When it comes to writing a book, there is no universal formula for how much you’ll earn with each title, but you can work out how much you will earn in royalties per book sold. We’ll talk about that in more detail later, but first, let’s look at how book royalties work.

The traditional publishing industry developed a sales system to ensure a fixed rate of return for authors, publishers, and distributors. An author receives profits or royalties as a flat fee per book sold or a fixed percentage of a book’s sale. The percentage or value of the royalty per book is at the publisher’s discretion, taking into account the book’s genre and marketability. However the publishing industry has evolved rapidly in the past five years: the hybrid and indie publishing routes are now viable options, and with these new options, book royalties vary significantly. But are they are better or worse than the royalties you’d get from a traditional publisher? We’ll let you decide.

Traditional Publishing
When you accept a book deal with a traditional publisher, your royalty percentage and the terms of your advance are discussed before you sign a contract. The royalty rate and advance will vary with the author’s experience, the performance of the author’s previously published books (and similar titles in the market), and the publisher’s size. Often, the author takes around 8% of the retail price on print paperbacks, while the publisher takes up to 92% of the retail price. For ebook formats, publishers can take as much as 75%, while authors get anywhere from 25% to 50% depending on the publisher. Why do publishers take the lion’s share? Apart from having to absorb production costs (design, editing, printing), they also have to give a large chunk to distributors as a wholesale discount: typically 45% to 60% of the book’s retail price. Every title published by a traditional publisher is potentially an investment, but it’s also potentially a risk. With every book deal, traditional publishers pay an advance on an author’s royalties once sales projections have been made. This advance on future royalties can range from $1,000 for a small publisher taking a chance on a new author to millions of dollars for a New York Times bestselling author, with ten bestsellers under their belt.Here’s the catch, though: unless you’re already a bestselling author, this advance will likely cover all or most of the royalties you get for that title. That’s right: it’s not as sweet a deal as you might expect. If you are working with a large publisher, you can expect to get decent exposure for your book, but at the expense of your slice of the pie.

Hybrid Publishing
Hybrid publishing is the middle ground between traditional and self-publishing. Hybrid publishers have several different publishing models under one roof, varying with the demands and requirements of authors and publishers. In other words, hybrid publishing attempts to sweeten the publishing deal by making it seem more profitable for you as an author.
Generally, the author takes 15% to 60% of the retail price on print paperbacks, while the publisher takes up to 85% of the retail price. For ebook formats, publishers can take as much as 50%, while authors get anywhere from 50% to 70% depending on the publisher. It seems like you are getting a greater percentage of royalties, but the volume of sales may or may not be impressive, and you will have to pay upfront for some of the production or marketing costs, or both.
Moreover, like traditional publishers, the marketing support hybrid publishers provide will be largely dependent on how investable they think your book is. You are much less likely to get an advance on future royalties with a hybrid publishing contract because hybrid publishing models are designed to minimize risk and financial outlay for the publisher while making the author take on more of the cost of production (including marketing) and financial risk. For authors, hybrid publishing seems to offer the worst of both worlds: a lot like standing in the middle of a two-way street, with not much to do except dodge oncoming traffic and run for your life.

Indie/ Self-Publishing
Self-publishing is the opposite of traditional publishing in the sense that authors take the lion’s share of royalties: everything outside of print and distribution costs. Self-published books are sold at relatively lower prices, but the entire sum of royalties goes to the author. It doesn’t matter if you have experience or how marketable your book is — what matters is the royalty rate offered by self-publishing platforms. Ebook platforms such as Amazon’s Kindle Direct are probably more beneficial as the distribution fees are a lot lower compared to wholesale discounts for print sales. If you know what you are doing, this can be an easy route. However, it’s not just about the royalties. With self-publishing, there is no control over the editorial calibre of your book as well as your cover design and layout, if you don’t hire a professional editors, layout artist, and cover design artist to help with production. Unfortunately, that cliched saying about judging a book by its cover is literally true in the publishing business: whether you’re selling your book in brick-and-mortar stores or on the Kindle store, readers can 
and do judge a book by its cover. This can mean that sales will suffer if your book doesn’t quite stand up to competition in the vast market. After all,100% of royalties on zero copies sold is still zero, at the end of the day.

Service Publishing
Service publishing is quite like indie or self-publishing in terms of royalty benefits, with the added benefit of receiving input from professionals. The end result is a book with a carefully crafted story, layout and cover design. A service publisher will never take any of the author’s royalties, and will only charge for the editorial, design and/or distribution services to get a title published worldwide for Print-On-Demand sales. An author shouldn’t have to pay a lot for distribution either, and that’s why Firewords never charges for distribution when you purchase editorial or design services.

Now you know how book royalties work, it’s time to dive into the numbers. Look out for our next article on how much royalties you should be getting for your published book, where we look at royalty rates across different publishing paths: traditional, hybrid, self-publishing and service publishing.