Author Solutions, self publishing

What every author needs to know about royalties. (Part 2)

In an earlier post, I referenced a conversation I had recently with the leadership team of a leading trade publisher. In that discussion, I was surprised to learn that one of the biggest issues book publishers deal with every day is royalty inquiries from authors. I have to admit, at first I was a bit surprised, but after I thought about it, I realized that royalties—and how they are calculated—can often times be complex and confusing. In my first post, I tried to define the key terms used when discussing royalties.In this post, I want to address some additional issues that I believe create confusion for authors.

Royalties can be confusing, but important.

  • New books can be sold by a used book retailer–On some online retailers, you will see books described as both used and new.  Despite those descriptions, it doesn’t mean the books are any different. There are many used book dealers who sell new merchandise as well.  They just mark it as used because that is the majority of what they sell. However, this description gives the impression to the author that a bunch of books have been sold and now are being resold.  The fact is most books are actually printed using print-on-demand technology so there are not really any used books at all.
  • Only 4 left” is almost always a marketing ploy to create urgency to buy–Even though books are printed print-on-demand, some online retailers will put a statement like “Only 4 left” near a book to try to get people to make a decision to buy. Again, authors assume that there have been other books printed and sold, but the reality is there were no books printed and stored in a warehouse. This is referred to as “virtual inventory,” and is simply a way to get people to buy more quickly.
  • If the retailer has a sale, it does not reduce the author royalty–In almost every case, this is not true. Royalties are calculated on Suggested Retail Price (SRP) and not the actual sale price so the retailer takes less margin on the sale to drive volume, but the author is paid the same regardless of the sale price. As with anything, there are always exceptions, but this is almost always the case.

I hope this information helpful. Please use the comment section to let me know if there are any other royalty questions I can answer.

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