Income models for Open Access: Appendix C: Financial Forecasting Templates for Transitioning to Discretionary Article Fees

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Figure C-1 presents a format for a multi-year spreadsheet forecast of the financial impact of a transition to discretionary Open Access via article processing fees. A publisher should consider at least two scenarios, each with its own set of assumptions and projections. One might represent a “best case”—with a gradual paid subscription loss and high author participation—and the other might be a “worst case”—with more rapid paid subscription loss and lower author participation.

Exhibit C-1: Financial Forecast Template for Discretionary Article Processing Fees

A) Year Base Year +1 Year +2 Etc. for nyears
B) Subscription Price $000 $000 $000  
C) Paid Subscription Base 000 000 000  
D) Articles per Volume (Year) 00 00 00  
E) Cost to Produce Journal $000,000 $000,000 $000,000  
F) Percent of Authors Paying Fee 00% 00% 00%  
G) Percent of Waived Charges 00% 00% 00%  
H) Computed Per-article Publication Cost $0,000 $0,000 $0,000  
I) Actual Article Processing Fee (+00%) $0,000 $0,000 $0,000  
J) Publication Charge Income $00,000 $00,000 $00,000  
K) Subscription Income $00,000 $00,000 $00,000  
L) Other Income (if any) $00,000 $00,000 $00,000  
M) Total Income $000,000 $000,000 $000,000  
N) Surplus or (Deficit) $00,000 ($00,000) $0,000  
O) Cumulative Surplus or (Deficit) $00,000 ($00,000) $00,000  
Repeat above template with alternative spreadsheet calculations for each scenario

Notes and Assumptions for Figure C-1

A) Year: Start the forecast with the base (current) year and project through whatever period may be necessary to achieve the full transition to Open Access.

B) Subscription Price: The projected price is based on the subscription income necessary to approximately offset any shortfall in covering publication costs after income from authors paying publication charges and from other income. However, many organizations will want to moderate subscription price increases and cap them (e.g., at 5% or 10%) year-over-year, even if that results in a deficit in some years.

C) Paid Subscription Base: This is a market performance estimate for the number of paid subscribers relative to price and transition to Open Access. For example, under one scenario, a publisher might assume that a journal’s subscription base would remain unaffected until at least 50% of a volume’s articles are available via Open Access, and then assume a 10% decline in subscription base for every 10% increase in authors paying publication charges. In another scenario, however, one might assume a more pronounced and rapid effect on cancellations. This dynamic between subscription base and Open Access availability will vary by journal and by discipline.

D) Articles per Volume (Year): Input either the number of articles published each year or the number of submissions, depending on whether the journal intends to levy fees only on published articles or on all submissions. This template assumes that charges will only apply to published articles.

E) Cost to Produce Journal: Input the projected annual cost of journal publication that needs to be recovered. This should take into account the possible effect on costs of lower quantities of the journal being printed and mailed.

F) Percent of Authors Paying Charge and G) Percent of Waived Charges: Based on its understanding of author attitudes and anticipated behavior for its particular field, a publisher will need to project the percentage of authors that will pay publication charges in each year relative to those authors who will not or cannot pay. (This would need to include the impact of journal policies, such as waivers for authors from less developed countries, etc.) For example, in under one scenario, a journal might assume that in Year One, 20% of authors will pay and 80% will not, and then assume a gradual increase in author participation of 5% to 10% per year. In another scenario, however, the journal might assume a slower author participation rate and/or years in which the author participation percentage remains flat or declines slightly from the previous year.

H) Computed Per Article Publication Cost: At its simplest, this is each year’s estimated cost to produce the journal divided by the number of articles per volume (year). As the percentage of paying authors increases, the Percent of Waived Charges needs to be factored in as well.

I) Actual Author Publication Charge: This allows a publisher to incorporate a surcharge to allow for the difference between paid and waived publication charges. For example, if the estimated percent of authors complying is 80%, the surcharge would be 20% (computed per-article publication cost x 120%; for example, $1,750 computed cost x 120% = $2,100 actual publication fee).

J) Publication Fee Income: First calculate the number of paid publication fees—the articles per volume multiplied by the percent of authors paying a fee (F) (for example, 40 x 80% = 32). Then multiply that number by the actual amount of the author publication fee (see I) to arrive at publication charge income (for example, $2,100 x 32 = $67,200).

K) Subscription Income: Multiple subscription price by the number in the paid subscription base.

L) Other Income (if any): Enter the estimated income generated from other sources, such as advertising, sponsorships, etc..

M) Total Income: This is the sum of J + K + L.

N) Surplus or (Deficit): This is the “bottom line” for each year forecast. Deducting the total costs to produce the journal from total income yields the estimated surplus or deficit. A deficit represents the financial risk or shortfall the organization will face as it transitions to Open Access. One may need to use the spreadsheets to calculate a variety of estimated outcomes (all of which should be realistic to the degree possible) to develop a model that presents a risk outlook acceptable to the organization.

O) Cumulative Surplus or (Deficit): A spreadsheet calculation of the cumulative amount.

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