Understanding Royalties

Royalty Rates

Royalties is just a fancy word for profits. It’s the money that’s left for the author after a book is sold and all the associated costs of things like printing, shipping, a share to the retailer, etc. have been subtracted from the retail price.

How to Calculate Your Royalty

(Examples below are based on a $15.99 retail priced book)

In its simplest form royalties are calculated as follows:

Retail Price minus Retailer Charges minus Production Costs equals Royalty (or Net Profit). Your share is 75% of the net.

  • Production costs include things like printing, shipping, taxes, etc. These costs vary widely depending on things like order volume, page count, hardcover versus paperback, etc.
  • Retailer charges are the portion of the sale that the booksellers keep to cover their costs and make a profit.

What does that mean for you in actual dollars? Below is an example 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 Publishing pay? We pay 75% of the net profits on all books sold through 3rd party retailers like Amazon.com and Barnes & Noble. Retailers typically keep about 55% of the retail price. Once you subtract the cost of printing, shipping and the share the retailer keeps, you get 75% of the remaining profit.

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. From there, you get 75% of the remaining profit, which leaves $2.47. Here’s how this is calculated:

 15.99          Retail Price
- 8.79          55% Retailer Charge
--------------
  7.20
- 3.90          Production Cost
- 0.83          25% Liberty Hill Publishing
--------------
 $2.47          Royalty

Note: The average 55% is taken from the suggested retail price.

eBook Royalties

There is no print cost on eBooks and the eBook retail charges vary widely. eBook retailers keep 30% to 70% of the cost of the eBook retail price.
Liberty Hill Publishing handles uploading your eBook to major retailer sites such as:

  • Amazon Kindle
  • Barnes & Noble Nook
  • Apple iPad, iPhone

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:

$7.99          eBook Retail Price
- .05          Amazon Kindle's Delivery Charge
--------------
 $7.94
- 2.38         Amazon Kindle 30% Retail Charge
--------------
 $5.56
- 1.39         25% Liberty Hill Publishing
--------------
 $4.17         Royalty

Retail charges by eRetailers are as follows:

Amazon Kindle – 30% to 65%
Barnes & Noble – 35%
Apple – 30% to 70%

Note: Amazon’s Kindle 70% royalty option is only available for sales in the US, UK, Canada and Germany. Sales outside of these countries receive 35% royalty. Barnes & Noble currently distribute only in the United States. eRetailer’s retail charges are subject to change.

Royalty Payments

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 now offer monthly online statements and quarterly 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.

Additional Information

For answers to the most commonly asked questions about royalties, please be sure to check out our Royalty FAQ page.Royalty FAQs