Royalties - Book Publishing Royalties

Book Publishing Royalties

Except in the rarity of cases where book writers can demand high advances and royalties, an author's royalty rate is dictated by their publisher. All book-publishing royalties are paid by the publisher.

For the predominant case, the publishers advance an amount (part of the royalty) which can constitute the bulk of the author’s total income plus whatever little flows from the "running royalty" stream. Some costs may be attributed to the advance paid, which depletes further advances to be paid or from the running royalty paid. The author and the publisher can independently draw up the agreement that binds them or alongside an agent representing the author. There are many risks for the author – definition of cover price, the retail price, "net price", the discounts on the sale, the bulk sales on the POD (publish on demand) platform, the term of the agreement, audit of the publishers accounts in case of impropriety, etc. which an agent can provide.

The following illustrates the income to an author on the basis chosen for royalty, particularly in POD which minimizes losses from inventorying and is based on computer technologies.

Book-publishing Royalties - "Net" and "Retail" Compared

	Retail Basis	Net Basis
Cover Price	15.00	15.00
Discount to Booksellers	50%	50%
Wholesale Price, $	7.50	7.50
Printing Cost,$ (200 pp Book)	3.50	3.50
Net Income,$	4.00	4.00
Royalty Rate	20%	20%
Royalty Calcn.	0.20x15	0.20x4
Royalty,$	3.00	0.80

Hardback royalties on the published price of trade books usually range from 10% to 12.5%, with 15% for more important authors. On paperback it is usually 7.5% to 10%, going up to 12.5% only in exceptional cases. All the royalties displayed below are on the "cover price". Paying 15% to the author can mean that the other 85% of the cost pays for editing and proof-reading, printing and binding, overheads, and the profits (if any) to the publisher.

The publishing company pays no royalty on bulk purchases of books since the buying price may be a third of the cover price sold on a singles basis.

In the US there is no "maximum retail price" for books (whereas there is in the UK) which can serve as a calculation basis.