Let’s talk about book royalties.
Depending on whether you publish traditionally, hybrid, or self-publish, there may be some confusion about where royalties come into play, how they are calculated, and how an advance on royalties works. Depending on how payments are calculated, what you think you’re getting may not be the full picture.
After almost twenty years of combined experience in traditional and self-publishing, I have some thoughts on royalties and how to choose the best package for your book.
I always encourage new authors to do their homework before signing a contract with a publisher or jumping into the deep waters of self-publishing. If you want to make money as an author, then you have to treat publishing like a business. Understanding how payments work is one of the first places to start.
In this article, we’ll take a detailed look at how book payments work in each type of publishing, along with what to watch out for so that you can make an informed decision when choosing the best path for your book.
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Here's What You'd Earn:
Your profit per book: $20
In 3 months, you'll make: $90,000
In 6 months, you'll make: $180,000
In 1 year, you'll make: $365,000
How do book royalties work?
The term book royalty refers to the percentage of sales that an author receives from a publisher for their book, which can depend on the book’s format, publishing type, platforms, and other variables.
Format
- eBook. A digital version of a book in the formats of EPUB, MOBI, and PDF. They can be read on e-readers, tablets, phones, and computers.
- Paperback. A physical book with a flexible paper or cardboard cover.
- Hardback. A bound book with a rigid cover that may include a dust jacket.
- Audiobook. A recording of a book narrated by the author or a voice actor. Audiobooks are available through streaming or download.
Publication Type
- Traditional. In traditional publishing, the publisher pays for the book’s publication, so royalty percentages are typically the lowest compared to other types of publishing (7-25%). Publishing traditionally is also the only place you’ll find book advances. These upfront payments vary, but they must be paid back. Unlike a bonus that you might get at work, an advance on royalties is a way for a traditional publisher to entice you to sign with them; however, you won’t see a royalty payment on your book’s sales until the entire advance has been paid back.
- Hybrid. Hybrid publishing is a little bit of traditional publishing mixed with self-publishing. You get the benefit of a ready-made publishing team to publish a professional book for you and distribute it, but you have to pay for services like editing, design, etc. Royalties are generally higher (40-60% of net or gross sales)
- Self-publishing. Technically, self-publishing payments are not categorized as royalties since you are acting as the publisher. A more accurate description would be a percentage of gross or net sales earned directly from the retailer. Since self-publishing is a part of the book payment discussion, I’ve included it in this article.
Platforms
- Distributor. A company or service that actively places your title with retailers, wholesalers, libraries, and other outlets. Their focus is on physical distribution, but many also handle digital formats. Example, IngramSpark
- Aggregator. A specialized middleman for digital (and often POD) formats. They bundle your files, metadata, and sales reporting, then push your book to multiple retailers via a single account.
- Retailers. Sell books directly to consumers online, in-store, or both.
- Wholesalers. Purchase books in bulk to sell to retailers, libraries, schools, businesses, and nonprofits.
- Library suppliers. Sell books to schools and libraries.
- Print-on-demand (POD). Print books as they are sold. Example: Kindle Direct Publishing (KDP)
- University Press. Focus on distributing academic works to libraries and institutions.
- Speciality Distributors. Distribute to niche markets, such as comics and religious books.
Calculating author earnings using book royalties
So, how much do authors make annually through their book royalties? It depends. Many factors affect the payments, but once you understand how everything works, calculating what you can expect to earn becomes easier.
Traditionally published author earnings through book royalties
Figuring out royalty payments for traditionally published authors can be tricky. Whether or not you get an advance can impact when (if ever) you receive a royalty check. The amount of an advance on royalties can vary depending on your experience (Have you had previous book successes?), the amount of the advance, and ultimately, the number of books you sell. Remember that advances must be paid back to the publisher, so you have to sell enough books to cover the advance or owe the publisher.
Traditionally published authors usually earn between 7-30% royalty rates, only after their sales have “earned out” the book’s advance.
Example (Gross)
Let’s say your hardcover sells for $20 retail at a 10% royalty rate based on gross sales.
Royalty per book = 10% × $20 = $2.00 earned per book sold.
If you received a $5,000 advance, you’d start receiving $2.00 per copy only after 2,500 copies have sold (2,500 × $2.00 = $5,000).
Caution: Be wary of publishing contracts where royalties are calculated based on net sales. This means that the publisher can deduct all kinds of things from the total sales before calculating your royalty.
Example (net)
Keeping the same hardcover retail price of $20 at a 10% royalty rate.
Let’s say your publisher sells it to a retailer at a 50% discount:
- Wholesale price = $20 × 50% = $10
- Net sales = $10
- Royalty rate = 10% of net sales
- Royalty per book = $10 × 10% = $1.00
If the publisher also deducts $0.50 per book for marketing and $0.25 for distribution:
- Adjusted net sales = $10 − $0.50 − $0.25 = $9.25
- Royalty per book = $9.25 × 10% = $0.93
Hybrid published author earnings through book royalties
If you choose hybrid publishing, where you split the costs with the publisher, you can expect to receive 30-50% royalties on the books sold. Expect to pay all or most of the production costs, like editing and design. The publisher will take care of the distribution and maybe some of the marketing.
Example
For a hybrid deal with 50% royalties on a $18 paperback:
Royalty per book = 50% × $18 = $9.00
If you invest $3,000 in production, the first 334 copies ($9 × 334 ≈ $3,006) cover your upfront costs. The rest of your royalty payments will be profit.
Self-published author earnings calculated as a percentage of sales
As I mentioned previously, it’s more accurate to describe self-publisher payments as a percentage of sales rather than royalties since you are acting as the publisher; however, the formula for calculating payments is almost identical. You’ll pay all upfront costs and have creative control, but you’ll also benefit from a higher percentage of sales revenue compared to other publishing types.
Example
Using Amazon KDP, you can expect the following calculations for ebooks and print books:
EBooks
70% royalty on list prices $2.99–$9.99 minus delivery cost.
35% royalty on list prices below $2.99 or above $9.99.
Delivery cost on Amazon.com is $0.15 per MB of file size.
Example: $2.99 eBook, 1 MB file
70% × ( $2.99 − $0.15 )
= 70% × $2.84
= $1.99 per sale
Print Books
- 60% of the list price minus printing cost for direct Amazon sales.
- 40% of the list price minus printing cost for expanded distribution.
- Printing cost depends on trim size, page count, and color vs. black-and-white.
Example: 6×9″ B&W paperback, 200 pages, list $14.99, print cost $3.25
Direct sale royalty = (60% × $14.99) − $3.25
= $8.99 − $3.25
= $5.74 per copy
Expanded distribution royalty = (40% × $14.99) − $3.25
= $5.99 − $3.25
= $2.74 per copy
Doing that calculation for every format of every book available for sale, then summing them all up, will give you the self-published earnings through book royalties.
Self-published authors usually earn between 60-80% royalty rates. Click here on the image below to go to a page where you can calculate your royalties directly.
What are typical book royalties?
Let’s look at some specific royalty rates for different publishing options and formats.
Traditionally published books
Hardback: Under standard royalties, a traditionally published author should receive 10-30% for sales of hardbacks.
Paperback: Under standard royalties, a traditionally published author should receive 10-15% for sales of paperbacks.
eBook: Under standard royalties, a traditionally published author should receive 10-25% for sales of eBooks.
Hybrid-published books
Hardback: Under standard royalties, a hybrid-published author should receive 30-50% for sales of hardbacks.
Paperback: Under standard royalties, a hybrid-published author should receive 30-50% for sales of paperbacks.
eBook: Under standard royalties, a hybrid-published author should receive 40-50% for sales of eBooks.
Self-published books
Hardback: Under standard royalties, a self-published author should receive 60-80% for sales of hardbacks.
Paperback: Under standard royalties, a self-published author should receive 60-80% for sales of paperbacks.
eBook: Under standard royalties, a self-published author should receive 70-80% for sales of eBooks.
How long do book royalties last?
Now that we’ve gone over how royalties work out based on the different methods of publishing, let’s talk about how book royalties work long-term. After all, if you want to write full-time, you’re probably going to want to be thinking about your book sales well beyond your release year. Once an author starts earning royalties, do they earn them forever, or is there a cut-off date?
- Related: Interview with Full-Time Nonfiction Career Author
- Related: Interview with Full-Time Fiction Career Author
Traditional publishing
Traditional publishers will calculate and pay out their royalty dues every six months, though the fixed schedule can vary from publisher to publisher.
As for how long an author receives royalty payments after they begin receiving them (after they’ve earned out their advance), it will depend on the contract and how long the publisher has publishing rights.
An additional thing to keep in mind with traditional publishing is that authors often have the option to “pay back” their advance in order to receive higher royalty rates and make “new” money. This can be a risk, because there’s no guarantee that they’ll earn enough royalties to re-earn the payment they gave back to the publisher, much less to start earning more money afterward.
Hybrid-publishing
Like traditional publishing, the amount of royalties and the frequency of those payments will depend on your contract with the publisher. Hybrid publishing doesn’t offer an advance, like traditional publishing does (in fact, they charge you an initial fee for publication), but they do offer much higher royalty rates.
Note: Keep an eye out for revsersion clauses which give authors the right to reclaim their rights early due to low sales, out-of-print status, etc.
Self-publishing
Through self-publishing, authors should expect to receive royalty payouts once a month, depending on the platform. There’s typically a waiting period before your first royalty payment, but once it’s on schedule, you should get paid monthly when you have enough sales.
Payments for self-publishers can last as long as your book is listed for sale and is actively selling.
Typically, a book will sell most of its copies within the first two years of publication. This is why authors and publishers often republish books, either as compilation pieces, new editions, cover updates, or other things that can give the book a fresh spin for a new market and a new release. Self-publishing gives authors a lot of freedom to publish multiple and updated versions of their books to boost sales, whereas with traditional and hybrid publishing, the publisher makes that call, which can put limitations on your book’s sales potential.
Which publishing format should you choose?
Royalty earnings can vary greatly across publishing methods, book formats, and sales venues. The best way to decide which publishing is best for you is to consider payment along with time investment, effort, and knowledge required, and your personal goals for yourself and your writing career.
It’s hard to nail a firm number about how much an author will earn, because that depends entirely upon the author and how they choose to publish their books. Marketing, especially in the lead-up to a book launch, can position you for potential sales regardless of which publishing path you choose.
The original article written by Hannah Lee Kidder has been updated.
Book Profit Calculator
Enter Your Information Below To Calculate
Your Potential Book Sales
Enter your details below to see your personalized book profit estimate!
CONGRATULATIONS
Here's What You'd Earn:
Your profit per book: $20
In 3 months, you'll make: $90,000
In 6 months, you'll make: $180,000
In 1 year, you'll make: $365,000
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