A Publisher's Conversation with Authors: Understanding Royalties

 





It is Tuesday. Time to tall turkey. Monday's madness is over, and Wednesday will take us over the hump, so Tuesday it is--for some serious discussion with authors. Tuesday talks mean to address authors in waiting and self-published authors who would like to go a more traditional route or who would at least like to take their steps with a publisher by their side.

Today's topic is book royalties. These are sometimes negotiable, and authors certainly should not accept royalties that they do not consider fair. What, though, should they consiider?

Basis of calculation.

  • Percentage of net revenue
    • You receive a percentage, typically 10%, but sometimes less and very occasionally more, of the book sales after all costs, including printing, promotion, catalogue and other fees, advertising, and other expenses, have been subtracted from the gross revenue.
    • Royalties based on net revenue will be lower than those based on retail price or gross sales.
    • This is the most common model for structuring royalties among publishers. 
  • Percentage of retail price
    • You receive a percentage (typically 10%) of the price that the book sells for (referred to as the retail price or the list price). Generally, there will be a clause that identifies any books, such as those on steep sale, for which royalties would not be paid or paid at a different rate. 
    • Royalties based on retail price are generally more favorable to authors than to publishers and are a better deal than royalties based on net.
    • This is somewhat rare, but there are publishers (such as our publishing concern, MSI Press LLC) that do use it.
  • Percentage of gross sales
    • You receive a percentage of the sales of your book before any expenses are taken out. 
    • This is the most beneficial to the author.
    • This is quite rare, with two exceptions: e-books and hybrid publication.

Frequency of payment: 

  • Annual statement and payment of royalties is very common. This means you will have to wait all year to get money that you might want to use on promoting your book, but it does not change the overall amount you receive. You just receive a bigger amount (the yearly total) in one lump sum.
  • Some publishers prefer to pay royalties more frequently. More frequently does spread out the income so you can use it more frequently to promote your book. It is only helpful, however, if books are selling well, as in 500 or more a year.
    • Semi-annual payments are quite common among publishers.
    • Quarterly payments are more common among publishers of fiction and highly popular nonfiction.
    • Monthly payments are rare, but in the case of publishers of best-selling books (those that sell hundreds each month), monthly payment of royalties does occur.

The bottom line that there is some variability in how various publishers will pay royalties. That is an important item in any contract and may be open to negotiation. (Remember, also, that if you got an advance, that is not grant money; that is a loan. You will not be paid royalties until after the royalties exceed the amount of your advance.)

Lesson for today's Tuesday talk: Understand what you are getting paid and how often, then negotiate, if possible, for what works best for you and seems fairest.

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 (Publishing for Smarties: How to Find a Publisher available from MSI Press LLC; discount of 25% with coupon code FF25; currently on sale for $5, but that offer will not last forever).



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