Congratulations! You have signed with a publisher that wants to bring your book to the market. But how will you get paid for book sales? What royalties are considered normal?*
I suppose I should backtrack. First of all, how do traditional publishers pay authors, and what exactly are royalties?
Publishers typically pay authors in several ways: advances and royalties.
Advances – Advances are initial, upfront payments presented to authors. Their full name is advances against royalties, so if a publisher offers an author a $1000 advance, that author will not begin to earn additional royalties until after the book has already “earned back” that $1000. Even if the book never earns $1000 worth of royalties, the author still gets to keep the advance.
Royalties – Royalties are the amounts of money an author earns on each book sold. In traditional publishing, authors tend to earn only small percentages of the sale price in royalties. The rest of the money goes to the publisher for marketing, production, editing, and other fees associated with creating a book. Agents may also take a portion of the royalties for services rendered.
In traditional trade publishing, royalty percentages tend to follow the industry standard numbers enumerated below. Digital publishers often offer much higher royalties, and, of course, in-demand authors often negotiate different royalties. For a more detailed explanation, see Alan Jacobson’s excellent article.
Royalties for hardback books: authors earn 10% on the first 5,000 copies sold, 12.5% on the next 5,000 sold, and 15% on any copies sold after that.
Royalties for paperback books: authors earn 8% on the first 150,000 copies sold, and 10% on any copies after that. (As you can imagine, most books don’t sell more than 150,000 copies, so publishers don’t necessarily have to worry about paying out the 10% royalties.)
Royalties for e-books: e-books complicate royalties a bit, and the standard is currently in flux. Often sellers like Amazon sell e-books at a loss for publishers, so an author may not make much money in royalties from these sales. In the best case scenarios, however, e-book royalties tend to run between 25% and 50%. (Keep in mind that e-books typically cost much less than paperback and hardback books, so the increase in royalties doesn’t necessarily result in a large increase in personal profit for an author.)
The above royalties usually aren’t applicable to all sales, and publishers describe exceptions in contracts. Books sold at a mass discount, for example, usually provide lower royalties.
Royalties are paid out on a schedule that varies by publisher. Some publishers pay royalties monthly, others quarterly, and others every six months. I haven’t heard of a publisher that only pays out royalties on an annual basis, but I’m sure that at least one exists. (At least one of anything always exists.)
So those are some introductory facts about royalties. Though this post contains some great information for people who are beginning to learn about publishing royalties, I have also listed some wonderful resources below.
If you have any questions or want to hear more about any part of the royalty process, just let me know! I’m happy to do what I can to open up this often murky aspect of publishing.
Resources about Royalties
*This post in no way takes the place of legal advice. It is simply intended to be an introductory guide to royalties written by someone in the publishing industry. If you end up working with a publisher, make sure that you have a lawyer look at your contract before you sign it.