Understanding Your Royalty Rates
A Royalty is the money that’s left for the author after a book is sold and any retailer and production costs have been subtracted from the retail price. With a traditional publisher (and unfortunately most self-publishers), that profit gets shared between the author and the publisher with the publisher keeping the majority of the profits. At Liberty Hill Publishing, we think the old way of doing business is wrong. You did most of the work! Why should your publisher keep most of the profits?
How to Calculate Your Royalty
In its simplest form royalties are calculated as follows: Retail Price minus Retailer Charges minus Production Costs equals Royalty (or Net Profit).
- Retailer charges are the portion of the sale that the booksellers (Family Christian Stores, Amazon.com, Barnes & Noble, etc.) keep to cover their costs and make a profit.
- Production costs include things like printing, shipping, taxes, etc.
What does this mean for you in actual dollars?
Below are examples based on an average book retailing for $15.99 with an average production cost of $3.90.
3rd Party Retailers
So, what does Liberty Hill pay? We are one of very few publishers who pay 100% of the net profits on all books sold through 3rd party retailers like Family Christian Stores, Amazon.com, Barnes & Noble, etc. Retailers typically keep about 55% of the retail price. Once you subtract retailer charges and production costs, the rest is yours. We keep NOTHING so you earn as much as possible from your work!
The first step in calculating your profit on a 3rd party retail sale is to subtract retailer charges. On average 3rd party retailers keep 55% of the retail price of a book. The retailer charges on a $15.99 book would be $8.79 so that leaves $7.20.
The second step is to subtract the production costs. Our example $15.99 book costs $3.90 to produce so that leaves $3.30 in profits from our $15.99 book. Since Liberty Hill pays you 100% of the profit on 3rd party direct sales, that $3.30 goes directly to you. Here’s how this is calculated:
Liberty Hill Retail Channels
You have an opportunity to earn an even higher profit when your book sells through Liberty Hill retail channels. We’ll sell your book on our online bookstore, our toll-free order line, through our book sales representatives and our eBook service.
When we sell your book there is NO retail charge versus the typical 55% paid to 3rd party retailers. This means you earn even more for every book sold. In fact, your profits on books we sell are usually more than DOUBLE that of books sold via 3rd party retailers!
When an order is placed through our online bookstore or Google book search, the royalties paid to you are calculated as follows:
The retail price of $15.99 less the production cost of $3.90 and the shopping cart admin fee of $2.50 is $9.59. And that’s it! The $9.59 goes directly to you. (The shopping cart admin fee is charged by the distributor/printer. The money does not go to Liberty Hill Publishing.) Here’s how this is calculated:
There is no print cost on eBooks and the eBook retail charges vary widely. eBook retailers such as Amazon Kindle, Barnes & Noble Nook, and Apple iPad/iPhone keep 35% to 70% of the cost of the eBook retail price.
Your retail price for eBook is half of the paperback retail price rounded to the next $0.99 and not to exceed $9.99. As an example a $15.99 paperback book sells as an eBook for $7.99
We will use Amazon Kindle as our example below sold at their 30% retail charge:
If all of this seems overwhelming, don’t worry. The great news about tracking book sales and royalties is we do all the work. We get reports from all the distributors, bookstores, website and other retailers that are carrying your book. You’ll get an easy to read online statement that shows exactly how many copies sold, when they sold and what your net profit is. We offer monthly online statements and payments so you can keep track of what’s happening with your book and how much you’re earning. We also have Author Representatives available to help with any questions that you may have.
Note: Royalty checks are not issued until the royalties owed exceeds $25 for U.S. citizens and $50 for foreign citizens.
Still have questions about royalties? Call us at 866-381-BOOK (2665). We would be happy to help.