What are royalties?

Royalties are the part of the price of a book that actually goes to the author after all other costs and fees. So, it doesn’t mean authors wear crowns. Here’s a little taste of the business side of writing and publishing.

If you check out Sudden Mission and Nasty Leftovers on Amazon, Nook, or Kobo, you’ll see that the price for the e-book version is $2.99. This is, I think, a reasonable price for an e-book. The print/paperback editions, as published through IngramSpark, are $10.95. As a self-published author, I get to set the pricing at a point that seems reasonable to me. I collect a nominal amount of royalty for each sale and the sale prices cover the costs of printing and/or producing the books. Marketing or promotion comes out of the royalties (my pocket).

Amazon, and most of the other e-book sellers, pay the author or publisher up to 70 per cent of the price of an e-book as long as the price is between $2.99 and $9.99. That seems the sweet spot for e-books. I went to the lower end of the price structure simply because I want my books accessible, and I felt the percentage was enough to cover my own costs and effort.

Hybrid Publishing

Sudden Mission and Nasty Leftovers first came out published by a–now defunct–hybrid publisher, Booktrope. When I signed up with them, they set the price of the e-book editions at $3.99 and the paperback editions at $13.99. My royalty from Booktrope would be 30 percent. Since I assumed that Booktrope would manage the creation of the e-book format, print format, and some marketing–as well as editing and proofreading support–that amount seemed fair. With most hybrid publishers, that is generally the deal with authors. A 30 percent royalty and the hybrid gets the 40 percent cut. Assuming that the hybrid does the work expected and the quality is decent, that is a reasonable and fair deal.

Even at $3.99 for the e-book, that price supports the production and release of an e-book edition just fine. The overhead costs of producing an e-book is very low. Much more so that production and printing–even on-demand printing–of a paperback or hard cover book.

Unfortunately, hybrid publishing is a hard business. Publishers come and go on a regular basis and authors get left in the cold. One friend has been through several hybrids with her books, and she sells a lot more than I.

Traditional Publishing

So, why are some e-books priced at $13.99 and higher?

If you look at books on Amazon with e-book prices above $10, you’ll see the publishers are traditional publishing houses, generally out of New York City. You’ll see new books released in the hard cover first, as with most traditional publishing processes, and the e-book released at the same time at a price of $13 to $20. Considering that the costs to produce the e-book edition are the same as, say, Sudden Mission‘s e-book edition–that seems like a very high price.

It is. You see, traditional publishing still follows the old model of producing a hard cover edition first, followed in a year or so by a paperback, maybe a trade paper, edition. Go to your local Barnes & Noble. How many hard cover copies of new books do you see going out the door? I’m talking the ones not on the bargain table. There are quite a few on the shelves, but they’ll get returned in a week or so when they don’t sell. The publisher will, if they are not damaged, re-sell them to other bookstores if they can. Eventually, the books that don’t sell get destroyed. Someone has to eat that cost.

But, traditional publishers figured out that if they release the e-book edition at the same time, the sales of the e-book will help subsidize the cost of producing–and later destroying–the hard cover edition. It’s a win-win for the traditional publisher, assuming the folks in the reading audience buy this concept.

How much does the author get in this? Well, a big name author can command between 12 and 15 percent royalty, maybe more. Less if represented by an agent. A less well-known author, with an agent, will get about half of whatever the royalty agreement is.

Bestsellers

Let’s have a little fantasy here. Say Sudden Mission became a best seller this year and we sold 50,000 copies of the e-book.

As a self-published author, at the current price for the e-book edition, my royalty for this year would be:

$104,650.00

With a hybrid publisher, at the $3.99 price for the e-book edition, my royalty for this year would be:

$59,850.00

With a traditional publisher, at a $13.99 price for the e-book, my royalty (after an agent takes a cut, I get 3 percent) would be:

$20,985.00

Granted, this doesn’t take into account the time, effort, and expense promoting the book. That includes attending conferences, SF&F cons, travel, hotels, all that. Yes, that is all on the author. Traditional publishers only cover travel and promotion for the top-tier authors. When it is all said and done, the author in each case would spend about one-third of the royalty for promotion. And, when that year of “bestseller status” is over–it is over. Royalties after the big year generally arrive in tiny dribs and drabs.

This example is a complete fantasy. But it does illustrate the differences between self-published, hybrid, and traditional. I was conservative on the traditional royalty rate and assumed an agent would be involved.

Bottom Line

Authors work hard to create a product. Most of the authors I know cannot support themselves on what they make from their work. They have “day jobs” and other ways to keep food on the table, pay for kid’s college, put gas in the car. Even authors who do well in the marketplace, do not make enough to live on just from the writing. Most authors I know who do well (better than I), rarely sell more than 10 percent of the books as in the above fantasy.

Those authors, including myself, are in the business because it’s a passion. A little fame, a little recognition–that all helps. We’d still write our stories anyway.

Keep writing.