Ebook Royalties – How Much Money Do Authors Get From Their Ebooks?

Ebook Royalties – How Much Money Do Authors Get From Their Ebooks?

It is very time-consuming to not only write and edit it, but also to do a very significant amount of research. So unless you are just writing and researching for fun, you should carefully investigate the possibilities you have in terms of actually getting paid. The amount of royalties you get depends on the exact type of royalty model that you will be using.

Before I go on, I would like to point out that everything may not be just about the exact “payment” or “royalty”. It may be true that the issue of royalties, on average, is focused on the particular amount of dollars or pounds sterling that you may get with a particular author’s arrangement. But also other aspects of an agreement or contract may be important. Such aspects might be, for example, the length of the contract, the question about the exact time of the payments, questions about what happens if the author wants to annul the contract, etc.

However, in this present article I shall mostly talk about the total amount of money that you can expect from different types of royalty arrangements. Although there are many different types of contracts on the market, I shall in this short article outline only four types of royalties models:

 

“List Price Percentage”
“Net Receipts Percentage”
“Flex-Price Net Receipts Percentage”
“Full List Price”

1. “List Price Percentage” Royalties

 

The “List Price Percentage” model is quite possibly the most straightforward of them all. It is used when writers go to major publishing houses to publish and market their ebooks.

This idea with this type of arrangement practically boils down to that the writer will get a certain percentage of the ebook’s (retail) list price. This percentage may vary between, say, 10 and 20 percent.

Let’s take an example. If the royalties arrangement is such that the writer gets 10 percent of the his ebook is sold for, the author would get a royalty of .80 per book (0.10 x 18).

This type of royalty model has previously been used at leading publisher houses such as Random House and Simon & Schuster. However, these publishers have now abandoned that model, and switched to the second model, the “Net Receipts Percentage”.

2. “Net Receipts Percentage” Royalties

Another royalties arrangement is the “Net Receipts Percentage” model, which is applicable when authors approach major publishing houses to market their books. Currently, many publishing houses are now using this royalties model. Some of these are Macmillan, Random House, and Simon & Schuster.

In this model the writer will get a certain percent of the net sale of the ebook. This percentage typically amounts to between 10 and 25 percent of the net proceeds.

For example, first assume that the royalties arrangement is such that the writer gets 20 percent of the net sales. Then also assume that the list price is , and that the net sales for the publisher is, say, 60 percent of the list price (i.e., the retailer gets 40 percent). In that case, the author’s royalties would be .40 per ebook (0.20 x 0.60 x 20).

3. “Flex-Price Net Receipts Percentage” Royalties

A third option may be to publish your ebook all by yourself, but still use one or several retailers and distributors to market and sell it. For example, you could use distribution channels such as Lulu.com.

In this scenario the author will get a certain percent of the net sale of the ebook, and in that sense it is very similar to the second model above, the “Net Receipts Percentage”. However, even though the model is similar, the “Flex-Price Net Receipts Percentage” has the major advantage that your percentage per book will be dramatically higher.

Another big difference is this. Since you are self-publishing your ebook, you may actually adjust the list price yourself. So you will have more flexibility in terms of fine-tuning the price of your product so that it will yield maximum royalties.

4. “Full List Price” Royalties

A fourth option is to do everything yourself. In this case you will be doing not only the publishing but also the marketing and sales by your own. This means that you have to have your own website through which you promote your ebook.

The royalties derived from such a solution is fairly easy to calculate, since you will keep all the proceeds for yourself. However, depending on the exact solution, you may need to deduct some costs such as website hosting and payment processing. However, assuming that you have a decent volume, such costs will be almost negligible.

Summing Up

It may not be easy to decide which model works best for you. One consideration is, of course, how interested you are in marketing. If you are very interested in promoting your own product on the internet, then royalties models 3 and 4 may very well be for you; and since you do not have to worry about your work being accepted by a major publisher, you can go straight ahead and start your work.

However, if you are mainly a writer, and not so interested in internet marketing, it may not be a bad idea to try to go for royalty models 1 or 2. The downside with these two models is, however, that it is not so easy to get published by some major publishing house. However, if you don’t get published there, you can always explore the other two models afterwards.

 

Johnny Jones is an internet marketing project manager, specializing in ebook business and ebook marketing. He is part of the EbookBrothers.com team, where he is a regular contributor, writing mostly on ebook marketing, including topics such as ebook royalties for authors etc.

To sign up for the free EbookBrothers.com ebook marketing newsletter (with free articles, product news, tips, and tricks on how to make money with ebooks, how to create an ebook, how to write an ebook, and how to market ebooks), please visit http://www.EbookBrothers.com today!

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