Royalty rate

The royalty rate needs to be expressed as a percentage.

Ideally you want a percentage of cover price, not net.

Read this set of links carefully.

On print books, a royalty of 10% of cover price is reasonably standard. So for your £13.99 book that would give a royalty per copy sold of £1.40.

The amount you've been offered is ridiculously small, and when you're paid on net that doesn't usually mean you're paid after the costs of printing have been recovered.

Who is the publisher who has made you this offer?

Springs2 said:

Thanks for that. it is a 25% on net, but that net is after the print costs have been deducted.

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I have a personal allergy to royalties based on net.

It's too easy to screw with the numbers, including the definition of "net."

Ebooks seem to have standardized at 25%.

I also always try to get an elevator clause, wherein my royalties increase based on sales.

I'd walk away. That royalty is ridiculously low; and as they're a startup you have no idea how well they're going to produce and market your book. The advance might be enticing, but I'm not sure if it would be enticing enough for me to sign with them--especially when there are so many good, established publishers to submit to.

Springs2 said:

Thanks for that. it is a 25% on net, but that net is after the print costs have been deducted.

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25% on net is unfortunately actually what the really big publishers like Random House and Harper Collins pay on ebooks. Agent Donald Maass commented that he believes this will definitely change and royalty rates from big publishers will start to rise because so many people who are trade published are throwing more and more of their work up on kindle and Smashwords to take advantage of the high royalties.

Going with a start up is usually dicey unless....do they have someone running the ship who has proven success from a well established publisher? If they are offering that kind of advance it does indicate they have some confidence that they can sell this book. What other publisher did the head of the publishing house come from?

gingerwoman said:

25% on net is unfortunately actually what the really big publishers like Random House and Harper Collins pay on ebooks.

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As you say, that's what the bigger publishers tend to pay on e-books: but that figure can be improved upon with some careful negotiation; and in this case, "net" is carefully defined and includes only the sales discount, so it amounts to 70% or so of the cover price.

The OP has been offered this:

Springs2 said:

it is a 25% on net, but that net is after the print costs have been deducted.

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That implies that this royalty rate is for a print book; and that the cost of production is included in the things removed from the cover price to get to that net figure. Which is a different game entirely. Especially when the result is that a royalty of just 29p is going to be earned for the sale of a book retailing at £13.99.

Medievalist said:

I have a personal allergy to royalties based on net.

It's too easy to screw with the numbers, including the definition of "net."

Ebooks seem to have standardized at 25%.

I also always try to get an elevator clause, wherein my royalties increase based on sales.

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My publisher pays on list price, but I know about a LOT of publishers and the ones that don't pay on net seem very few and far between. I am naturally on the lookout for them though, and switching to paying royalties based on list price would help publishers in their battle to retain all those authors switching to self publishing.

gingerwoman said:

My publisher pays on list price, but I know about a LOT of publishers and the ones that don't pay on net seem very few and far between.

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For print publishers the opposite is true.

I am naturally on the lookout for them though, and switching to paying royalties based on list price would help publishers in their battle to retain all those authors switching to self publishing.

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Could you explain more, please?

My publisher is digital first and my book is going to print in November. But publishers like Harlequin and Random House and Harper Collins are all paying net royalties on their digital books so I'm not sure what you mean about opposite being true. I'm pretty sure Harlequin pays net on it's print books too.
Wish it was not the case of course.
Are you saying standard print royalties on fiction are 8% of list?

Springs2 said:

I get really confused with rates and what not.

Can I ask what range of royalties a writer could expect to get on a £13.99 print book in pence. I've been offered 29p per copy, which seems very low, and 25% on ebooks. Anyone know? Thanks!

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That would only be 2% - very, very low. I mean, ridiculously low.

Also, can I ask, is this a paperback or a hardback? £13.99 is very high for a paperback.

Springs2 said:

It's a start up publisher, Old Hack - this would be their first book.

Medievalist, I do have an elevator clause which goes up to 35 then 40 percent. They have also offered a reasonable advance. (Low four figures for each book.)

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I would run, very fast.

Start-ups are often hard to judge because they are an unknown quantity, which always makes folk a bit wary. Not all start-ups are bad, however, being a start up and also the very low royalty rate and this being their first book, I would say no and look for somewhere else.

If you book is good enough to be published then you'll get another publisher.

Old Hack said:

I'd walk away. That royalty is ridiculously low; and as they're a startup you have no idea how well they're going to produce and market your book. The advance might be enticing, but I'm not sure if it would be enticing enough for me to sign with them--especially when there are so many good, established publishers to submit to.

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I would also be asking a lot of questions about their marketing strategy and budget.

Springs2 - did you get an advance?

Springs2 said they'd been offered a low four figure advance.

I've been following this thread with great interest, but I'm afraid confusion now has the better of me...

In posts #8, Gingerwoman notes that 25% on net is unfortunately actually what the really big publishers like Random House and Harper Collins pay on ebooks.

(See link for sample confirmation - http://www.atrandom.com/eoriginals/index.php)

Old Hack responds in post #9; ...that's what the bigger publishers tend to pay on e-books: but that figure can be improved upon with some careful negotiation; and in this case, "net" is carefully defined and includes only the sales discount, so it amounts to 70% or so of the cover price.

My confusion ensues... Considering the information available (like at the above Random House link) I'm at a loss to comprehend how this works out to 70% or so... Am I misinterpreting this somehow?

It depends on the definition of "net."

Let's say the book has a cover price of $10 (because it makes the math simple).

If it's an ebook, paying what's relatively typical, at 25% of the "net" (with "net" defined as "the amount the publisher gets from the retailer," which is often somewhere between 50% and 70% of the cover price, which I think is where Old Hack's 70% came from), then (again, using easy numbers and splitting the difference between 50% and 70%), if the retailer buys the book from the publisher for $6, then the author gets 25% of the $6, or a total of $1.50. The publisher pays its expenses (editing, cover art, marketing, whatever) and takes its profit out of the remaining $4.50.

For paper books, the industry standard is to pay on the cover price, at closer to 10%, so for the same book priced at $10, with the same discount to the distributor, the publisher would get $6, but the author would get 10% of the cover price ($10), for a total of a dollar. A little less than on the ebook, but consistent with the slightly greater cost incurred by the publisher for printing the paper book.

Finally, there are the scary contracts, where "net" is not defined or is loosely defined as "the costs of printing." If "net" is the amount received by the publisher, it's pretty easy to figure out what that is likely to be, and both the publisher and the author have incentives to maximize how much the publisher receives, because the publisher gets to keep a portion of that profit. Where "net" is undefined, it may include editing, cover art, marketing (all usually the risks assumed by the publisher, not the author), and there's no incentive for the publisher to keep those costs low, because, after all, they get their money first. It's like blockbuster movies that, after creative accounting, produce no profit to be distributed to the investors. Is the publisher going to include some of its general overhead (rent, utilities, stationery, computers) to the cost of printing/publishing your book, since, after all, the book couldn't be published if they didn't have an office and electricity and computers?

It's not so much the percentage numbers that are the key here, but the unpredictability of "net" that's the problem. Even if you had a contract that gave you 90% of the undefined "net," it could be either a windfall (although, of course, any publisher that offered that is likely to go out of business) or -- more likely -- a disaster, when it turns out that there is no "net."

Not giving individual legal advice here, just general information.

gingerwoman said:

I'm not sure what you mean about opposite being true.

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I meant that most print publishers pay royalties on cover price, not net.

I'm pretty sure Harlequin pays net on it's print books too.

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I wouldn't hold up HM&B's contract as a typical or good one.

Are you saying standard print royalties on fiction are 8% of list?

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Print royalties are usually anything from 6% to 15% on cover price, depending on format and genre. MMPB takes the lower end.

GinJones said:

It's not so much the percentage numbers that are the key here, but the unpredictability of "net" that's the problem. Even if you had a contract that gave you 90% of the undefined "net," it could be either a windfall (although, of course, any publisher that offered that is likely to go out of business) or -- more likely -- a disaster, when it turns out that there is no "net."

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Exactly. And as the OP said in the opening post that the offered royalty equates to 29p per copy sold on a book with a cover price of £13.99, this one looks disastrous to me.

So, the real key to comprehension is to pin down precisely how the publisher defines "net" - hopefully within the context of a contract under consideration. Any ambiguity in such a definition (of "net") should be viewed as a potential red flag and worthy of thorough scrutiny and detailed examination.

My print royalties when my book comes out in November will be 8% of list (cover)
Harlequin changed from 6% of list on print AND ebook to 15% of net and 25% of net. And people were trying to work out if it was an increase or a decrease. Harlequin is a much bigger company than just the Mills and Boon books. I just mention them because I belong to RWNZ.
Too many publishers want to keep their royalty rates a mystery until contracts are offered and I think in this day and age when publishers are competing for good submissions and advertising opportunities to submit to imprints on Facebook etc it would be a good idea to include their royalty rates for authors to compare. Some do and others just repeat the same old things.

Q- Why should I submit my manuscript to Such and Such Publishing? A. Because at Such and Such Publishing we are breaking down conventional boundaries and offering readers new works that are provocative, inspiring, challenging, ennobling, exalting and breathtaking! The possibilities in this new age of publishing are endless, and we’re all excited!"
This kind of thing is a non answer to their own question.
I wish I could be a PR person for a big publishing house and get paid to throw adjectives around meaninglessly.

ironmikezero said:

So, the real key to comprehension is to pin down precisely how the publisher defines "net" - hopefully within the context of a contract under consideration. Any ambiguity in such a definition (of "net") should be viewed as a potential red flag and worthy of thorough scrutiny and detailed examination.

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You've got it!

gingerwoman said:

Two many publishers want to keep their royalty rates a mystery until contracts are offered and I think in this day and age when publishers are competing for good submissions and advertising opportunities on Facebook etc it would be a good idea to include their royalty rates for authors to compare.

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But publishers don't pay all their writers the same royalty rates. They have boilerplate contracts, most agencies establish their own boilerplate contracts with most of the better publishers which will have slightly better royalty rates, writers they really want to publish will be offered better rates still, escalator clauses aren't always included... there's no one royalty which publishers could advertise in the way you're suggesting.

ironmikezero said:

So, the real key to comprehension is to pin down precisely how the publisher defines "net" - hopefully within the context of a contract under consideration. Any ambiguity in such a definition (of "net") should be viewed as a potential red flag and worthy of thorough scrutiny and detailed examination.

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I spend days writing these FAQs using primitive writing implements and clay and no one reads them.



http://www.absolutewrite.com/forums/showthread.php?t=244845

You should put them in a room marked "FAQs" or "Publishing Resources" or something, Lisa.

Oh, hang on...

Medievalist said:

I spend days writing these FAQs using primitive writing implements and clay and no one reads them.



http://www.absolutewrite.com/forums/showthread.php?t=244845

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I've read some of them.

Old Hack said:

You've got it!



But publishers don't pay all their writers the same royalty rates. They have boilerplate contracts, most agencies establish their own boilerplate contracts with most of the better publishers which will have slightly better royalty rates, writers they really want to publish will be offered better rates still, escalator clauses aren't always included... there's no one royalty which publishers could advertise in the way you're suggesting.

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Well some publishers do advertise them by saying stuff like "royalty rates start at 30% with some authors with proven track records receiving a higher rate blah blah escalator clause after sales of ex amount rises to 60% etc..."