The way authors make money is a little…unfair, if we’re being honest. Someone can put as much as 200 hours into writing, editing, and producing one book, only to sell it for a measly $14.99.
Of which they end up taking home roughly $4.50.
It seems a little silly that all that work is only worth a few bucks, but that’s how authors get paid nowadays. It’s really only offset by the potential to make that much money thousands of times over—if the book sells well, that is.
That said, the amount you actually take home per book can vary widely and depends on this little thing in the author world called $ royalties$ .
It might sound like a fancy term indicative of wealth and fortune but really, royalties can be more like the tightly laced corset slowly suffocating its author. Unless you know how to get the best book royalty rates and set yourself up well.
Book royalties are the amount the author receives from a book sale, usually referred to in percentages of the sale price. It’s not the price of the book itself.
So when we see an author list a book for $30 and balk at the price, chances are only a small fraction of that money ends up in the author’s bank account. Unfortunately, the royalty rates are usually outside the author’s control. We can’t decide, "I want 80% of the royalties, please!"
Even Stephen King doesn’t get that kind of cash flow from his books.
The way the royalties are set depends on your method of publishing and the book distributor. Most distributors, like Amazon, Barnes & Noble, and Kobo, have set royalty rates for all books going through their platform.
These businesses have sole control over what percentage authors will make per book, and they differ from one another.
And if you traditionally publish, the publishing house will negotiate a royalty percentage with your agent. So you’ll receive something different from the listed rate (usually less) because the publishing house will make a royalty as well.
What’s considered a fair royalty rate completely depends on the method you publish with. Self-publishing will have a different rate than traditional publishing because of the method.
A "fair" royalty rate is one that you believe you deserve.
A good rule of thumb, though, is that you should never make less than 10% royalties on your books no matter which way you publish. It’s the bare minimum of fair pay for your imagination and hard work.
The first thing you have to understand is that everywhere books are sold is a business. Amazon is a business. Barnes & Noble is a business. Businesses have operation costs like paying labor, running the websites or physical locations, producing books, and they’re driven primarily to turn a profit.
Which means you can’t just list your book online for free. You will have to pay for your book to be made (produced) as well as distributed (shown, buyable, delivered). Even if you only want to sell your book in a physical bookstore, that bookstore has to make money from the book, and you will still have to pay to get physical copies of your book made.
Royalties in these cases are calculated based on the business’s needs.
For example, Amazon can give you a higher base royalty rate because it can afford to do so (which we’ll get into later).
You can think of it as paying the business to create and house your book. The way you’re paying for it is with a percentage of the income from when a person buys that book.
There are also different royalty rates for different formats of books, which is mostly due to the method of delivery and operation costs, including printing cost.
Thanks to Amazon and other drop shipping businesses, you don’t have to figure out anything about how to get your book made into a...well, a book. The entire process can be done yourself (if you’re self-publishing), but you will technically pay for the book to be printed. You don’t have to buy a ton of books at one time. When a book is sold, it’s printed and shipped all within Amazon or other book distributors.
Here’s a breakdown of royalty rates per format for Amazon compared to Barnes & Noble (if you are self-publishing and directly receiving all the payments):
• 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
If you want to calculate the royalty you’ll receive from Amazon, here’s the formula to use:
(Royalty rate as a decimal x book list price) - printing cost = take home pay
For a 300-page paperback book, this would look like:
(.6 x 14.99) - 4.45 = $4.54 per book sold
Your royalty is $4.54 per book.
Barnes & Noble Royalty Rates
• Ebook: 70% of the list price
• Paperback: 55% of list price minus printing costs
• Hardcover: 55% of list price minus printing costs
Barnes & Noble does not have a set printing cost. Their prices vary greatly depending on the various features of your book, so we can’t list an example for you without that information. In general, you can expect it to be slightly more expensive than Amazon.
NOTE: This doesn’t necessarily include royalty rates for books sold in-store. Digital storefronts have a lower operating cost, which allows for a higher royalty rate for the author. This is why books you buy in-store are more expensive than the online prices.
Traditional publishing is fairly straightforward, but also varies considerably depending on who you are, how many houses want your book, and how good your agent and lawyers can negotiate.
Typically, you’ll find that traditionally published authors will receive an advance, along with 10% royalty on books sold. You can see this royalty increase after a certain number of books are sold, as well.
For example, it can be tiered:
10% until 10,000 books are sold
12% until 30,000 books are sold
15% on all books sold after the first 30,000
Keep in mind that the more established you are as an author, the higher the royalty rate you can get with traditional publishing. For a fairly well-known author selling books consistently, you can get 15%.
If your book gets in a bidding war and you rack up a hefty advance, you can usually also use the interest of other houses to negotiate a higher starting royalty percentage. Just know that you will not likely get much more than 15%.
Authors like Stephen King can negotiate for more, with $ some sources$ even reporting his ask of 26% royalties being considered unreasonable since, "There’s no profit for any publisher in the world with those terms."
The way you’ll make the most money in royalties is by self-publishing the book entirely yourself (assuming that you can sell).
This means you own all aspects, including uploading and publishing, the cover and formatting, and setting it all up for distribution online. While the royalty rates on these distributors are set (above), you can do a few things to guarantee a little higher of an income per book when you self-publish.
Taking printing costs into account is one way.
Looking at this chart of $ Amazon’s printing costs$ , there are two ways to calculate the print cost. With a book under 108 pages, there is a fixed cost. For books above that number, there is a fixed cost plus a certain amount per page.
This means the shorter the book you write, the less you’ll pay in printing costs. Since the printing cost is deducted from your royalty, this will get you a higher end-income.
Here are some examples using a $14.99 paperback list price and 60% royalty rate.
100 page book:
(.6 x 14.99) - 2.15 = $6.84 per book sold
250 page book:
(.6 x 14.99) - [.85 + (.012 x 250)] = $5.14 per book sold
450 page book:
(.6 x 14.99) - [.85 + (.012 x 450)] = $2.74 per book sold
As you can see, the smaller the book you have, the more income you’ll make per book if you have a consistent list price.
But, the size of your book shouldn’t matter so much on what you want to make as it does your genre expectations. You can’t write a good epic fantasy novel in 200 pages, for example.
The other option to take home a higher paycheck is to list your book for more money. Instead of a $14.99 list price, use $17.99 and you’ll take home an additional $3 per book. Just remember that if your book is a lot more expensive than other ones in your genre, you might lose out on sales.
You don’t have as much say in royalties as you might want. You get what you get…sort of. Self-publishing is the way to go if you want to make more for your work and know $ how to sell books$ and market them well.