Pub Rants

Agenting 101: Part Six: Royalties

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STATUS: Today I was perky. How can I not be perky (isn’t that such a fun word?) when I get the news that Target has bought in for ONCE UPON STILETTOS. They are a hard market to capture so this is great news.

In fact, here’s a picture of STILETTOS on the Breakout End cap in West Hollywood. Go Shanna. And yes, I would love to fly to Hollywood and pop that baby up to the top shelf position.

What song is playing on the iPod right now? TUPELO HONEY by Van Morrison

Am I done yet with Agenting 101?

I have to say that I couldn’t really conjure up a whole lot of excitement to write about royalty structures and percentages. I mean, there are a million (okay, I’m exaggerating but it feels like a million) different royalty clauses in any given contract.

And it varies greatly if we are talking about the big publishers versus the small independents.

The biggest thing you need to know is that big Publishers calculate royalties from the list or cover price. Independent publishers (and smaller houses) often calculate royalties from net proceeds received (otherwise known as cash received).

Big, Big, very Big, and did I say Big, difference.

Calculating royalties based on Net isn’t bad or evil. It’s usually just because it’s easier accounting for the smaller house.

However, you have to figure out the equivalent of what a net royalty would be versus a royalty based on cover price.

Back to math.

Let’s say you have a hardcover book priced at $24.99 and the first 5000 copies are based on a 10% of cover price royalty.

This means, as the author, you would receive on your royalty statement (after you have earned out your advance of course), 10% of $24.99 which would be $2.49 for each book sold.

When a publisher operates on net proceeds received, then you, the author, would only get a royalty on what the publisher received after the discount.

For example, if the publisher sells the $24.99 hardcover to a distributor at a 40% discount, then you as the author would only be getting 10% of $15.00 (approximately—$24.99 – $9.98 = $15.01).

That would mean you would only be receiving $1.50 per book.

See the difference? Rather eye-opening.

So what you have to negotiate for is a royalty percentage that would be the equivalent of 10% of cover price.

That means if the upon net publisher is trying to get you to go for the standard:
10% to 5000 copies
12.5% to 10,000 copies
And 15% thereafter

They are getting a bargain.

In reality, if the publisher is operating on Net, you should ask for 16% (instead of 10%) for the first 5000 copies and then do the math from there on up. (Because 16% of $15 is $2.40 per book—pretty close on to the cover price royalty calculation.)

Need I say that most small publishers are quite reluctant to give that high a percentage?

More on royalties tomorrow.

11 Responses

  1. PJ said:

    You know what? I personally wouldn’t be so quick to pop that up. As a Target shopper, the two rows of books I notice are the top row and the bottom row. The middle is completely a lost land to me, unless I really stop to examine each one. I would guess there are a lot of people just like me. It’s probably getting more notice than you might think.

  2. Eileen said:

    In your on going agent training- can you give us more information on how a book is picked up by Target/WalMart? Is that something the publisher is doing or is it something you promote?

  3. Elektra said:

    This isn’t only great news for you guys–it’s great news for we students who have been balking at the $14 cover price for the past few months now.

  4. 2readornot said:

    On other author news, I just finished I’D TELL I LOVE YOU BUT THEN I’D HAVE TO KILL YOU, and I liked it:) I’m hoping there will be another book about cammie and her unique life…I think it’s definitely open to one 🙂

  5. Anonymous said:

    All royalty arrangements are meant to favor the publisher. Figure it this way: say you have a midlist book. As a percentage of your time writing it versus the publisher’s time buying/printing/ promoting/selling, who gets the lowest profit per hour? The author. That’s the way it is. That’s the way it will be. Power to the People.

  6. skint writer said:

    As a very “small publisher” it would be great to be able to give only a 40% discount to a distributor – in reality it’s more like 55%, or 50% if you’re lucky (in the UK at least). And Amazon Advantage demand a 60% discount.

    Also what about carriage costs and returns of unsold books for credit, and the cost of printing the book – and on a small print run this is not cheap.

    And then there’s all the other overheads . . .

  7. Anonymous said:

    After reading these posts and comments, and Anna Genoese’s posts on profit and loss, I’m wondering how ANY book manages to get published! I mean, as a writer, I’ve invested my time, my blood, sweat and tears, and a big hunk of my imagination into my story. I haven’t had to put up my house, though, or cough up $35 000 to get it into stores.

    When you read the example on Anna’s blog where the author made $16k on a book while the publisher lost $25k, it makes you appreciate that publishers (and agents) are willing to take risks on unknown authors.

    Of course, that doesn’t mean I’m not hoping to get every dollar I can out of my writing. 🙂

  8. Bridget Medora said:

    2readornot —

    On her blog Ally Carter has talked about a Gallagher Girls sequel (“GG2”) in the works, but I don’t think very many details are available about it yet. I’m with you though, I loved LOVE YOU KILL YOU and I’m hoping for a second book too. =)

  9. Anonymous said:

    Shanna and Kristen, I’ll move the book for ya! I do it all the time for my favorite authors!