In Your Corner: Royalties. What do they mean?

fountain pen money coins royalties

Royalties. There is no better word to convey a connotation of status, power, and entitlement for the published author … but it’s a word which can be dangerously misleading, or seductive. For one thing, getting your royalties isn’t the same thing as getting royalty.

royals tv show

Just sayin’.

You might be confused by the word. In fact, it took years of working in the self-publishing industry with legitimate experts on this subject for me to really get a handle on the finer points. I can’t go into all of them in a single blog post, of course, but I’m here today to talk about some of the common misconceptions about royalties as well as what royalties really are, and what they can do for you.

Definition A:
Royalties or a royalty paid to an author is a percentage of revenue earned on book sales.

Definition B:
Whatever the vanity presses can eke out of you without you knowing.

Traditional publishing houses pay royalties to their author clients based on a percentage of the listed retail prices of their books. This percentage depends on format, and can be tied to net receipts and/or net profits, which are essentially two more loopholes the industry invented to keep a little more of the money out of authors’ hands. And many times, these same institutions will offer authors advances against their expected royalties, which only occasionally works in the authors’ favor.

We never said they weren’t smart. But they’re definitely not out for their authors’ best interests.

So, what about self-publishing? Aren’t there royalties to be had there, too?

 

Yes and no. As a self-publishing author, you’re both author and publisher. So in the strictest sense, you don’t receive royalties because you don’t extend a deal to yourself and give yourself a percentage of your book’s profit, gross or net or anything else. But in a looser sense, and in most self-publishing literature, this is equivalent to receiving 100% of your book’s royalties–which sounds pretty great, doesn’t it? You’ve already covered the up-front costs of editing, publishing, and marketing, so what’s left is all yours, kids!

In self-publishing, your royalty is the total amount you’re paid. There might conceivably be situations where you split your revenue–say, if you co-authored your book, have a translator or illustrator you did not pay as an independent contractor, or if you accidentally publish through a shady vanity press service which keeps a percentage for themselves.

Read the fine print, always! This is especially true when it comes to paying vanity presses, self-publishing service providers, and DIY self-publishing platforms like Amazon’s Kindle Direct.

princess bridge inconceivable gif

Incidentally, the Princess Bride contains plenty of useful material for the conscious self-publishing author. Case in point:

princess bridge inconceivable gif

Royalty as a word has its roots in an ancient, mostly outdated traditional model of business. You want to steer clear of any of the aforementioned companies which offer “X percentage of your royalties!” unless they’re offering a flat 100%. Simply put, you’re already paying them for the same services which traditional publishing houses withhold from your royalties to pay for–marketing and such–so there’s absolutely zero reason to let these vanity presses take money out of your royalties on top of everything else you paid a flat starting fee for! They are counting on you not understanding what royalties were invented for, and fleecing you out of the difference.

It’s oh-so-easy to fall into a trap if you don’t do the math. And the only math here worth having is the full, 100% royalties delivered straight to you. Every book sale is your revenue or earnings, and always be sure to do your due diligence before selecting a publishing company. Your down payment and up-front publishing costs are an investment, and your royalties are the payoff! With a little care and a keen eye for the fine print, you can make back those initial expenditures.

You are not alone. ♣︎


Elizabeth

ABOUT ELIZABETH JAVOR: With over 18 years of experience in sales and management, Elizabeth Javor works as the Manager of Author Services for Outskirts Press. The Author Services Department is composed of knowledgeable publishing consultants, pre-production specialists, customer service reps and book marketing specialists; together, they all focus on educating authors on the self-publishing process to help them publish the book of their dreams. Whether you are a professional looking to take your career to the next level with platform-driven non-fiction or a novelist seeking fame, fortune, and/or personal fulfillment, Elizabeth Javor can put you on the right path.

From the Archives: “Avoid these 5 mistakes when choosing your publisher”

Welcome back to our Tuesday segment, where we’ll be revisiting some of our most popular posts from the last few years.  What’s stayed the same?  And what’s changed?  We’ll be updating you on the facts, and taking a new (and hopefully refreshing) angle on a few timeless classics of Self Publishing Advisor.

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[ Originally posted: April 23rd, 2010 ]

1) DO NOT CHOOSE SPEED OVER QUALITY
Avoid publishers that claim to publish in 24 hours. After the time it took to write your book, do you want it published right, or overnight? Avoid overnight publishers no matter what they charge because the only one looking at your book will be a computer. It should take between 6-15 weeks.

2) DO NOT BE FOOLED BY HIGH ROYALTY CLAIMS
A royalty is simply a percentage of another number. The actual dollars and cents you earn depends upon that second number. The truest royalty is a royalty based upon the retail price of your book. Many publishers use “net royalty” which is a royalty based upon their profit. To be sure, always confirm your profit in dollars and cents.

3) DO NOT SIGN YOUR RIGHTS AWAY
The main advantage to self-publishing alternatively with a on-demand publisher is that you keep all the rights to your work. The rights are valuable. Read the contract. Your rights should clearly stay with you.

4) DO NOT BE CONFUSED BY BULK DISCOUNTS
If a publisher normally offers discounts to an author who buys their own book in bulk, that tells you two things. 1) It tells you they are more concerned with selling to you than to other readers. 2) It tells you they are charging you too much for lower quantities. Do you really want to be forced to buy 100 books at a time just to get a fair price? “Bulk” discounts simply trick the author into buying more books than they need, which defeats the whole advantage of on-demand printing.

5) DO NOT BE TRICKED BY AUTHOR DISCOUNTS
As an author, your per-book price should be based upon the production cost of the book, not the retail price. No wonder publishers inflate their retail pricing. You should always receive a below-wholesale price, regardless of how many you buy. You will never make money if you have to buy your own book at wholesale from the publisher.

When push comes to shove, all five of these points boil down to the same core idea:

You ought always to look for a self-publishing company that puts you––the author––first.  A company that shares your ethics and vision for rendering stories accessible to readers.  A company that knows how to treat people right and does so consistently, day in and day out.

A company that works solely to satisfy its bottom line and invested parties is a company that has forgotten the human element … and the whole point of self-publishing, to be perfectly frank.  Responsibility to shareholders and investors is one thing, but the deliberate choice to inflate profits at the expense of quality products, customer satisfaction, and author empowerment is unconscionable and inexcusable.  I sometimes wonder how much of the corporate soullessness we see in certain corners of the world today has its roots in people not loving the work they do––not finding value and meaning in enriching the lives of others in addition to their own, and not seeing the significance of their daily tasks or the opportunities to craft a career that is as much art as it is science.  But here I’m rambling!

Looking back nearly six years to this original post, I now see the five mistakes noted above to be more a list of symptoms than a list of “to-not-dos” … because each and every single one points to a company that prioritizes itself over its product and clients:

  • If a company maximizes profits by creating artificially high prices that only seem reasonable when reduced to a bulk or “author-only” rate, it is clearly a company that cares very little about balancing the need for profit and survival in a competitive market with the reality that self-publishing is a market and industry that demands transparency, accessibility, and progressive thinking.  It is a company that looks to trap its customers into a long-term, toxic, parasitic relationship.
  • If a company prioritizes speed over a quality product or quality customer service, then it’s a company that sells itself using gimmicks … and gimmicks, as we are all well aware, are the desperate empty gestures of a company lacking imagination.  Innovation and creativity do not produce inferior versions of a thing; they find new and fresh ways to look at problems and to improve upon that thing.

constraints in self publishing

In short, no, nothing really has changed in the six years since this post first hit the Self Publishing Advisor front page.  There were ungenerous self-publishing companies in existence then, and there are ungenerous self-publishing companies in existence now.  We haven’t changed that fact in half a decade, and we’re not particularly likely to change it in the next.  What we can change, however, is our own degree of discernment.  We can spot the warning signs––the symptoms above––and steer well away from companies that manifest them.  We can choose not to sell ourselves short, and to choose instead a publishing option that respects us as authors and empowers us to better ends than a bottom line.

If you have any other ideas, I’d love to hear them.  Drop me a line in the comments section below and I’ll respond as quickly as I can.  ♠

KellyABOUT KELLY SCHUKNECHT: Kelly Schuknecht is the Executive Vice President of Outskirts Press. In addition to her contributions to the Outskirts Press blog at blog.outskirtspress.com, Kelly and a group of talented marketing experts offer book marketing services, support, and products to not only published Outskirts Press authors, but to all authors and professionals who are interested in marketing their books and/or careers. Learn more about Kelly on her blog, kellyschuknecht.com.

From the Archives: “How Much Do Self-Published Authors Make Per Year?”

Welcome back to our new Tuesday segment, where we’ll be revisiting some of our most popular posts from the last few years.  What’s stayed the same?  And what’s changed?  We’ll be updating you on the facts, and taking a new (and hopefully refreshing) angle on a few timeless classics of Self Publishing Advisor.

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[ Originally posted: July 13th, 2011 ]

You want to become a self-published author, but you also have bills to pay and a lifestyle to maintain. So you pull up Google (or your search engine of choice), and search for “average income for book authors” or “average income for self-published authors”. You skim the results but can’t find any solid statistics. There’s a good reason why. Ready for it? Authors aren’t paid a salary. They earn royalties based on the sales of their book. These royalties are paid to them on a set schedule – usually provided that they meet the agreed upon “minimum earning threshold”.

So, will I be able to pay my bills if I become a self-published author? That’s an excellent question. Unfortunately, there is no “one size fits all” answer to it. When you publish a book, you are essentially taking a “gamble” on yourself. Many authors keep their day jobs until they are able to earn enough to support themselves on their book sales alone. One dedicated Outskirts Press author made $100,000 in only 180 days (6 months). However, there are some authors who don’t earn anywhere near this amount in a year. Furthermore, there are some authors who may not sell even one book over the course of a year.

How do you know where you fall? Self-publishing is all about investing in yourself. Given that successfully publishing a book involves 20% writing and 80% marketing, you should naturally spend most of your time/money on promoting the book after you write it. If you need help, you may consider enlisting the services of a book marketing consultant.

The income of a self-publishing author is 100% in their own hands. No one can “predict” how much you will earn as that is only a result of two things:  the quality of your book and substantial effort in marketing it to the right audience.

money in the bank

Back in 2011, Elise was so perfectly on point that it’s almost a crime to revisit her post and attempt to add a touch of 2015 to it–––but I’d like to deliver some good news.  With the expansion and stabilization of the  indie, hybrid, and self-publishing markets, greater numbers of authors than ever before are able to make bank at the end of the year.  Exceptions like the one Elise mentioned remain exceptions, but now it’s not unheard of to stumble across authors like Mark Dawson, who reportedly put away some $450,000 after selling his book through Amazon Direct.  And the very fact that we can now cast a skeptical eye toward Amazon shows just how far we’ve come, I think, in that we now have established parameters for what’s “acceptable practice” and “sound ethical behavior” in our self-publishing platforms.  We have options, now, and we can afford to pick fights with industry supergiants if they act like the profit-driven corporations we know they are.

That said, we also have made progress in nailing down some of those “solid statistics” that Elise mentioned––another benefit of participating in a maturing market. In May 2015, AuthorEarnings put out its annual report.  AuthorEarnings, a website which has made its purpose to “gather and share information so that writers can make informed decisions” also has a “secondary mission […] to call for change within the publishing community for better pay and fairer terms in all contracts”––which is pretty wonderful for self-publishing authors like you or me, who want to know where we fall on the spectrum of wage-earners in our industry.  AuthorEarnings’ report shows, in great detail, how the profits from the sale of ebooks is divided up between authors, publishers, and Amazon.  And in their longitudinal study, published in September of this year, they give us a few handy statistics.  For example:

“5,643 authors in our longitudinal data set — or roughly 2.8% of the original 200,000 — whose Kindle best-selling ebooks appearing on Amazon best seller lists were consistently earning them $10K/year or better.”

And:

“[A]lmost half of these 5,600 authors — over 2,200 of them — are consistently making $25K/year or more on their Kindle bestsellers, and more than a fifth of them — over 1,200 authors in the data set — are making $50K/year or more on their Kindle best sellers alone.”

Keeping in mind that we’re talking about trends and percentages, not instruction much less guarantees, these numbers present a huge leap forward from what we had at our fingertips even just four years ago.  They present lots of opportunity for hope (lots of self-publishing “midlisters” are making good money), but also groundwork for caution (lots of authors are not visible in the data at all).  You certainly ought to keep Elise’s admonitions to self-promote carefully, often, and effectively.  The best way to sell your books is to make sure that they’re readable, “findable,” and affordable!

In closing, I’m going to ask the same question now that Elise did in 2011: What level of success have you seen as a self-published (or traditionally-published) author? Have you been able to maintain your lifestyle on royalties alone?  We’d love to hear from you in the comments below.  And even more, we’d love to be on hand to cheer you on.  You’re not alone in this endeavor!  ♠

KellyABOUT KELLY SCHUKNECHT: Kelly Schuknecht is the Executive Vice President of Outskirts Press. In addition to her contributions to the Outskirts Press blog at blog.outskirtspress.com, Kelly and a group of talented marketing experts offer book marketing services, support, and products to not only published Outskirts Press authors, but to all authors and professionals who are interested in marketing their books and/or careers. Learn more about Kelly on her blog, kellyschuknecht.com.

Top Four Reasons to Self-Publish: Part 4 – Rights

Last month, I did a series on the most popular questions self-publishing authors ask. The posts were such a hit, I’ve decided to do another series this month. Each week in August, I will discuss one of the top four reasons why you should self-publish your book.

This week, I’ll discuss book rights. (In case you missed the last three reasons, be sure to go back and view those posts: Control, Money, and Trade and Distribution.)

As a self-publishing author, you maintain all rights to your book. This gives authors the freedom to sell or keep the rights as they see fit. However, it is important to note that self-published books will be considered “previously published” if the author later chooses to sell the book to a traditional publisher.

Owning book rights such as translation rights and film rights can have a significant impact on an author’s profitability.

Authors who use traditional publishing firms often give up most of the book rights but are usually entitled to a small percentage of the profit if the firm sells the rights to someone else. Self-publishing authors have the opportunity to choose if and how to sell their book rights to ensure they are getting the best deal possible.

I’d love to know, how has owning the rights to your book influenced your publishing decisions?

ABOUT JODEE THAYER: With over 20 years of experience in sales and management, Jodee Thayer works as the Manager of Author Services for Outskirts Press. The Author Services Department is composed of knowledgeable customer service reps and publishing consultants; together, they all focus on educating authors on the self-publishing process in order to help them publish the book of their dreams. Whether you are a professional looking to take your career to the next level with platform-driven non-fiction or a novelist seeking fame, fortune, and/or personal fulfillment, Jodee Thayer can put you on the right path.

Top Four Reasons to Self-Publish: Part 3 – Trade Discounts and Distribution

Last month, I did a series on the most popular questions self-publishing authors ask. The posts were such a hit, I’ve decided to do another series this month. Each week in August, I will discuss one of the top four reasons why you should self-publish your book.

This week, I’ll discuss trade discounts and distribution. Unlike traditional publishing, self-publishing allows authors to choose the type of distribution that is appropriate for their material and marketing goals.

When thinking about distribution, it is important for authors to understand how the process works. For starters, “trade discount” is an industry term for profit margin. This rate impacts who buys and sells your books as well as the profits you will make off of your book.

For instance, shelf space in a brick and mortar chain bookstore has very specific requirements: the books must have a very high trade discount (50% to 55%). Therefore, if you buy a book at one of these bookstores  for $14.95, 55% of the retail price ($8.22) is divided between the store and the wholesale distributor for their profit. When you subtract the $8.22 from the $14.95, you are left with $6.73. This remainder covers the cost of the actual book. The balance that is left after the price of the book is the author royalty. Typically, authors receive very low royalties in these scenarios.

In addition to needing a high trade discount, authors also need to provide the bookstore with a “Retail Returns Program.” This program allows the bookstores to return books to the wholesaler and get their money back if the books do not sell. You must provide this program to the retailers, but having it is no guarantee that they will agree to stock your book.

Conversely, authors that elect to focus on internet sales may select a much lower trade discount as the internet book sites do not require as large of a profit margin. So that same $14.95 retail priced book under a 25% trade discount would look like this mathematically: $14.95 – $3.74 (25% of the retail price) = $11.21 – the actual cost of your book = your royalty. Obviously, $11.21 is a larger number than $6.73. Therefore, your royalty will be greater if sold by an online distributor, assuming the cost of your book remains the same in each equation.

Freedom to choose your trade discount and distribution center is just one of the many perks of self-publishing. To learn more about trade discounts, check out Cheri’s post titled Trade Discounts 101. It provides a great overview of industry standards and questions to ask yourself before setting your discount.

ABOUT JODEE THAYER: With over 20 years of experience in sales and management, Jodee Thayer works as the Manager of Author Services for Outskirts Press. The Author Services Department is composed of knowledgeable customer service reps and publishing consultants; together, they all focus on educating authors on the self-publishing process in order to help them publish the book of their dreams. Whether you are a professional looking to take your career to the next level with platform-driven non-fiction or a novelist seeking fame, fortune, and/or personal fulfillment, Jodee Thayer can put you on the right path.

Top Four Reasons to Self-Publish: Part 2 – Money

Last month, I did a series on the most popular questions self-publishing authors ask. The posts were such a hit, I’ve decided to do another series this month. Each week in August, I will discuss one of the top four reasons why you should self-publish your book.

This week, I’ll discuss one of the most popular reasons authors choose to self-publish: money. (Check out last week’s post on control.) There are two things that are unique about self-publishing in relation to money.

1) The author sets the price.

The price of your book influences the profit you make and how well your book sells. Different authors have different pricing strategies, and you need to give this decision a lot of thought. Rather than a publisher deciding the value of your book, you set the price based on your goals and personal situation.

2) The author earns100% royalties.

If you talk to authors who use traditional publishing firms, royalties are a hot topic. Many authors are unhappy with the royalty rate (which is often in the single digits). Self-publishing authors enjoy 100% royalties. Yes, 100%. Whatever you earn from your book is yours to keep. This reason alone is why many writers choose to self-publish their work.

I’d love to know, how has price and royalty influenced your publishing decisions?

ABOUT JODEE THAYER: With over 20 years of experience in sales and management, Jodee Thayer works as the Manager of Author Services for Outskirts Press. The Author Services Department is composed of knowledgeable customer service reps and publishing consultants; together, they all focus on educating authors on the self-publishing process in order to help them publish the book of their dreams. Whether you are a professional looking to take your career to the next level with platform-driven non-fiction or a novelist seeking fame, fortune, and/or personal fulfillment, Jodee Thayer can put you on the right path.

Top 5 Questions New Authors Ask About Self-Publishing

Whether you are a regular visitor of this blog or this is your first time here, something led you to us.  Maybe you are interested in self-publishing or some of the specific topics discussed on this blog (like book reviews or book marketing).

In many cases, our readers come to us because they searched a particular term on Google or another search engine and that led them to one of our helpful posts.  Below are the top 5 questions readers ask that bring them to our blog.  Perhaps you will find answers to some of the questions you have about self-publishing (each question is conveniently linked to a post that discusses the individual topic in more detail):

  1. How much do authors make? – This post discusses what self-publishing authors can expect to earn in royalties and some of the considerations when it comes to successful book sales.
  2. How much does it cost to publish a book? – Read this post from Wendy Stetina as she advises on what self-publishing authors can expect to invest in the publication of their book, including professional cover design, copyediting, production and marketing.
  3. How do you market a Kindle ebook format? – This guest post from Dana Lynn Smith has been a top post for months.  As the publishing industry shifts from hardcopy to ebook formats, authors want to know how to increase their ebook sales.  Dana tells us just how to do that.
  4. How can you use tags to promote your book on Amazon? – A post by…yours truly about how to use Tags to help customers find your book on Amazon.
  5. Where can I find self-publishing advice? – This one doesn’t have a link because you’re already here! If you haven’t done so already, subscribe to the Self Publishing Advisor blog (top right corner of the page) and you will receive our posts directly in your email inbox.  We’re glad you’re here and hope you’ll come back for more.

I would love to know, what other questions do you have about self-publishing?

ABOUT KELLY SCHUKNECHT: Kelly Schuknecht is the Vice President of Outskirts Press. In addition to her contributions to the Outskirts Press blog at blog.outskirtspress.com, Kelly and a group of talented marketing experts offer book marketing services, support, and products to not only published Outskirts Press authors, but to all authors and professionals who are interested in marketing their books and/or careers. Learn more about Kelly on her blog at http://kellyschuknecht.com.