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Gross vs. net..

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Risseybug

Can someone explain to me the difference between receiving royalties from gross receipts as opposed to net? I won't say which my contract specifies, I am pretty sure I am getting the good part of the deal, I just want it spelled out, b/c someone asked me and I didn't know how to make it clear.

James, I think you know a little something about this. Care to 'splain to me? Thanks.
 

arainsb123

If I remember something Mr. Macdonald said a while ago correctly, gross is preferable to net, but that getting royalties on retail/cover price is preferable to both.

Of course, I might be rememberring incorrectly.
 

vstrauss

"Gross" isn't a term typically used in publishing contracts, but I'd assume it means getting royalties on the retail or cover price of the book. This is what you can generally expect from commercial publishing houses.

"Net" means royalties paid on the publisher's net receipts--the book's cover price less any discounts, and sometimes various publisher expenses.

Many publishers that pay on net offer a higher royalty percentage, but in most cases this actually works out to no more than, and often less than, a lower royalty percentage paid on the cover price. So net royalties are less desirable, and you need to be especially careful of publishers that manipulate their net by charging expenses against the book's income, which may result in your royalty being paid on a pittance. I just saw a contract from a publisher that pays a royalty of 70% of net--pretty impressive until you read the fine print, which allows the publisher to deduct advertising and promotion, printer's costs, and a menu of other expenses in order to arrive at net. Conceivably, under these circumstances, net could be less than zero.

- Victoria
 

Risseybug

Thank you! That's what I thought, but the examples were helpful. I DID get the good one :D
 

James D Macdonald

What Victoria said. Royalties based on net open the door to a great variety of jiggery-pokery that you don't want to get involved with.
 

CaoPaux

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Royalties paid on gross vs net

Data point: the trend for ebooks (especially Erotica) seems to be paying on net. Be sure to read the fine print and get every factor defined in writing so they can't weasel out of paying you.
 

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