Just How Much Can You Make on Book Royalties?

Many of you writing wannabees on the outside of publishing most likely entertain the idea that all authors get rich, based on the handsome advances and royalties paid to some of the top stars. Unfortunately, that is far from the truth. In fact, the average percentage of royalties hasn’t changed since before the 1980s! Can you think of anyone whose salary hasn’t gone up at least a little in all that time. Even those earning minimum wage get a hike every once in a while.

So what is this elusive thing called a royalty? Essentially, a royalty is a sum paid for the use of a patent or to an author or composer for each copy of a work sold or for each public performance. Sounds easy enough, but it’s far from it.

First, royalties are basically a percentage of the retail price of books actually sold by the publisher. And in today’s market where booksellers can return unsold books for a refund, the amount a writer actually gets can be quite puny. Currently, the author of an adult hardcover book can expect to receive a 10-12.5 percent royalty for the first 5,000-10,000 copies sold. Big name authors might receive 15 percent based on increased sales volume. If you're negotiating a deal for a paperback, you’ll most likely receive 5-10 percent, with 10 percent more common.

Traditionally, publishers computed royalty rates and the author's earnings from the list price of all copies sold. Thus, if they sold 2,500 copies of a book listed at $15, the author's royalty earnings would be $3,750.  However, some publishers sell books at less than list price through chains of bookstores, supermarkets, and other outlets. As a result, they compute royalties on net proceeds from book sales rather than the number of copies sold. Then again, the larger volume of wholesale sales may compensate for a smaller per copy earning.

Try this. Compute what you would earn if your publisher paid you a royalty based on the list price of your book. Compare that to your royalty earnings the net amount many publishers today use. Then decide if it’s worth negotiating for a higher royalty rate or a higher advance.

Publishers usually pay authors advances against future royalties. How do you figure how much money you might earn from your book? For this you need to study the market for it, rather than take out your calculator. If the subject of your book is a hot one and potentially lots of readers will buy it, then you should negotiate a higher royalty percentage against future sales. However, if the subject is one that may not attract lots of readers, then you should negotiate for a higher advance.

An advance is an up-front payment against which royalties are set. If you fulfill your part of the contact—that is write the book as ordered—then you don’t have to refund it. If your book sells poorly, you’re ahead. And if your book sells well, you ahead based on the amount you’ll get in royalties after you have earned enough to make up the advance. Most beginning authors get three or four-figure advances. So don’t think you’ve hit the big time just because a publisher says her or she will publish your book.