Where the money goes on a £10 book

How much does the retailer take? #

In the UK and US, retailers commonly receive a discount of 40–55% off the list price of a book. For a £10 book, this means the retailer could take anywhere from £4 to £5.50. This significant discount is a standard practice in the industry, allowing retailers to cover their costs and make a profit while selling the book to consumers.

What does the publisher do with their share? #

With approximately £2.50 from the £10 book, the publisher must cover various costs and expenses. These include:

• Editing: A copyedit of an 80,000-word novel can cost between $2,400 and $4,000, which is roughly £1,900 to £3,200 at current exchange rates. This is a significant portion of the publisher’s revenue from each book sale.
• Cover design: The cost for cover design averages around $880 (£700), which is another substantial expense.
• Interior/print formatting: This can range from $200 to $800 (£160 to £640), depending on the complexity and length of the book.
• ISBN: While the cost of an ISBN varies, purchasing a single ISBN in the US costs $125 (£100). In the UK, ISBNs are free, but this is a cost that publishers in other regions must consider.
• Marketing and distribution: These costs can vary widely but are key for getting the book into the hands of readers.

After covering these costs, the publisher must also allocate funds for overhead, such as salaries, office space, and other operational expenses.

How are author royalties calculated? #

Author royalties are typically calculated as a percentage of the book’s list price or net receipts, depending on the terms of the contract. For example:

• Hardcover: Authors might receive 10% of the list price for the first 5,000 copies, 12.5% for the next 5,000, and 15% thereafter.
• Trade paperback: The royalty is usually around 7.5% of the list price.
• Mass-market paperback: Authors typically receive 8% of the list price up to about 150,000 copies, and then 10% thereafter.
• E-books: The standard royalty is 25% of the publisher’s net receipts, although the Authors Guild argues that 50% is a fairer rate.
• Audiobooks: Authors commonly receive about 25% of the net receipts.

It’s important to note that royalties on net receipts are calculated after the retailer’s discount, which means the author earns less per copy compared to royalties on the list price.

What are the other income streams for authors and publishers? #

Beyond the initial book sale, both authors and publishers can benefit from additional rights and formats:

• Audiobook rights: Producing an audiobook can cost between $200 and $400 per finished hour. While this is an additional expense, it can also provide a new revenue stream.
• Foreign rights: Selling translation rights to publishers in other countries can be lucrative, although this often involves sharing revenue with a literary agent or co-agent.
• Film and TV rights: Although less common, these rights can be highly profitable if a book is adapted for the screen.
• Merchandising and licensing: Some books lend themselves to merchandise, such as toys, games, or clothing, which can provide additional income.

However, it’s important to note that these additional income streams are not guaranteed and depend on the book’s success and marketability.

How do advances work, and what happens if a book doesn’t earn out? #

Advances are upfront payments made to authors by publishers, and they are typically based on the publisher’s estimate of the book’s potential earnings. According to Publishers Marketplace, a “nice deal” might be up to $49,000, while a “major” deal is $500,000 or more. However, most deals are not publicly disclosed and are often subject to non-disclosure agreements (NDAs).

It’s important to understand that most books do not earn out their advances, meaning the royalties generated from sales do not surpass the amount of the advance. This is a normal occurrence in the industry and does not necessarily indicate a book’s failure. The Authors Guild income surveys consistently find that the median book income for working authors is relatively low, highlighting the financial challenges faced by many writers.

Frequently asked questions #

How much does the average author make from a book?

The average income for authors varies widely, but the Authors Guild surveys indicate that the median income from book-related activities is quite low. Advances can provide a significant portion of an author’s income, but since most books do not earn out, the ongoing royalty payments are often modest.

What is the role of a literary agent in book deals?

Literary agents negotiate deals on behalf of authors and typically receive a commission of 15% on domestic deals. For foreign and translation rights, the commission is often 20%, which is split with a co-agent if one is involved.

How are e-book royalties different from print book royalties?

E-book royalties are usually calculated as a percentage of the publisher’s net receipts, with the standard rate being 25%. This is different from print book royalties, which are often based on the list price and can vary depending on the format (hardcover, trade paperback, mass-market paperback).

What are some common misconceptions about book advances?

One common misconception is that an advance is a guaranteed income for authors. In reality, if a book does not earn out its advance, the author is not required to pay back the difference. However, this also means that the author does not earn additional royalties until the book has surpassed the advance amount in sales.