How Do Book Royalties Work?

How do book royalties work? If you’re looking to publish a book, there are several topics to learn about, such as how to format your manuscript or design your cover. When it comes to actually earning money from your book, you’ve got to know the ins and outs of your book royalty options. Let’s go over what to know.

What Are Book Royalties?

What are royalties in books? Book royalties are what you’re paid through as a published author. Royalty rate refers to the percentage you’d get for every copy sold, based on the book’s retail price. Royalty percentages (and conditions) differ between traditional publishing and self-publishing.

Traditional publishing is when you work with a mainstream publisher to manage the publishing process for you. Self-publishing involves taking matters into your own hands.

Here’s a quick breakdown of the differences:

As you can see, traditional publishing earns you fewer royalties than self-publishing. I suggest reading up on self-publishing vs. traditional publishing to determine which route is best for you. Do know that traditional publishing is harder to achieve. Let’s dig deeper –

Traditional Publishing Royalties (What’s an Advance?)

In traditional publishing, there’s usually an exchange for the rights to the author’s book. And royalty rates vary across book formats. For example, ebook royalties differ from print royalties. Royalty rates vary across publishers, too. Generally, they’re around 10% (meaning the author gets only 10% of the royalties made.)

Here’s what you can expect from traditional publishers:

• Paperback: 5-8% royalties
• Hardcover: 15% royalties
• Ebook: 20-25% royalties
• Audiobook: 25% royalties

Let’s break down the math for a better picture:

• Your paperback retails at $20.
• You’re contracted to receive 5% royalties.
• That means you earn $1 per every book sold.
• Selling 1 million copies means making 1 million in royalties!

Important: What’s an Advance?

Here’s the thing with traditional publishers: You get your royalty payout only after you earn back your book advance. What’s an advance? It’s an upfront payment from the publisher based on how many copies they think your book will sell.

You see, mainstream publishers won’t pay in advance for a book they’re not sure is going to guarantee success. It’s important to remember that an advance is a payment against whatever future royalties you earn. If you don’t make enough to cover the cost of the advance, it’s most likely you won’t see another check. Reaching your advance can be a challenge, especially for newbies.

Here’s how indies earn book publishing royalties –

Self-Publishing Royalties (What’s an Aggregator?)

How do royalties work in self-publishing? Like traditional publishing, royalty rates vary across book formats and self-publishing channels. The major benefit is that self-publishing royalty rates are way higher.

What to expect from the best self-publishing sites in the game:

• Amazon KDP: Up to 70% royalties for books between $2.99 and $9.99, 35% if below $2.99
• Apple Books: Up to 70% royalties for most books
• Google Play Books: Up to 70% royalties for most books
• Barnes & Noble: Up to 70% royalties for ebooks, 55% for prints
• Kobo: Up to 70% royalties for books priced more than $2.99, 45% if below $2.99

One of the coolest things about self-publishing is just how accessible and affordable it is. You can publish your book for free on many of the platforms mentioned above. With tens and thousands of channels accepting self-published titles around the globe, you need a solid book aggregator to reach them all –

Important: What’s an Aggregator?

If you decide to self-publish, consider publishing wide to as many markets as possible. That means reaching all the major stores mentioned above plus more. This strategy is about maximizing your reach and selling potential.

Trying to handle every single store and market will burn a lot of your time and energy. That’s why book aggregators exist. An aggregator distributes for you to multiple places like Amazon, Apple, and more. Most aggregators take an extra 10% of royalties on top of store royalties. No worries, your take-home royalty rate is still higher than traditional publishing.

How Do Book Royalties Work With PublishDrive?

You can choose a unique aggregator like PublishDrive that doesn’t take any extra royalties. That means you keep the royalties you earn from stores as if you’re handling them yourself. This is possible because of PublishDrive’s subscription-based model, where authors and publishers pay a flat monthly fee to publish.

Let’s do the math:

• Let’s say you sell a book for $9.99.
• The aggregator you’re with uses a 70% payout plan.
• That means you receive $5.99, and the aggregator gets $1.
• That $1 represents 10% of the sales price only.
• In terms of the amount you give up, you lose about 17% of your royalties to the aggregator ($1/$5.99).

By saving that 17%, authors earn more with subscription-based aggregation.

“When you’re selling 5,000 books a month at 10% versus a flat fee of 100 bucks, that’s sort of a no-brainer...We can use PublishDrive, save a ton of money, and still reach the same audience and actually a bigger audience which is awesome too. When I first heard about that, I almost thought it was too good to be true.” – Quinn & Bo Loftis

Managing Your Book Royalties With PublishDrive

With PublishDrive, you earn more, plus get a ton of tools to help you manage your royalties and book sales like a pro:

• Sales analytics: See real-time sales performance for all of your stores in one place. Check out automated charts and graphs to help you analyze and understand where your sales come from. Download all your data in no time whenever you need it.
• Royalty reporting: Never miss a payment with automated royalty reporting and payouts. Get regular updates on your royalties.
• Abacus: If you work with other authors or collaborators, easily manage co-royalties with the Abacus tool. It does all the number crunching for multiple royalty revenues, fantastic for publishers. Learn more about PublishDrive’s royalty software for publishers.

💡 For publishers that work with multiple authors across multiple stores and channels, it’s important to optimize the work process to benefit everyone involved. With PublishDrive, you can manage everything on a single platform while earning your authors the most royalties they can earn.