Writers are generally paid a royalty based on their book sales.
The way it works is fairly complicated, so if you have an agent to
represent you, you should take their advice on any offer you receive
from a publisher. But if you don’t have an agent, then make sure
you check any contract carefully. You’re still faced with the problem
of knowing what to expect and what it all means.
Publishers usually offer to pay authors advances against
royalties. How do you work out how much money you might earn from
your book? You need to understand for yourself how advances and
royalties work and what they mean for you.
What Kind of Publishing?
There isn’t any publishing norm. It really does depend on what
kind of publishing you are talking about.
Advance Payments
An advance is literally an advance payment and royalties on sales of
the book are set against it. It is not normally refundable, provided
that the author fulfils their part of the contract.
It is often split into three parts, payable one-third on
signature of the contract, one-third on delivery and acceptance of the
manuscript and one-third on publication.
If the book is written and doesn’t need more work, then the advance
might be paid in two parts, on signature and publication. In some cases
the publisher will want to pay part of the advance on paperback
publication (often but not necessarily a year after hardback
publication), but obviously it is in your interest to get the money paid
to you as soon as possible. Don’t forget to take into account the
tax implications of what you agree!
Published Price or Price Received?
The royalties can be based either on a percentage of the published
price of the book or on what is called the ‘price received’, i.e. a
percentage of the publisher’s receipts from the booksellers, which is
a much lower figure.
Educational publishers (who focus on books for schools) and academic
publishers (books for students and academics’ own work) generally
work on price received, trade publishers on published price royalties. Export
sales are usually on the price received because of the greater
selling and distribution costs for the publisher. There’s also a
tendency in trade publishing to move towards price received,
because of the high discounts publishers give booksellers and because
publishers would prefer to pay a royalty based on a lower figure.
Publishers’ Discounts
Discounts need some explaining, although they are a bit of a
minefield. Publishers sell books to booksellers at a discount off the
published price, which can vary from 35% for small independent bookshops
to 60%, or even higher, for the chains, which buy in bulk. So with a
typical 50% discount on a book retailing through the chains at £20 or
$20, the publisher would get £10 or $10 from the bookseller to cover
all their costs, including the author’s royalties, their overheads and
distribution, and the production cost of the book. Their margins really
are quite tight.
In the USA, where there is no retail price maintenance on
books, discounts have been subject to negotiation for many years
(although American publishers are supposed to give the same discount to
all booksellers). In the UK, the abolition of the Net Book
Agreement has meant more pressure on discounts, since the booksellers
want publishers to improve their terms to help them to price promote the
books. Many publishers believe that the UK has the highest discounts in
the world, but discounts are under pressure in all the major
English-speaking countries, as publishers and booksellers try to
maintain their margins.
Royalties
Having said all this, 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. Other kinds of publishers will offer lower
royalties, often based on the price received.
Chris Holifield
See Author to Reader
for a book flowchart and our Contract
vetting service for specific advice on contracts.
Other articles in the Inside Publishing series:
