A Publisher's Conversation with Authors: How fair are your royalties?

 

It is Tuesday. 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 post addresses the topic of royalties. I suppose that topic was conditioned by the fact that the first quarter of the year is when MSI Press calculates royalties for the past year and gets ready to pay them out to authors. Of course, royalty issues should have been sorted out before a contract was signed, but if one is still pending, and for the future, perhaps some of the information here will help.

Kinds of Royalties

Royalties can be calculated on list or net.

• Royalties calculated on list are pretty easy to figure. It is generally a percentage of the selling price of the book, regardless of costs encountered in producing and marketing the book. For example, we pay 10% on list, which works out to about 50%-60% of net. It is fair. The question becomes how returned books are handled. Some publishers subtract those costs, which is also fair. There is considerable cost in returned books; too high a percentage of returned books can put a publisher out of business. We do not, for obvious reasons, pay royalties on returned books, but we do not subtract losses from the number of books that did sell. There is more than one prevalent way to handle book returns vis-a-vis royalties. IMHO, payment on list, regardless of how returned books are handled, is fair.
• Royalties calculated on net are a little more opaque. The percentage is applied to revenue after all costs have been subtracted. Even though net sales are smaller than gross sales, many publishers pay around 10% on net. This is normal if the publisher has covered 100% of the production costs. It is not fair if the author has covered part of the costs (hybrid publishing). Depending upon how the costs were distributed, an author could fairly expect to see 50% or so of the royalties. Jane Friedman does an excellent job of explaining how net is calculated using profit-&-loss statements, albeit not for determining royalties but whether to publish a book in the first place. Her article is clear and takes only a few minutes to read: The Book P&L: How Publishers Make Decisions About What to Publish | Jane Friedman.

Should royalties increase if the book sells well?

It is not uncommon to have a contractual clause (our contracts do) that allow for higher royalties with higher volumes of sales. For high volumes of sales, royalties might increase as much as 5%. What constitutes "high volume" depends upon the publisher. It could be as lower as sales of more than 1000 books, or more than 5000 books. This is a valid negotiating point with the publisher although some publishers, particularly academic publishers, are often already subsidized to meet expenses and have no wiggle at all. 

What about advances?

This one is pretty clear. Advances are advances against royalties. Until the publisher gets the advanced money back, the author will receive no royalties. Quite frequently, publishers calculate how much they think a book will earn in offering an advance. They might not expect an author to earn back the royalty.

Bottom line: Don't be shy in talking about royalties with your publisher; make sure they are fair.

See more Publisher Conversations with Authors HERE.

 Learn more about publishing from an acquisitions editor -- how to get your book proposal accepted, why proposals are turned down/accepted, and how to find the right publisher for your book. On special sale for $5 while inventory lasts at MSI Press webstore. Also available as an e-book and an audiobook.

The Tuesday talks reflect real discussions between the management of MSI Press LLC and our own authors or those would-be authors who come through our doors but don't make the cut--yet. If you have a topic that you would like addressed, leave the question in the comment section. Chances are, in our 18 years of publishing first-time and experiences authors, we have had a conversation with one of our authors that we can share with you.

                             

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