By BookBaby author Philip Kinsher

Estimated reading time: 5 minutes

Book Royalties can be confusing — especially for new authors — but it’s an important aspect of the publishing process and one an aspiring author should understand when considering the differences between self-publishing and traditional publishing through one of the Big 5 publishers.

What is a book royalty?

A book royalty is a payment made to the author for each copy of their book that is sold. Royalties are typically calculated as a percentage of the book’s retail price (though, as we will see, not always).

If an author has a traditional publishing deal, this royalty payment comes from their publisher. For self-published authors, the payment comes either directly from the retailer (e.g., if you published with Amazon KDP) or from your self-publishing partner (e.g., if you self-published with BookBaby).

Book royalties under a traditional publisher

Traditional publishing involves signing a contract with a publishing house. Royalty structures can vary widely depending on the publisher, an agent’s negotiation skills, and the book’s anticipated sales.

Although royalty rates differ from contract to contract, here are some pretty standard royalty rates for traditional publishing deals:

• Hardcover book sales: 10 percent
• Trade paperback book sales: 7.5 percent
• Mass-market paperback book sales: 5 percent
• eBook sales: 25 percent
• Audiobook sales: 25 percent

As I explain later in the post, these are the rates an author might earn from a book sale, but as most traditional publishing contracts include an advance, these royalties won’t flow to an author until after that advance is paid back.

Book royalties through self-publishing

Self-publishing offers authors greater control over their work and, typically, higher royalties. Platforms like Amazon KDP or IngramSpark allow authors to publish and distribute their books independently. In this model, authors often receive higher royalty rates, roughly 40 percent of the book’s retail price for print and between 35–70 on eBooks. There are no publishing advances, of course, and authors are responsible for production costs, marketing, and other elements that a publishing house takes on.

Maximizing book sales and royalties with BookBaby

While authors can go direct to individual publishing platforms, working with a self-publishing partner like BookBaby assures a smooth process, flawless finished products, distribution to all retailers, a means for tracking and managing your sales, access to BookBaby Bookshop, and a host of other benefits. And while many self-publishing companies take an additional percentage of your book sales on top of what the retailer keeps, BookBaby does not take any additional percentage of your sales.

If you sell a printed book through BookBaby’s Bookshop, you will get 50 percent of your sales, which is the highest royalty rate in the business. eBooks sold on Bookshop return an 85 percent royalty, and audiobooks pay a 75 percent royalty.

Types of royalties and royalty terms

It’s worth defining some of the different types of royalties as well as related terms to better understand what you are getting yourself into when you publish your book.

Royalty rate

This refers to the percentage of the book’s retail price the author receives. Different formats (e.g., hardcover, paperback, eBook) and distribution channels have varying royalty rates.

Retail royalties

These are royalties calculated based on the book’s cover price or list price, minus returns. This is usually a fixed percentage. Sometimes this is referred to as “gross royalties,” though some publishers don’t always use the terms “gross” and “net” consistently.

Net revenue royalties

In traditional publishing, this is a royalty based on how much money actually ends up in the publisher’s hands, and as a result, will mean less money flowing through to the author. This means some of the costs are deducted from the sale of the book before your royalty rate is calculated. Some of these costs may include things like shipping, insurance, retailer fees, and costs of collection.

Graduated royalties, aka performance-based royalties

Many contracts include benchmarks that increase the percentage of royalties as sales increase. For example, you may start with a royalty rate of 7.5 percent, which will then go up to 10 percent once your book sells, say, 50,000 copies, and then up to 12 percent once you sell over 100,000. All of these figures are negotiable.

Advance

In traditional publishing, authors usually receive an advance against future royalties when they sign a contract. This upfront payment is a prepayment of the author’s expected earnings. That means an author will not receive royalty payments until they have “paid back” their advance.

For example, let’s say an author receives a $20,000 advance and their royalty rate is 5 percent. If the retail price for the book is $20, the author’s royalty cut would be $1, which would mean they would have to sell 20,000 copies in order to “pay back” that advance. Any sales beyond that will start to earn them additional income beyond the advance.

If you do not sell enough copies to recoup your advance, you do not have to pay back the difference. That advance money is yours to keep.

When are royalties paid?

It’s hard to pinpoint exactly when you might see royalties with a traditional publishing deal, but it generally takes three to five months for royalties to get reported by retailers. For self-published authors selling through traditional retailers, that same timeline holds true. For BookBaby Bookshop sales, royalties are posted the week after the sale.

Related Posts
How to Self-Publish a Book With BookBaby
Book Pricing for Authors
Can You Self-Publish a Book on Multiple Sites?
How Much Do Self-Published Authors Make?
The Power of Self-Publishing: Why It Outshines the Big 5 Publishers

This BookBaby blog article Understanding Book Royalties appeared first on and was stolen from BookBaby Blog .