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Re: [GWL]: Agent or no agent?

In a message dated 01/19/2002 6:29:14 AM Pacific Standard Time, ez@acmeplant.com writes:


Why should the lost opportunity fee of $40/hour be deducted from the
earned income of $60/hour to give you the real value of the book?  I'm
not a math professor, but it seems it should be subtracted from the
potential $100/hour.

This isn't math, Ellen, but economics.

Your capital  (time) is finite. You only have 24 hours to invest, and the goal is to maximize the return on that investment. ROI is different than profit, and is a much more valid measurement of success.

So, we have in our example, established that the ROI should be $100. Instead, it is only $60. In mathamatics terms, you have lost $40. But in economics terms we have the missed opportunity of that $40. In other words, had you realized the targeted ROI, you would have $40 to spend on office supplies, or seeds, or going to the movies, or however you spend your descritionary income. So, because you _do not_ have that $40, you subtract it from the $60 in order to determine the true ROI.

In conventional "profit" and "lose" terms none of this fits. You would say, conventionally, that you "lost" $40 on the book deal. But you didn't really lose it, you never had it. And that's the whole point. If you had invested your capital in magazine articles, or garden club presentations, or the other venues that make it worth $100/hour, then you would have had that $40 to spend.

I know this is all confusing, and doesn't appear to make sense. But it really does. The same way that the old puzzler of the 6 chickens and 6 eggs does. But the fact remains, from an economics point of view, the chickens lay 24 eggs, not 36.

All of which is irrelevant to the basic thesis, which is, that most people, most of the time, lose their shirts writing books. You can write books for ego gratification; and to establish credentials; and to open the way for other projects, and for other reasons. But if you write a book thinking you're going to make money doing it, then you're generally kidding yourself.


Brook 

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