NovelPad

How Do Authors Get Paid? Payment Structures & Breakdowns

Bella Rose Emmorey
Is probably just a couple cats in a trench-coat—the hair shedding and sunlight napping are highly suspect.
Most avid readers as kids grow up to try their hands at writing a book. The ones who find more comfort in their imagination than in their homes typically make for great storytellers. The problem for most (back then) was the challenge of traditional publishing.
Becoming an author was difficult and often took many years of rejection, all for the hope that your novel would be enthralled in a rare bidding war that saw you with a 6-figure advance, New York Times Bestseller accolade, and a life of publishing successful books that brought in all the royalties.
The truth for many who did make it to authorhood via the traditional route was still long, the advance much smaller, and the book sales far fewer than they dreamt. But nowadays, authors make money in all kinds of ways.
Which often begs the question of how authors get paid now.
With self-publishing is now a viable and respected option, the method with which authors get paid differs. No matter which option you choose, we’re going to cover the specifics of how authors get paid and what that process looks like.


How Authors Get Paid No Matter The Method

There are a lot of ways to get paid as an author. Yes, selling more books is definitely the primary way, but how much can you make per book? What do the royalties mean? How can you set it up to get paid more?

Traditional Publishing

This method is when you’re published by a publishing house after querying, landing an agent, and your agent selling your manuscript to the publisher.
With traditional publishing, the author is paid in two primary ways: An initial advance and ongoing book royalties.
When a publishing house agrees to publish your book, what they’re actually doing is buying the book rights from you. Technically, it has your name and you are the creator and author of it, but the publishing house itself owns the copyrights. 
This is why you’re paid an advance. It’s sort of like the house saying, "Here’s what your book concept is worth to us" in contract form that dictates your advance amount and royalty rate.
When you’re paid the advance, you still have to produce a book, you’ll work with an editor, and the rest of the book production process.
Then, when the book is published, you’ll begin racking up royalties.
Common misconception: You actually do not start to earn new income until you have sold enough books to "pay back" your advance.
You’re not actually paying the publisher back because it’s not coming out of your pocket, but any books you sell during the release will not count as new income until the amount surpasses what your advance was.
This can get confusing, so let’s break it down with an example:
Advance paid to author: $10,000 (an average amount for a first-time author)
Royalty rate author receives: 10%
Book list price: $18.99
Author income per book: $1.89
This is a general breakdown, and your contract can vary. These are average rates, and often authors will receive increases in percentage of royalties after a certain amount of books sold (or experience with the publishing house).
From here, you’d take that information to figure out how many books you need to sell before you start earning again. So take the advance rate, divide it by how much you earn for each book, and you’ll have the number of books you need to sell in order to earn additional income past your advance.
Number of books needed to sell before NEW income is earned: 10,000 / 1.89 = 5,291
In this case, you won’t see additional earnings until you’ve sold over 5,000 copies (which is a feat).
This doesn’t include audiobooks, as that process is a bit more complicated and nuanced depending on the contract with the voice artist (some voice artists obtain royalties from the audiobook sales).
But the traditional publishing houses have more distribution and marketing funds to help you get there. Just don’t assume that they’ll do all the marketing for you. That’s not at all the case. Usually, the more the house spends on the advance, the more they’ll pitch in for marketing.
Note: if your book hits it big and there’s merchandise created and sold as a result, or even a TV or movie deal, there is obviously more income attached to those. The rates would be highly negotiated with your agent, lawyers, and the publishing house.

Self-Publishing

There are far more possibilities with self-publishing than traditional when it comes to how authors get paid. In this case, there is no advance, but your royalty rate is significantly higher per book and per book format.
For these examples, we’ll be using Amazon as the distributor because they have the best royalties rates of other distributors (like Kobo or Barnes and Noble).
These are the primary ways self-published authors make an income:
Book royalties
KENP (Kindle Edition Normalized Page reads, which come from Kindle Unlimited reads)

Self-Published Royalty Rates

Each format of your book will have a different royalty rate based on Amazon’s guidelines.
• Ebook (NOT Kindle Unlimited): 35% or 70% depending on $ the option you choose$ 
• Paperback: 60% of list price minus printing cost, 40% for expanded distribution minus print costs
• Hardcover: 60% of list price minus printing cost
• Audiobook: 40% for exclusive publishing through Amazon, Audible, iTunes OR 25% if not exclusive to these 3 channels OR 20% if you choose a royalty share option with the voice artist
Here’s what this would look like with price breakdowns:
EBOOK: list price $6 and royalty rate of 35% with a U.S. VAT of $.99
.35 (6 - .99) = $1.75 per book sold
PAPERBACK: list price of $14.99, royalty rate of 60%, and a printing cost of $.85 flat fee plus $.012 for every page up to 828 pages. Print cost for a 300-page book is $4.45
(.6 x 14.99) - 4.45 = $4.54 per book sold
HARDCOVER: list price of $19.99, royalty rate of 60%, and a printing cost of $5.50 flat rate and $.012 per page for books over 110 pages. Print cost for a 300 page hardcover is: $9.10
(.6 x 19.99) - 9.10 = $2.89 per book sold
Obviously, if you want to take home more of a royalty, you’ll have to increase your prices. Hardcover printing costs are more expensive because of the materials used. You’ll want to price your books by what is common in your genre (if your book is much more expensive than others, you’ll likely sell fewer).

KENP Payment Breakdown

When you put your book in the Kindle Unlimited library on Amazon, you’re signing up for the KDP select program, which means you can’t sell your ebook anywhere else online (or any other format of your book at least for the first 90 days of publishing).
Instead of being paid a royalty rate, you’re paid by how many of your pages are read.
The rate paid actually changes depending on what the KDP Select Global Fund is every month. The more readers, the higher the fund is. Basically, Amazon takes how much money is in the Global Fund and divides it for pages read based on tiers.
Here’s how Amazon describes the breakdown in their $ KENP royalty guide$ :

Now this might not seem like a lot, but some authors make significantly more money through Kindle Unlimited than selling physical copies. If you can imagine hundreds of people consuming all 3 books in your series in a single month, that’s a pretty hefty paycheck.

Side Hustles

Self-published authors often make money from additional streams of income outside of just their books. A lot of them have side hustles that make up for it, still within the book world.
For example, some have merch they sell related to their books. Others offer book services like editing, critiques, and even writing groups.
Some authors create content, like YouTube videos, Skillshare classes, Instagram posts, blogging. All of these are good options for growing your visibility and readership, but you can also create additional income streams by monetizing that content.
You can create a Patreon with exclusive merch access, book updates, and even the opportunity for patrons to help you write your next book by voting on character or plot elements.
Of course, these prices vary greatly and depend on what’s sold, how much they take to produce, and all that good math stuff.

Hybrid Publishing

This form of publishing is more rare nowadays and usually involves a book production company taking some of the royalties you make, but not all of them. There are other hybrid companies that charge an upfront fee to manage the book production and publishing, but you keep all the rights and royalties.
In cases like this, it really depends on the publisher and contract. Typically, you’ll make more royalties than with traditional publishing. But the way the royalties work out is the same as above (if published through Amazon).
We don’t recommend hybrid publishers unless it’s a case where you keep all the rights to your book and all the royalties. In this case, it’s less of a publisher and more of a publishing services company.

Sell More Books, Make More Money

At the end of the day, authors make money by selling more books in any format. There will always be readers who $ prefer ebooks$  to paperbacks, but you want the options available for them. Same goes for audiobooks. 
The key to getting paid more as an author is to sell more copies of each book you have, which means building a roster of many books you can sell to each reader is the fastest way to compound your income.
You’re not just selling one book to one person. You can sell ten books to one person if you write and publish many. This doesn’t even consider the benefit for the Amazon algorithm when you have many books in a single genre.
This is especially true when $ selling romance books$ . Readers want more of what they love, so stick with a genre and give them tons of options.
Reputation as an author is everything for your ability to sell books. That reputation shows up online in the forms of reviews. So before you can get paid, you have to write quality books that readers love. Otherwise, forget getting paid as an author.

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