Unveiling the Profit Share: How Much Do Publishers Keep from Book Sales?

The world of book publishing can be quite complex, with numerous parties involved in the process. One of the most significant questions for authors and aspiring publishers is how much of the revenue is actually kept by the publisher. This article aims to demystify the share of profits between self-publishing and traditional publishing.

Self-Publishing: Who Keeps the Money?

Self-publishing offers a more straightforward financial landscape than traditional publishing. When you choose to self-publish, the company that prints your book will typically charge you for the printing costs. For example, Barnes Noble may charge you more than just the printing cost, but you can get a specific estimate by using their online calculators based on the page count and format specs.

Once the book is printed, if you choose to sell it yourself, you keep the revenue from the sales. If the publisher sells the book, you will receive a percentage between 55–75 percent. This percentage is largely based on the specifics of the sales price. For instance, if you self-publish a black and white print book, the costs are relatively low.

Professional Publishing: A Different Share Structure

When dealing with a professional publisher, the financial structure becomes more intricate. You might receive 8–10 percent of the list price of the book, with the exact amount depending on your contract and the number of books sold. This percentage remains constant, regardless of any discounts in bookstores, but you don't get paid for unsold, returned books. Publishers retain a portion of your earnings for a short period to ensure they can recover costs associated with the production and marketing of the book.

If you have an agent, they will take a cut, usually around 15–20 percent of your share. After that, the publisher receives 88–90 percent of the list price, which covers various costs including the cover artist, copyeditor, printer, marketing expenses, and other production costs. This means that while publishers may 'keep' 88–90 percent in the distribution, their actual profit margins are often lower, around 40 percent, depending on the terms of the contract and the financials of each book.

Traditional Publishing: A Breakdown of the Share

In the traditional publishing world, the publisher's share of the 100 is around 20 percent after paying the wholesaler and distributor. Out of this 20 percent, the publisher must also cover the overhead and production expenses, as well as any royalties you earn. The exact shares can vary widely based on negotiations with distributors and other costs.

To illustrate, here's an example from a book published by the author: 'Unlocking the Secrets of E-Book Publishing'. The royalty plan significantly impacts earnings. The key terms to understand include:

List Price: The full retail price advertised for the book. Net Price: The publisher's income after the retailer takes its cut. Wholesale Discount Rate: The discounted rate at which a book is offered to the retailer, usually at 55 percent of the list price.

Whether a royalty rate is based on the list price or the net price can greatly affect your earnings. For example, a 70 percent royalty rate based on the net price may not earn as much as a 35 percent royalty rate based on the gross price.

Examples to Help You Evaluate Your Retailer

Consider the following scenarios for a book sold at 9.99 with a wholesale discount of 55 percent:

Vendor Service Percent of List Price (Gross) Percent of Net Price Total Earned Vendor A Smashwords 70 3.15 Vendor B Amazon 35 Plan 35 3.50

These examples illustrate that understanding the calculation method is crucial. In this case, Vendor B pays more based on the list price, while Vendor A pays more based on the net price. This highlights the importance of evaluating each retailer's terms to maximize your earnings.

Ultimately, the financial arrangements can vary significantly between self-publishing and traditional, professional publishing. Authors should carefully consider their contract terms to ensure they are maximizing their earnings potential. Understanding the share of profits and how they are calculated can help authors make informed decisions about their publishing choices.