Posted on Tuesday, 22nd December 2009 by FTS
Creating a really great ebook is not an uncomplicated task: it takes significant time and energy to compose a piece of work that is truly correct, to-the-point, as well as enjoyable to read. So unless you are just writing for the thrill of it, you must cautiously assess what your options are in terms of your royalty payments, in order for you to really make money with ebooks. How much royalties you will get depends on a variety of factors.
As you would expect, “payment” or “royalty” is not an entirely easy subject to talk about. Undoubtedly, the concept of royalties is fundamentally about the actual quantity of dollars or pounds sterling that you would get with a particular publishing agreement. But there are also other aspects of an agreement or contract that may be just as important, and perhaps even more so. Such aspects can be, for example, the length of the contract, the issue about the precise time for payments, etc.
However, in the current article I shall mostly address the overall amount of money that you might be expecting from different kinds of royalties arrangements. Although there are numerous different types of contracts in the publishing world for writers and authors, I shall in this short article outline only four types of royalties: “list price percentage|, “net receipts percentage”, “net receipts percentage”, and “full list price”.
1. Publisher’s “List Price Percentage” Royalties
The “List Price Percentage” royalties model is perhaps the most “easy to calculate” of them all. This royalties model is used when writers or authors approach major publishing houses to market their ebooks (or even ordinary books). This royalties model basically boils down to that the author will receive a certain percentage of the ebook’s (retail) list price. The exact percentage typically varies between 10 and 20 per cent.
For instance, if the royalty agreement is such that the author gets 20 percent of the $15 the ebook is sold for, the author should get a royalty of $3 per book (0.20 x 15).
This kind of royalty arrangement has previously been used at top publishing houses such as Random House and Simon & Schuster. But these publishing houses have now migrated to the second model, the “Net Receipts Percentage”.
2. Publisher’s “Net Receipts Percentage” Royalties
Another arrangement is the “Net Receipts Percentage”, or the “Net Proceeds Percentage” model, which may be utilized when authors approach major publishing houses to publish and market their e books. Presently, many publishers utilize this royalties model, including Macmillan, Random House, and Simon & Schuster.
In this scenario the writer will receive a certain percentage of the net sales of the ebook. This percentage usually amounts to between 10 and 25 per cent of the net proceeds.
For example, if the royalties arrangement is such that the author gets 20 percent of the net sales, then the computation could look something like this. Assuming a list price of $25, and also assuming that the net sales for the publisher is, say, 60 percent of the list price (i.e., the retailer gets 40 per cent), the author would get a royalty of $3 per ebook (0.20 x 0.60 x 25).
3. Self-Publisher’s “Flex-Price Net Receipts Percentage” Royalties
Option number three would be to publish your ebook by yourself, but nevertheless use one or several retailers and distributors to advertise and sell it. For example, you could use sales channels such as Lulu.com.
In this set-up the writer will receive a certain percentage of the net proceeds of the ebook, and in this sense it is very similar to the second model above, the one named “Net Receipts Percentage”. But even if the royalty models are similar, the “Flex-Price Net Receipts Percentage” has the main advantage that your share per book will be radically higher, assuming that you will sell your ebook for more than simply a dollar or two.
Another great dissimilarity is this. Since you are self-publishing your e-book, you might actually choose yourself what the list price should be. Because of that you will have more flexibility in terms of picking a product price that may bring in maximum royalty earnings.
4. Self-Publisher’s “Full List Price” Royalties
The fourth option is to do everything yourself. In this case you will be involved in not only the publishing of the e-book but also the advertising, as well as the sales. This means that you almost surely have to have your very own website or blog where you promote and sell your e book.
Note, though, that you do not unavoidably have to have a very complex e-business solution integrated with your website. You might very well instead utilize a more simple system such as the payment processing used by paypal.com, or other similar systems.
At any rate, the sum of royalty to be anticipated from this fourth scenario is fairly easy to estimate, as you will keep all the earnings for yourself. Obviously, however, depending on the precise solution you are using, you may wish to adjust the figures, in order to properly account for costs related to services such as your site or blog hosting or your payment processing, etc.
Closing up
It may not be entirely easy to decide which royalties scenario suits you best. One issue might be, for instance, how involved you are in marketing. If you are very interested in promoting and marketing your own ebook or ebooks on the internet, then royalties models 3 and 4 may very well be good for you.
However, if you are mostly an author, and not so keen on online marketing, it might not be a bad idea to aim at the first and second royalty models. The downside with these two royalties models is, however, that it is not so unproblematic to get published; but if you don’t get lucky, you can always try models three and four afterwards.
ABOUT THE AUTHOR: Johnny Jones has a background in project management and publishing, and is currently a contributor to the EbookBrothers.com website, where he writes about ebook marketing, inluding topics such as e-books royalty etc.
For a free subscription to the EbookBrothers.com Newsletter (with free e-articles, tips and tricks on how to create, write, and market ebooks online), visit http://www.EbookBrothers.com today.
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