What Are Book Royalties?

Receiving an advance from a publisher and profiting off book royalties is a dream come true for many authors. But what are royalties? And what's the math on royalties? You should know as an author, if you're wondering that this video is for you. Hey there. I'm Julie the Book Broad, founder of Book Launchers, your professional self publishing services team. When an author is traditionally published, they're paid through book royalties. Not. No, I don't mean Hamlet Khaleesi or Prince Humperdinck. Did you know Prince Humperdinck was a prince? I didn't. Anyway, in exchange for the rights to the book, the publisher pays the author a set amount per every copy that's sold. This is based on the retail price of the book. Of course, retail prices differ depending on the formats of the book available, and royalty rates vary depending on the publisher. But typically, the breakdown looks a little something like this for an author. For for each paperback book sold, you'll earn 5 to 8% royalty, around 15% for every hardcover, and usually 20 to 25% for each eBook. Brace yourself. We're gonna do a little math. But don't worry, I'll try to make it as easy as possible for me as much as for you. Let's just say your paperback book retails at $20 and you're contracted to receive 5% royalties. You are going to earn $1 per every book sold. Sounds kind of good, right? No wonder authors dream of book deals. With a traditional publisher, every book sold adds to from your publisher. Sell 1 million copies and you'll make 1 million in royalties. Woohoo. Of course, selling 1 million books is extremely uncommon. More likely, you'll sell less than 10,000 copies of your book. Maybe as few as 500. Now that math doesn't look as awesome, does it? But there's another catch. Don't expect a big payday as soon as your book is published. You'll only see the royalty paycheck you're dreaming of once you've earned back your advance through sales. When a traditional publisher offers to publish your book, the deal usually comes with an advance. A deal worth signing usually comes with an advance, which is an upfront payment, usually paid in installments from the publisher based on how many copies of your book they think will sell. Unless you're a big name like author James Patterson, who landed the biggest advance in history with $150 million for 17 books, or a celebrity like Tina Fey, who reportedly received a $6 million deal for her book Bossypants, don't expect to Quit your day job from Advances on royalties Six figure advances are really rare. Many advances, especially for less well known authors or books that may not be in high demand or written on a super hot topic, they often don't even reach five figures. So there's a lot of factors that come into play to determine the number on the check. There's the publisher, of course, but the author, their platform, the book itself, the genre, current trends in the publishing industry, of course, the marketing plan for that book, and a few other things too. It's not a one size fits all and publishers are aren't going to take a chance and pay in advance. That's a rhyme. They're not going to take a chance or pay in advance. Serious mode now. It's certainly not one size fits all and publishers aren't going to take a chance and pay in advance for a book they aren't sure is going to be a guaranteed success. Whatever the final number, it's important to remember that an advance isn't simply a thank you gift from your publisher. It's a payment against whatever future royalties you make. Unless you make enough book sales to cover the cost of the advance, you won't ever see another check. Little Bit More Math if your publisher paid you 50,000 doll dollars as an advance, which by the way would be really awesome, and your book earns a dollar per copy in royalties, you're going to have to sell more than 50,000 copies before you receive any royalty payment. If you don't earn back your advance with enough book sales, the money is still yours to keep, but you're going to have trouble selling your next book to any publishing companies. If you choose to forego the glories of an advance and book royalty checks and self publish, you'd not only earn money right away, but you'd also earn a higher percentage on your sales. You also own the rights to your book, so you can sell off foreign rights. You can connect with TV producers to turn your book into something for the screen, and you can make all the profits. You can sell courses based on your book, you can build a brand around that book title for your business, and so much more. You have much less flexibility to do all those things when you get a book deal, because you don't own the rights or the content in your book anymore. The publisher does. When you self publish your book on Amazon, Kindle Direct Publishing refers to your payments as royalties, but based on the definition that's not really correct. You don't receive royalties because you keep the rights to your book, set your price and decide on your profit margin rather than a publishing company. You can still wear a royalty crown though. If it makes you feel better. I think you should wear a crown to talk about royalties, don't you? I like it. Alright. KDP offers two payment options for ebooks, 35% or 70%. Obviously the 70% seems like the better choice, but there are certain requirements to get this higher rate, like pricing and geographical availability that might not work for you. If you enroll your book in KDP select, you'll see a different payment structure. I'll link to a video on KDP select at the end. Oh, and make sure you've subscribed to the channel and turn those notifications on so you can catch future videos too so you can learn all about the latest KDP and self publishing news. Okay with all that math? I'm sure you're excited to hear this, but let's go back and do a little bit more math. Okay? You publish with a traditional publisher and they pay you that awesome $50,000 advance. You then sell your first 50,000 copies at $20 each, which covers that advance. After that, you'll make a dollar for every book sold. Now, selling 50,000 books is no joke, and that could take quite a few years. But if you self publish that same book on Amazon, you'll earn at least 35% on each sale from the very beginning. Since you won't be paying back in Advance with those 50,000 copies you sold your book for $20 for, you'll end up with $350,000 in the bank. We have to bring you back to reality. It's rare for a nonfiction author to get a traditional book deal. If they do, it rarely comes with an advance that's much larger than $10,000, and it almost always comes with you keeping none of the rights and earning less than an 8% royalty. If you do this on your own without a publisher, you're going to pay the upfront costs of editing, book design, cover design, and possibly a whole lot of marketing. But you keep all the rights and the profits and the control. You can make a lot more money selling a lot fewer books if you self publish, and that doesn't even factor in the other streams of income that should result from your book, like getting clients, paid speaking engagements, or higher rates for your service. Publishers don't consider these opportunities because they don't translate to direct book sales in many cases, meaning they're not going to make money off them. But you do. Well, now you know what royalties are crown optional and what you might make if you traditionally publish versus self publish. Signing a book deal with a publisher might get you an advance and royalty payments, but that doesn't always work in your best interest if you're hoping to do more with your book. Trading the rights to your work for a book deal with a traditional publisher means you lose control of the content. And for many authors, including myself, that might not be worth it when your book can open the door to so many more opportunities for you and your business and you can make a lot more for every copy sold. By the way, you don't need to be traditionally published to get wider distribution. Check out this video right here to learn how to sell your book to local bookstores. And this one over here is the all important info on kdp. Select Go ahead click on over. I've got coffee on in the noboringbooks mug. I'll see you there.