Old-School Book Royalties
Book royalties are proceeds paid to authors based on a percentage agreed to in the publishing contract. Many large publishers pay a low percentage of 5–10% based on the list price of the book. So, if the book listed for $17.95 for the softcover, the author would receive $.89–$1.79 in royalties per book.
How We Do It
Koehler Books pays author royalties based on the net proceeds of the book, meaning the money left over after all expenses have been paid to the distributor and the book has been sold to a wholesale bookseller, library or other distributor. The net is then split with the author according to the percentage agreed to in the contract.
The Key Royalties Language in Our Contract
Section 3.1 The Publisher agrees to pay the Author royalties as follows:
A. Royalties due and owing shall be determined on the Net based on the Publisher’s paid invoices for the Work, less printing, return fees, and a reasonable reserve for returns from all sales. Royalties shall be computed under the following categories:
i. On the sale of the Work in printed Book Form, the Publisher will pay the Author 60% of the Net Receipts
ii. On the sale of the Work in eBook Form, the Publisher will pay the Author 60% of the Net Receipts
iii. On the sale of the Work via foreign rights translation, the Publisher will pay the Author fifty percent (50%) of the Net Receipts.
Below is an example of a typical book and how royalties work (prices may vary depending on number of pages, list price, etc):
210-page 6×9 softcover book with black and white interior, color exterior
$16.95 — suggested list price
$7.96 — wholesale price (53% wholesale rate)
$3.52 — print price (author price is $5.28)
$4.45 — net
$2.67 — author’s royalty per 60% rate
Our Publishing Models
We have two models of publishing, and the author royalty rate varies from one to the other. The rates shown below may vary slightly, depending on the negotiations with the author:
Co-publishing model (60% royalties): We are the publisher of record. We handle the creative development and technical work, as well as marketing, coaching the author, and managing the royalties. Co-publishing deals typically pay higher royalties because the author is investing in the development of the book by paying creative development and other pre-publication fees. Co-publishing is also referred to as hybrid publishing.
Traditional publishing model (40% royalties): Has the lowest royalty rate because the publisher is handling all expenses and wants to earn back their loss. Same publishing structure as co-publishing. We are the publisher of record. We handle the creative development and technical work, as well as marketing, coaching the author, and managing the royalties.
Ebook royalties are usually the same rate as print books.
When Do You Get Your Royalties?
Most publishers start paying royalties well after the publication date. This allows time for the publisher to get paid by the distributor, which can take several months. It also allows for returns, which typically are higher in the first year after publication.
Koehler Books typically starts providing royalty reports and any accompanying royalty checks six months after the publication date. Royalty reports are given on a quarterly basis, meaning at the end of March, June, September, and December. If that six-month period falls in the middle of the quarter, the author must wait for their report/check until the end of that quarter.
What Sales Period Are We Paying Royalties On?
Koehler Books pays on sales that occur six months prior to the end of the reporting quarter. Which means that any sales that occur within the past six months will NOT be paid out, but will roll over to the next quarter. Eventually this means that our authors are getting paid on sales made during a 3-month period.
The Critical Language in Our Contracts:
The Publisher shall make quarterly royalty payments and statements to the Author beginning six months after date of publication, so long as there are Proceeds available for payment to the Author. If the amount due for any accounting period shall be less than $100.00, the balance shall be applied to the next calendar quarter until the royalty payment due equals or exceeds $100.00. The Publisher may deduct any overpayment to the Author from any royalties due and owing the Author on the Work.
Example of a Typical Royalty Schedule:
November 15, 2018—publication date
May 15, 2019—end of six-month period; author can receive royalties
June 30, 2019—author will receive a royalty report and any accrued royalty monies for sales that took place in December, 2018 or before
September 30, 2019—author will receive a royalty report and any accrued royalty monies for sales that took place in March, 2019 or before
December 31, 2019—repeat
Royalty Report Example
This is a SAMPLE report of a successful author with the report period falling in March of 2020. We pay royalties on sales that occurred 6 months or more prior to the reporting period, or in this cased September and before, the months marked in yellow. All sales from October to the report date of March are held in reserve. For the next quarterly report, we would then pay from December and before, so the reporting period is typically a 3 month period.