A royalty is what remains of a book's selling price after the cost of printing and the retailer's or distributor's margin. Stardom Books pays 75 percent of that amount to the author, in every format and every market, for as long as the book sells. This is how the arithmetic works on a single copy.
A worked example
Take a paperback listed at $20. The retailer or distributor keeps its margin, say 40 percent, which is $8. Printing that copy costs about $4. That leaves $8 in royalties, of which $6 goes to the author and $2 to the publisher. The figures vary by format, market and retailer; the split does not.
Why eBooks and audiobooks pay more per copy
An eBook has no printing cost, so the royalty on the same list price is larger. The same is true of audiobooks. A leader's book sold in four editions, paperback, hardcover, eBook and audiobook, earns at four different rates, and the mix of editions matters more than most authors expect.
Why the market matters
A book printed on demand is printed close to the reader, in the United States, the United Kingdom, Australia, the UAE or India, with partner printers in eight more countries. Print costs differ by country, retailer margins differ by store, and each sale is reported in the currency of the market it was made in. An author selling in the US, the UK and India will see royalties in three currencies.
When royalties are paid
Distributors report sales at different intervals, and returns can arrive months after a sale. Publishers therefore hold royalties for a period before paying them out. At Stardom Books, royalties are credited when each distributor's report arrives, become payable six months after the report period, and are paid once they reach a minimum amount, in the author's own currency.
What royalties are not
Royalties are not how the cost of producing a book is recovered. What an author invests in the project goes into the advisors, writers, editors, designers, proofreaders and publishing team, and into registrations, printing and distribution. Royalties come afterwards. Many authors do recover their investment, through speaking, consulting and the business the book brings, but a publisher that promises royalties will cover it is not being honest.
Two things that change the picture
Bulk orders, when a company buys copies for clients or an institution buys for a programme, pay royalties on every copy and are often the largest single line in a leader's statement. And bookstore stock, when a store insists on it, is sold on trade terms of at least 55 percent margin and returnable stock, which is why most leaders sell online and by direct order instead.
Founder, Chief Editor and Publisher of Stardom Books, and creator of The Authority Forum. He has directed 260+ leaders to become internationally published authors. About the house · raamanand.com