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Primary Blog/blog post/Understanding Book Royalties With Traditional Publishing

Understanding Book Royalties With Traditional Publishing

Understanding Traditional Book Royalties

Hello, Lifers!

Let's talk about something that's crucial to your journey as an author: book royalties. Now, I know what you're thinking. "Royalties? That's the stuff of kings and queens, right?" Well, in a way, you're not wrong. As authors, we do rule over our literary kingdoms. But today, we're talking about a different kind of royalty. The kind that fills your royal coffers and keeps your writing career thriving.

Royal coffers. Royalties. Ha. I crack my butt up.

Honestly, in self-publishing royalties are pretty straightforward:  they're typically calculated as a percentage of the cover price, or of the net profit per unit sale. This means that after the costs of production and distribution are deducted, along with the retailer's cut, authors receive a share of the remaining revenue.

Unlike traditional publishing, where royalty rates might range from 10-15%, self-publishing platforms like Amazon's Kindle Direct Publishing (KDP), Nook, Kobo, iBooks, Google Play, and Smashwords often offer higher royalty rates, usually between 35-70%. The exact rate can vary based on factors such as the book's pricing, the chosen platform, and the territories in which the book is sold.

But we're going to talk about TRADITIONAL publishing royalties.  Why? Because there's always the chance you land a sweet publishing contract with a trad-pub house, especially after taking all my advice and killing it on the indie lists. 

Unlike a lot of self-pubbers, I'm not going to tell you to avoid trad-pub stuff. It's like anything else: there's good to it, and there's bad. But one of the things you HAVE to understand is how royalties work with them.

What are Book Royalties?

In the realm of traditional publishing, book royalties are a percentage of the book's list price, i.e., the price at which the book is sold to the public. This percentage is not a fixed number and can vary based on factors like the format of the book (hardcover, paperback, ebook), the size of the market, and the author's negotiation skills.

So royalty rates in traditional publishing might look something like this:

Hardcover: 10-15%

Paperback: 6-8%

Ebook: 25% of net receipts

These percentages might seem small, especially when compared to the 35-70% royalty rates in self-publishing. But remember, in traditional publishing, the publisher bears the costs of production, distribution, and marketing. So, while the royalty rate is lower, you're not shouldering these expenses.

The Intricacies of Book Advances

Now, let's talk about book advances. An advance is a sum of money that a publisher pays to an author before the book is published. It's essentially a pre-payment of the author's royalties.

Here's how it works. Let's say a publisher offers you an advance of $10,000 for your book (yay for you!). This means that you'll receive $10,000 upfront, before a single copy of your book is sold.

But here's the catch: you have to "earn out" your advance before you start receiving royalties. This means that you won't see any royalty payments until your book has generated enough in royalties to cover the advance.

For example, if your royalty rate is 10% and your book is priced at $20, you earn $2 for each book sold. If your advance was $10,000, you'd need to sell 5,000 copies of your book to earn out your advance. Only after selling these 5,000 copies would you start receiving royalty payments.

Also, advances are mostly paid bi-annually. So you'll get two paychecks a year from your traditional publishers. Smaller houses are often different, but be aware that you'll have to budget your life pretty strictly if you're working for a trad-pub house!

Reality check

It's important to note that advances can vary wildly. A debut author might receive an advance of a few thousand dollars--re even a few hundred, if it's a small press--while a bestselling author could receive an advance in the millions.

And here's a sobering fact: many books don't earn out their advance. This doesn't mean you have to return the unearned portion of the advance to the publisher. Once an advance is paid, it's yours to keep (assuming you haven't signed a one-sided contract designed by a shark--make sure you have your lawyer/agent look over the contract before signing!). But it does mean that you might not see any royalty payments for that book.

Understanding book royalties and advances in traditional publishing is crucial for making informed decisions about your writing career. It's not just about crafting a compelling narrative; it's also about navigating the financial landscape of the publishing world. So, keep learning, keep writing, and keep striving for your Bestseller Life!

Protip/word of warning:
In traditional publishing, the money should NEVER flow from author to publisher

In traditional publishing, the publisher is taking a risk on you and your book. They're betting that your book will sell enough copies to cover the costs of production, distribution, and marketing, and still make a profit. That's why they're willing to invest their resources into your book.

This investment includes everything from editing, cover design, and formatting, to marketing and distribution. The publisher foots the bill for all these costs. As the author, you should not be paying for these services in a traditional publishing deal.

You might come across so-called "publishers" who ask authors to pay for these costs. They might call themselves "subsidy publishers," "co-op publishers," or "partner publishers." They might promise you greater control over the publishing process, or higher royalty rates.

But here's the truth, Lifers: These are not traditional publishers. They're businesses that make money from authors, not from selling books to readers. And often, the costs they charge are significantly higher than what you would pay if you hired freelance professionals to provide these services.

If you're being asked to "contribute," it's almost always a sign that you should RUN (not walk) for the hills. This is someone making money off you, and their business model isn't "tell good stories," it's "find as many suckers as possible."

Remember, Lifers, your work has value. You've poured your heart and soul into your book. You've spent countless hours crafting your narrative, developing your characters, and polishing your prose. You deserve to be paid for your work, not the other way around.

Royalties checklist

  • ​Understand the flow of money in traditional publishing.
  • Be wary of "publishers" who ask you to pay for services.
  • Value your work and expect to be paid for it.
  • Research any publisher thoroughly before agreeing to work with them.
  • Seek advice from a professional before signing a contract.

Welcome to the Bestseller Life Blog!

I'm Michaelbrent Collings, an international bestseller and produced screenwriter, as well as a multiple Bram Stoker Award and Dragon Award finalist, and maker of a fair-to-middling chocolate chip waffle.

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