Recently, in one of my online discussion groups, a new author asked, “Does anybody have experience with self-publishing companies and the way they pay royalty fees?” I was surprised at the great many responses the author received, which didn’t really answer the question at all. I thought the answer to this question was something many new authors would like to know, so I thought I would share my response in an article so others could benefit. Below are some of the key points I gave in that response.
First, some definitions.
By “self-publishing companies,” the author is referring to “publishers” who set up your book to be distributed via print-on-demand (POD). These companies don’t actually print your book, but rather send them to a print-on-demand printer. There is one that most publishers use, which has two massive printing plants, one in the US and one in the UK.
Typically, these kinds of companies don’t get your books into shops, but rather focus on the big online book retailers (you know the ones I mean). For my first book, I steered away from the big companies, and chose a small family run company here in the UK who take good care of their clients. I needed that extra bit of attention when I was a new author.
The self-publishing publisher sets up your ISBN and arranges for your book to appear on all the major online retailers. Or at least, they SHOULD. Be SURE you read the fine print and ask lots of questions before you agree to hire a self-publishing company, no matter how big they are. I had a scenario not very long ago when one of my clients went with one of the biggest print-on-demand publishing companies in the world and they ONLY placed the book on the American retail sites, completely overlooking Canada and the UK. This seriously impaired my client’s sales. So before deciding on which company to choose, be sure you ask whether or not they GUARANTEE your title will be on all the English-speaking sites worldwide. And don’t overlook retailers selling to France, Germany, Japan, Italy, etc. If your book is only available in English and these audiences want it badly enough, they will buy it from these sites as well.
Ok, so here are 7 facts about self-publishing and how royalties typically work. I’ll use USD below, as it is the currency that most people will understand even if they are not in the US.
The online retailer buys your book for 45% of the retail price. That means, if you book retails for $10, the retailer pays your publisher $4.50 (NOT you, unless you actually START a publishing company and are selling the books directly to the retailer).
From that $4.50, your publisher subtracts their printing costs. Not sure of what they are in the US, but here in the UK, the costs are typically 1p (let’s say 2 cents) per page, plus 70p (let’s say $1.25) for the cover. So a 100 page book would cost $3.25 to print (don’t quote me on the exact figures; these were current as of 18 months ago in the UK. DO ask your publisher these questions).
If the book costs $3.25 to print, and you have received $4.50 from the retailer, it means your NET is $1.25.
Most self-publishers do a 50/50 split of the net, or in that ball park. That would mean your royalty per book sold is a whopping $0.67. Most payouts are quarterly, starting 4-6 months after publication.
Of course, you could also set the retail price higher to ensure you get a higher royalty. The best thing to do is to go online and check out similar books in the same niche, and check out their page count, and see how much their retail price is. Bear in mind, that online retailers will normally sell you book for LESS than retail, but you will still receive 45% of retail unless you tell them you are willing to take less in order to drive up sales (not recommended for first-time author, frankly!).
If you go FULLY self-published (i.e., set up your own ISBN, deal with Lightning Press, etc), then your royalty is 45% of retail. Subtract your printing costs from that, and that is your net profit per book. That is what I am doing with my next book.
Last option: getting the books printed in bulk (most do this overseas) can drive the cost per book WAY down, but you have a massive front-loaded investment at high risk because the minimum run is usually 1000 books or more to get a good price. PLUS you have the set-up costs, as it is not the same as digital POD. Any time I have seen new authors do this, they end up with a house full of hundreds of unsold books, and feel very discouraged. I don’t recommend it unless you have a solid promotional platform and good distribution set up. ALSO, bear in mind that if you go this route, book distributors tend to take the books on consignment and they don’t pay anything if the books don’t sell. And who do you think is responsible for the marketing? You guessed it – you. Furthermore, they might take 300 books from you when they first come out, but they can RETURN every book that hasn’t sold (or worse–been returned to the retail shops!) after a certain period of time.
I hope this short summary of how self-publishing options and royalties was helpful to you. Just so you know, I help self-published mind-body-spirit authors via my online courses, and offer modules on writing your book, self-publishing and self-promotion. I also off full-service book launches when you’re ready to set your book free into the world. I look forward to hearing from you!