Royalty Rates

I’ve written about royalty rates several times, and I usually avoid using actual numbers because royalty rates are varied across types of publishers, types of books, and book formats. But people keep asking me, so I’ll try to explain a little more clearly here.

Royalty rates are calculated either on the retail (or cover) price of the book, or on the net price which is the price at which the publisher sells to the retailer (usually around 50% off).

The big New York publishers always pay royalties based on the cover price. Most publishers in the CBA including the largest ones pay on net. Smaller publishers vary in how they calculate royalties.

Most royalty rates increase according to the number of units sold. So a typical royalty schedule for a first time author with a mainstream publisher might be:

Hardcover:
10% of the cover price, up to 5,000 copies
12 ½ % of the cover price on the next 5,000 copies
15% for all copies sold thereafter

Trade Paper:
6 ½ % of the cover price, up to 25,000 copies
7 ½ % of the cover price for 25,001 and above

Mass market:
8% of the cover price up to 150,000 copies sold
10% of the cover price thereafter

Audio edition:
8% of the cover price up to 25,000 copies
10% of the cover price thereafter

E-book royalties are pretty much standard right now at 25% (but some industry experts are predicting an increase to around 40%).

For first-time CBA authors, a standard royalty schedule for both trade paper and hardcover might be:

16% of net, up to 15,000 copies
18% of net for 15,001 to 30,000 copies
20% of net for 30,001 copies and above

Other royalty rates are also specified in the contract, such as large print, book club, special sales, high discount sales, remainders, etc. (Braille and handicapped editions are typically licensed without payment to either author or publisher.)

Again, please note all numbers are hypothetical and vary across the industry.

© 2010 Rachelle Gardner, Literary Agent

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  • Richard Mabry

    >Thanks for letting us into one of the lesser understood aspects of publishing. It's experience in this area that makes the help of an agent in negotiating a contract invaluable–or at least worth 15% of what the author finally gets.
    I still remember calling you when I found one of my novels available in a large-print edition, only to learn that such books (as you've just pointed out) are published without payment of royalties to authors. You'd think that we authors would read our contracts, but most of us are just so thrilled to get them that we leave that up to our agents. Thanks.

  • BK

    >Helpful. Thank you.

  • Timothy Fish

    >I can see authors not getting royalties for books produced for the blind and handicapped, since there is a special provision for that under US copyright law, but I don’t see the justification for the large-print edition Richard mentioned. With the size of print most books have and the number baby boomers wearing glasses, many non-handicapped readers prefer large print editions. On the surface, this seems like just another way for publishers to keep from paying authors.

  • Rachelle

    >Timothy & Richard: The only time the author doesn't receive royalties on a special version of a book is if the publisher also doesn't receive payment. If the publisher receives payment for licensing certain rights like Braille or large print, the author usually gets 50% by contract.

  • Em-Musing

    >ALWAYS you have great posts on the industry. You should put out a booklet, (available on-line) for these types of blog posts.

  • Sue Harrison

    >Much appreciate the information, Rachelle!

  • T. Anne

    >What happens when bookstores heavily discount hardbacks and paperbacks? Does the profit margin move along with the price, or is the bookstore taking a hit? Also, I've noticed Amazon will periodically give novels away from free on Kindle then sell them at regular rates the next month or so, who controls whether or not e-books are free?

  • Joanne Bischof

    >Wow, you really break these concepts down for us and its hard to get these answers anywhere else. Thank you!

  • Cecelia Dowdy

    >Thanks for this information, Rachelle. It is helpful.

    I got paid for my largeprint Thorndike edition when it came out. Can't recall how much though – I do recall it being a weird arrangement since there were two publishers involved – both Harlequin and Thorndike. Also, for some of my books, if they're sold WAY BELOW retail value, I don't get royalties for them. This is spelled out in my contract and by the time they're sold at this price, the book is about to go out of print anyway.

  • Working Stiffs

    >It's posts like this that put you on our BAAM list today. You're always helpful and give great info.

    Thanks!

  • T C Mckee

    >Thanks for posting this. I wasn't exactly sure how it worked. Interesting to see the difference in E-books as well.

  • Anonymous

    >What's a CBA?

    (No, there will be others wanting to know this.)

  • jrpoulter

    >Thank you Rachel! Appreciated!

  • Maggie Desmond-O’Brien

    >This is great to know! Thank you. It's always nice to get ballpark figures on this sort of thing, and to understand how much of your money is going to the author when you buy a book new (and how much authors are really losing if you pirate that book, too). The difference between traditionally published and e-book editions is interesting. Thanks again! =)

  • Anonymous

    >Супер, Какие нужные слова… супер, отличная мысль

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  • Drew

    Hello Rachelle,
    I enjoyed this article. I am about to start finishing piecing together a book and I am in the process of exploring revenue knowledge.
    I am searching for the best ideas on introducing my work. I have heard that short 99 cent books are a trend, but I have also seen suggestions to go in the $2.99 to $9.99 range. I have a radio voice (handy since I am in radio) and I intend to simultaneously produce an audio version of whatever I write.
    Any particular resources for putting together a plan for launching into the market?
    Drew

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