What royalties are: a percentage of the retail cover price based on copies sold that’s paid to the author once she’s earned out her advance
What you need to know:
- Three numbers to keep in mind: number of books printed, number shipped/gross (books sent out to book stores) and number sold/net (books actually purchased by consumers)
- A book’s sell-through is the percentage of gross copies that actually sold. Stores can “return” unsold books for a refund (really, they’re just sending the cover to save on freight charges). You’ll often hear talk of high or low returns. Obviously, the lower the return, the higher the sell-through.
- Royalties are calculated on number of books sold, but have nothing to do with the cost of producing the book. So it’s possible for an author to earn money on a book where the publisher takes a loss. This usually happens if they have a high royalty rate on books sold, we ship out a lot of copies, and then get a lot of returns.
- If an agent is listed on the contract, all money is sent to the agency. Typically, even if an author changes agents, the agent who originally sold the book continues to collect a commission and still gets the royalty check.
- To help mitigate returns, publishers hold a reserve on royalties for a certain length of time. Typically they’re designated as a certain percentage of the gross sales.
- Subrights, sales for things like foreign translations, audio books, large print books, and movie deals, are also included in an author’s royalty statement.