Understanding Your Royalties: What's Your Share of the Profits?

Naturally, your first instinctive answer when asked what your share of the profits should be might be ALL. Considering you slaved over the manuscript, invested countless hours in research and editing, why shouldn't your cut be substantial?

And your cut can be substantial with self-publishing, but you may still feel a little cheated when you're plugging selling prices into the publishing wizard, and your royalty is smaller than you would have hoped.

In order to help you better understand your future royalties, PublishingRoom has generated this handy list of fundamental questions, which, once explored, should acquaint you with the basics you'll need to choose a fair and cost effective selling price for your new book.

What Are Royalties?

Essentially, royalties are what you earn per book sold. Whether you publish with a traditional publishing house or a self-publishing company like PublishingRoom, you'll always earn a royalty on your intellectual property. While this percentage is negotiable with traditional publishers, self-publishers usually have a base quote price for printing, which, after subtracted from your selling price, determines your royalty rate.

Often, your royalty can only be calculated after your book is designed and formatted for publication. Only then can a publisher determine the cost of printing your book and distributing your title to the general public.

Why Are Royalties Important?

As the writer of your book, you obviously deserve your share of the profits, but there's more to royalties than just money. First of all, your royalty allows you to gauge your own promotional and book selling strategies. If your royalty check isn't as juicy as you had hoped, this may be a good indication that you should revise or reconsider your marketing plan.

Second, earning a little extra cash is good motivation for emerging writers. You want to feel as through your book is being actively read in the modern era, and your royalty is a practical way of measuring your readership. Sure, your publisher could send you a simple break down of your books sold in a certain quarter, but emerging writers can hardly feed themselves on faceless figures that never affect your bank account. But tack a dollar sign onto the front of that figure, and authors can feel both creative and productive in the economic world.

Third, royalties give you reason to stick with writing. The more financial success and stability you notice from your book, the more you'll finally be able to devote significant time and effort to your craft. The exciting prospect of finishing yet another manuscript that could earn you a significant source of income will definitely help you buckle down and stick to a writing schedule, not unlike an editor on a deadline.

Last but not least, always remember you deserve your cut. Your unique voice and insight are earning your publisher a percentage as well. Truth be told, PublishingRoom makes a small profit from your book sales, and though our earned revenue from your orders is much more modest than that of a traditional publisher, who may take more than 90 percent of the profits your book can potentially generate, we don't want to bite the hand that feeds us. In order to ensure our publishing presence as well as the future of your writing career, royalties for authors are a must. After all, we may crunch the numbers, but you provide the interesting content that makes revenue possible in the first place.

What's Your Share?

After your manuscript is properly prepared for publication and your selling price is selected, your publisher will undoubtedly calculate your royalty, but before you can understand the reason different books provide different royalties, you must first consider the publishing industry as a whole.

Care To Guess? Traditional Publisher's Royalty Scheme

A traditional publisher will mostly likely ask you to sign a contract in order to buy the rights to your manuscript outright. While you may receive a juicy advance for your novel or a modest lump sum of money for the copyright to your book, your royalty may be adversely affected when you sign your contract.

More often than not, emerging writers are given a less substantial royalty rate for their first book, which is understandable at times. Remember, a traditional publisher is taking a chance on you whenever they contract your book. There's no guarantee that your book will sell thousands of copies, and though they may have a good handle on the hot book marketing trends, selling tides can change at the drop of a hat. However, as you gain literary acclaim and your first book makes a sizeable impact on the reading community, you can always ask that your royalty be increase for your next publication.

Another factor that affects your royalty when publishing traditionally is the estimated budget for your physical books. Publishing houses have large quantities of your book printed and warehoused for ordering convenience. The printing cost combined with storage rents may be sizeable enough to knock down your royalty rate a point or two.

In addition to printing costs, traditional publishers will also need to subtract production and promotional costs from your royalty till. Books don't sell themselves, and since the publishing house technically own the rights to all manuscripts that they've contracted, they'll be the ones taking the financial hit if your book doesn't move from storage into the bookstores. Remember, they're taking a chance on you, too, especially if you're an emerging writer.

Therefore, you'll need to factor in the cost of a company publicist who can draft press releases and contact the media, an educated editor who can smooth out your prose, an expert design team who can polish the look and the feel of your future publication, not to mention a book sales professional who can apprise bookstores of your new publication. Once you've tallied their time and the materials they'll ultimately use to spread the word about your book, your royalty might dwindle to a mere eight or nine percent of your retail selling price as a result.

Sharing Is Caring: Self-Publishing Royalty Payment

Self-publishing companies like PublishingRoom, on the other hand, operate a little differently. Using print-on-demand technology, which utilizes a virtual inventory instead of a physical warehouse, we're finally able eliminate the added expense of storage space. So too, using our innovative publishing software, you're able to lay out your book on your own, reducing the price of paid professionals to the minimum.

Given this new DIY publishing process, your royalty should be healthier as a result. Of course, we still have to determine the cost of printing your book before the publishing wizard can calculate your royalty, but you decide the rest. You have the option of commissioning a publicist for a press release, hiring an editor for a fresh perspective or contracting a designer for cover art, but you're never obligated. That's the whole point of DIY publishing – you make the choices that are best for your publishing needs and marketing goals.

Essentially, with PublishingRoom, the only publishing factors that affect your royalty are (1) the base cost of printing your book, (2) retail pricing since we account for possible worldwide distribution when you initially price your book and (3) PublishingRoom's modest margin. Printing costs are determined primarily by page count, and you can use our pricing calculator (located on the homepage) to test different pagination if you'd like. PublishingRoom's margin is negligible and mainly used to pay for maintenance to the publishing software. We wouldn't want you using an antiquated system, now would we?

But you always have the freedom to choose your selling price, so you determine the price at which your book sells and the royalties you earn per book sold. So too, with PublishingRoom, you always work within your own budget when it comes to promotional materials, so you can decide the future of your publication. Nobody knows better than you the best way to market your book, and with your DIY enthusiasm, your royalties should reflect your efforts as a result.

For more technical information on pricing your book as well as royalty allocation, please visit the "Pricing and Royalty Payments" section of the PublishingRoom FAQs.