On Royalties…

The biggest argument for self-publishing made on the many blogs dedicated to the topic is that an author gets to keep all of the money. I have to admit this one point is hard to argue – other than to say that, as I point out in my last blog, you also get to do all of the work. The other point is that publisher’s royalties are somehow out of touch with the reality of a modern age.

This one point I would like to argue, with an example.

Divertir Publishing currently pays the following royalty rates to authors:

  • 12.5% of net for the first 2,500 paperback copies.
  • 15% for the next 2,500 paperback copies.
  • 17.5% for every copy after the first 5,000 paperback copies.
  • For e-books we pay 50% of net.

So how does an author fare with these rates? Let’s take our upcoming book “Hurricane” as an example. We are planning on pricing the book at $9.99 to keep it in line with other books in the genre. Assume the following:

  • We are giving a 40% discount to retailers, so our net sales per book are $5.99 for print copies.
  • Our fixed costs (press fees and ISBN) are $142 per book, and we pay 15% of net (or about $0.90 per book sold) for editing and cover art (we pay editors a percent of net sales just like authors). Our printing costs are $3.50 per book.

Let’s look at what % of the gross margin (net sales minus cost of goods sold) an author receives if we sell the average number of books (500) or if the book is a success (meaning we sell 5,000 copies)

Books Sold 500 5,000
Net Sales (60% of list) $2,997 $29,970
Cost of Goods Sold (not including authors royalty) $2,342 $22,142
Margin (Net – Costs) $655 $7,828
Author Royalty $374 $4,104
Royalty – % of Margin 57% 52%

 

Our royalty rates are set of so that an author will receive about 50% of the margin for each book. For e-books, we give 50% of net. We feel this is fair. What are we doing for our 50%? We provide the editing, typesetting, cover art, fulfillment, and marketing (more on this in a future blog).

The usual argument against self-publishing (or going with a new small press like Divertir) is that you’ll end up with low sales. But as discussed previously, going with a major publisher is no guarantee your book will be successful or that it will sell more than 500 copies. The usual argument for self publishing is that you keep all them money. While this is true, you also get to do all the work. The choice is yours. Caveat Emptor.

Advertisements

4 Comments

Filed under For Authors, Publishing

4 responses to “On Royalties…

  1. mike

    Question: How do you market your books?

    No one (except my mother) is going to buy a book beccause I wrote it. As you’ve indicated, small presses like Divertir do not have large cash reserves for publications. The margins are tight.

    Other than, self promotion—author signings, word of mouth—how can Divertir promote a new author?

    Also, how did you happen upon the name, Divertri? My mother will want to know.
    Mike

  2. Hi – Our general marketing plans will be the subject of 3-4 blogs in about a month because I think this is important information to share with authors as they decide on a publisher. In short, our plan relies heavily on sampling (giving away free samples). We currently make Look Inside active for all our books on Amazon and post our books on Google Books. We are working to make eBook versions of all of our books available free to libraries (more on this when I have the details worked out) and are going to use P2P technology to distribute samples. We are currently launching a free eZine that will contain samples from our authors. All of these techniques have two things in common – they are low cost and involve a lot of work. We feel that this work is necessary to ensure the success of our authors. We believe most books fail to become successful because the publisher uses a “post and hope” strategy for sales, and we want to do better.

    As for the name, Divertir is French for “to amuse or entertain”. Prior to meeting our Acquisitions Editor (Elizabeth Harvey) my focus was going to be nonfiction political satire. Beth convinced me that there was a need for publishers willing to publish new author fiction and that we could be successful with it if we worked hard to market our books. So you all have Beth to thank for both our acceptance of new author fiction and our open submissions policy.

  3. mike

    Hi,

    Thanks for the prompt response. I, myself, would have been most happy if you had decided to stay with political satire because that’s what I prefer to write. But I’m sure there is room for everyone.

    As to the marketing of new authors, there are a number of prizes awarded each year for new and previously unpublished authors. In my area there is the Thurber Prize for Humor not to mention state awards etc. Most of these awards are given to writers who have active publishers willing to do some homework (application processes) for their stables. Has Divertir any intention to join in the fray? The awards can lead to some serious money, not to mention a wealth of publicity for the publisher.

    BTW, I don’t speak French, but I’m willing to learn. So is mom.

    Mike

    • The short answer to your question is that we will be submitting our books for awards. I must admit that we will be selective in this process. The sheer number of awards out there would preclude all but the largest publishers from submitting every book they publish for every award possible. A publisher can spend all their time and resources chasing awards and forget that, at the end of the day, what they and the author make money for is when they sell books. While awards are certainly important, they cannot be the only part of the overall marketing plan.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s