay these things on a monthly basis (though, sometimes yearly). Forgetting about a person’s salary or rent could be a disastrous oversight. These costs can amount to tens (if not hundreds) of thousands of dollars every year, so knowing about them is important. Careful planning can help to ensure that you do not have any unexpected surprises when it comes to your fixed costs. Variable costs, on the other hand, are quite different.
Variable costs
Unlike fixed costs, variable costs change (or can even disappear) on a case-by-case basis. When running a journal, examples of variable costs might things like costs associated with mail and shipping, office supplies, or even something like hiring a freelance English editor to edit something for you. Importantly though, this might be a single (or couple) document. If this freelancer was editing for your regularly, this would be more of a fixed cost than a variable cost. For example, you may only need said editor for one month. But you might need them again, six months down the road. This variability is sometimes difficult to plan for, but is something that you should try to 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.
Specific overhead costs
We’ve talked about some general examples of overhead costs, but let’s get more specific. By defining your costs, you can figure out what your APCs should look like.
Publishing manuscripts in an academic journal has a process. This process is fairly standard, but might vary between journals. From submission through to publication, there are different steps. They need to be reviewed after submission, approved for review, sent out for peer review, and so on. They may also need layout work and/or English editing to be performed.
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 publishing a lot of manuscripts, changing this variable cost to a fixed one and paying a salary might be a better choice. To accomplish your 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.
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.