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How Are Book Royalties Calculated?

royalties May 26, 2021

A book royalty is simply the money you earn from the sale of your published book. As a self-published author, you are given a royalty rate based on the platform you use.

Here’s how it works:

  • When someone buys your book, you’ll earn a portion of the sales price.
  • The bookseller will deduct certain fees from the proceeds of the sale.
  • If you publish your book on a distributor’s site, that distributor will also deduct their fees.
  • You’ll earn the amount remaining after booksellers and distributors deduct their fees.

The royalty calculations work differently based on whether you sell an e-book, a paperback, or a book in another format. They also work differently based on whether you publish directly to a bookseller site or through a distributor, also known as an aggregator.

 

 

E-Books Published on a Bookseller Site

Many self-published authors sell the majority of their books in e-book format. The royalty calculations are fairly simple for those sales since many booksellers pay authors a specific percentage of each book's sales price.

 

E-books Published Using Barnes & Noble Press, Apple Books, or Google Play Books:

The simplest royalty scenario is when you publish an e-book with a bookseller such as Barnes & Noble Press, Apple Books, and Google Play Books. Those retailers pay authors 70% of the sales price for each book sold. Here's how the calculation works:

  • Formula: (Sales Price x Royalty Rate)
  • Example: ($4.99 x 70%) = $3.49 per book

 

E-books Published Using Amazon’s KDP:

It’s a little more complicated if you publish on Amazon’s self-publishing platform, Kindle Direct Publishing. Amazon will also pay you 70% of your book’s sales price. However, they’ll charge you a small “delivery fee” for delivering the e-book to your customer.

Their delivery fee for a book sold to a customer in the United States is currently $0.15 per megabyte. For example, the delivery fee is $0.06 for my book with 30,000 words and no graphics. If your book file is graphically intense, your file size might be several megabytes, so your delivery fee would be higher.

Here’s the formula for calculating the royalty I receive from Amazon on my text-only book with just over 30,000 words:

  • Formula: (Sales Price x Royalty Rate) - Delivery Fee
  • Example: ($4.99 x 70%) - $0.06* = $3.43 per book

*based on Amazon’s delivery charge of $0.15 per megabyte for a 0.4-megabyte e-book file

While 70% is the standard royalty rate for e-books, there are circumstances in which your rate might be different.

 

E-Books Published on an Aggregator Site

If you publish on an aggregator’s site, your royalty amount will likely be lower. What’s an aggregator? It’s a company that distributes books to multiple booksellers.

 

E-books Published Using Draft2Digital:

One example is Draft2Digital, which distributes to Amazon, Apple Books, Barnes & Noble, and others.

Using an aggregator can simplify your publishing process, but it comes at a price. The aggregator will charge a portion of your book’s sales price in exchange for distributing your book to booksellers.

For example, Draft2Digital charges 10% of the sales price for every e-book sold through its distribution system. Rather than earning 70% if you publish directly on a bookseller’s platform, you’ll earn 60% if you publish the same book using Draft2Digital. Here’s how the calculation works:

  • Formula: (Sales Price x Royalty Rate) - (Sales Price x Aggregator Fee %)
  • Example: ($4.99 x 70%) - ($4.99 x 10%) = $2.99 per book

 

Not all booksellers pay the same royalty rates. While 70% is the industry standard, I’ve seen royalty rates as low as 35% for e-books. There’s also a broad range of fees for aggregators. I’ve seen aggregator fees anywhere from 10% to 30%, so check the rates before publishing.

 

Paperbacks Published on a Bookseller Site

Royalties for paperback books are complicated by printing and other costs. Booksellers calculate an author’s royalty amount, then deduct printing costs from that amount. Printing costs vary widely based on factors including book dimensions, number of pages, and ink type (color or black-and-white).

 

Paperbacks Published Using Amazon’s KDP:

Here’s a sample calculation for sales of books I've published using Amazon's KDP platform. This example is for my 250-page book with black-and-white printing and standard book dimensions (6” by 9”):

  • Formula: (Sales Price x Royalty Rate) - Printing Costs
  • Example: ($12.88 x 60%) - $3.81 = $3.91 per book

 

Paperbacks Published on an Aggregator Site

Your royalty amount is likely to be lower when you publish a paperback with an aggregator, like IngramSpark, for two reasons: most booksellers offer a lower royalty rate than Amazon, and aggregators charge a distribution fee in addition to the bookseller fee.

 

Paperbacks Published Using IngramSpark:

Here’s a sample calculation for sales of books I've published using IngramSpark. This example is for my 250-page book with black-and-white printing and standard book dimensions (6” by 9”):

  • Formula:          (Sales Price x Royalty Rate) - Aggregator Costs = Royalty Amount
  • Example:          ($12.88 x 45%) - $4.42 = $1.38 per book

As you can see, your profit on each book you publish with Amazon would be more than double the profit you would earn with IngramSpark.

 

Advances

When an author publishes with a traditional publisher, they might be paid an advance. This involves the publisher paying the author a portion of their future royalties before the book is published. This isn’t a common practice with self-publishing platforms where the author is typically the publisher. Therefore, self-published authors don’t pay themselves an advance; they only get paid after their books sell.

 

Bulk Printing Charges

With most self-publishing platforms, each book is only printed after a customer orders it. Therefore, publishers don’t incur the cost of printing books in bulk. That means, as an author, you won’t have to worry about bulk printing charges.

 

Payment Timing and Methods

Authors typically receive their royalty payments in as little as 60 days after their books are sold on platforms like Amazon. The payment cycle is much slower with aggregators, sometimes taking 120 days or more. Most booksellers and aggregators pay authors through direct deposit, PayPal, or another electronic payment system.

 

Pro-Tip

Publish your book on retailer sites first. Before you publish on aggregator sites, make sure each of the top retailers has your book in distribution so you lock in the higher royalty rates. Only publish on aggregator sites after you’ve published on all the key retailer sites. This will maximize the profit you make on each book sold.

 

 

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