Purple World Publishing Blog
Adventures in Publishing

Purple World Publishing is an independent press started and operated by writers.  As we work our way through the maze of the publishing industry we continue to come across information and understanding that all of our writing friends would appreciate.

Understanding Royalties

As a writer, I've often wondered about the way royalties work.  Why is it that a writer spends hundreds of hours, years of labor - blood, sweat, and tears - writing a book, and in the end only get about 8% royalties?  Is it really worth it?

After investigating the publishing process and the costs associated, from a publisher's standpoint, it becomes apparent why royalties are the way they are, and work the way they do.  It is a far more detailed and complex issue than just assigning an arbitrary percentage.  And, despite how it feels for most writers, it isn't a means of pulishers to get 90% of the pie while the writer gets next to nothing.

What is the standard royalty rate?  Royalty rates vary widely.  In general, royalties for hardcover trade books range from 10-15%, while rates on trade paperbacks range from 6-10%.

How much does the publisher make on a book?  While it is possible for the publisher to make direct sales of a book at the full retail price, most books that the publisher sells, sell at the wholesale price, which is usually 40-60% off the retail price.  For a $16.95 trade paperboack, if the wholesale price is 50%, the publisher is receiving $8.48 per book, gross.

If the author is paid an 8% royalty on the retail price, the author receives $1.36 per copy sold, bringing the publisher's net income on that book to $7.12.

What other costs are involved with producing a book?  Editing, layout, cover design, interior graphics, printing, shipping, marketing, and more.  All of which has to come out of the $7.12 the publisher was paid for the book.  Some research shows that the cost of producing the book averages around 30%.  In this example, that works out to about $5.09 per book.

That leaves the net publisher income for the book at $2.03 per copy.  This amount has to pay for the overhead of the publishing company - employees, insurance, office space, utilities, and much more.

When you look at it this way, it seems clear that it would be very difficult for a publisher to pay a higher royalty rate, and still remain in business.  As much as we as writers want to receive more, and many publishers would probably like to be able to pay more, it's just not financially feasible.

Posted by Karen at 7:30pm on May 10, 2011      {0 Comments}
Retail, Wholesale, Gross, Net, & Returns

The publishing industry is full of terms and jargon that begin to sound like a foreigh language after a while.  Even when the words being bantered about are words that are commonly known and widely used.

Royalties - the piece of the publishing puzzel that writers are often most concerned with - are calculated on a complex and varied set of terms and formulas relating to retail price, wholesale price, gross and net sales.

Retail price is the price printed on the book's cover, the price that the book will sell for, if it were to sell for full price in a book store.

Wholesale price is the discounted price that the publisher sells the book to distributers for.  The wholesale price can be as much as 60% of the retail price - I kid you not.

Gross sales refers to the total amount of sales income that the publisher receives on a book, based on retail and wholesale sales, regardless of any and all expenses incurred in the production and marketing of that book.

Net sales refers to the amount of sales income on a book minus some or all of the expenses incurred in the production and marketing of that book.

Returns are the books that book stores may send back to the publisher if they don't get bought.  The "royalty value" for returned books is deducted for the author's earned royalties.

Posted by Karen at 10:00m on December 3, 2009      {0 Comments}