Everything About Book Royalties

When authors decide on the best self-publishing company for their masterpiece, one critical area is sometimes overlooked: author royalties. It can be a confusing topic because many publishers use different definitions to define what “royalties” means and different formulas to determine how author royalties are calculated.

In the simplest terms of definition, “royalties” means the amount of money that is paid to the author for books that are sold.

How are Author Royalties Calculated? The formula used to calculate the author royalties often varies from publisher to publisher and that can make comparing Publishers X, Y, and Z challenging.

For instance, some publishers will pay a percentage directly off the Sales Retail Price of the book, regardless of how much the book costs to produce, or how much the trade discount is. In these instances, it is not uncommon for the percentage to be fairly low (in the 5%-10% range).

This formula sometimes works to the author’s detriment, however, since book printing and trade discounting play such an enormous role in the book’s overall profit and the author has no say in what the Suggested Retail Price is. Without any say in the matter, authors are often left at the publisher’s mercy.

On the other end of the spectrum are publishers that pay a percentage of the book’s profit, which is the amount left over after the printing costs and trade discounts have already been accounted for. In these instances, you will more often see percentages in the 50%-100% range.

Yes, there are some self-publishing companies, such as Outskirts Press, that pay the author 100% of the net profit of the book when it is sold through wholesale channels, such as Amazon and Barnes & Noble.

That royalty formula looks like this:

Suggested Retail Price – Trade Discount – Printing Cost = Book Profit

What is the Suggested Retail Price (SRP) of a Book? It’s just what it sounds like – the cover price as suggested by either the publisher or the author. While nearly all traditional publishers and almost all self-publishers set the SRP for the author there are a select few self-publishing companies that allow the author to set their own Suggested Retail Price. Outskirts Press is one of them; the only requirement is that the price being set by the author is above the sum of the trade discount and the printing cost. In other words, the Suggested Retail Price cannot be below what it costs to produce and sell the book. Makes sense, right?

Of course, the reason this is called the suggested retail price and not the final sales price is because retailers have the discretion to decrease the price (in the form of a sale) or increase the price (to improve their bottom line) if they choose to. But doing so has no affect on the amount the author ultimately receives, which is always set on the SRP.

What is the Trade Discount? This is the percentage of the book’s SRP that the retailer, wholesaler (if any), and distributor take to “handle” a book. It’s how they make money in the book industry. Every book that is for sale with a retailer has given a cut of its retail price to all the parties involved in the form of a trade discount.

What is the Printing Cost? In simplest terms, the “printing cost” is the per-unit cost of producing one book. The reason there is such a discrepancy between offset printing and print-on-demand, one-at-a-time printing is due to “economies of scale”. While that topic is beyond the scope of this article, we have a whole blog posting about the role economies of scale play with your printing costs, and you can read all about that here.

The benefits to choosing Outskirts Press don’t end with 100% author royalties, as important as that is. You also retain 100% of your book’s rights, and receive unlimited wholesale and retail availability thru channels including Amazon & Ingram. Our flexibility and adaptability to your needs, coupled with our phenomenal services and staff, is just one of many reasons Outskirts Press is the only A+ rated and #1 rated self-publishing company according to the Better Business Bureau and Top Consumer Reviews, respectively.

You can schedule a no-obligation consultation with one of our consultants at https://outskirtspress.com/consultation.html or you can select your package to start publishing right now at https://outskirtspress.com/self-publishing.html

Get started today. People are waiting for your bestseller!

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