Writing a truly unique and useful ebook is not an uncomplicated task: it takes substantial time and effort to compose a piece of work that is truly correct, to-the-point, and enjoyable to read. So unless you are simply writing for the thrill of it, you have to cautiously weigh in what your alternatives are in terms of your future royalties, in order for you to really cash in on ebooks. How much royalty you will get is depending on a number of factors.

Naturally, “payment” or “royalty” is not an entirely easy issue to discuss. Certainly, the concept of royalties is in essence about the actual quantity of dollars or pounds sterling that you might get with a certain publishing deal. But there are also alternative aspects of an arrangement or contract that can be just as important, and conceivably even more so. Such aspects can be, for example, the length of the contract, the question about the exact time for payments, etc.

However, in the present article I shall mostly address the total sum of money that you can anticipate from different types of royalties arrangements. Although there are lots of different types of contracts in the publishing world for writers and authors, I shall in this short article run through 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” royalty model is perhaps the most “intuitive” of them all. This royalties model is used when authors approach major publishing houses to market their ebooks (or even ordinary books). This royalty model practically boils down to that the writer will obtain a certain percentage of the ebook’s (retail) list price. The precise percentage typically varies between 10 and 20 percent.

For instance, if the royalties agreement is such that the writer gets 10 percent of the $20 his or hers ebook is sold for, the writer would get a royalty of $2 per book (0.10 x 20).

This type of royalty model has formerly been “standard procedure at leading publishers such as Random House and Simon & Schuster. But these publishers have now migrated to the second model, the “Net Receipts Percentage”.

2. Publisher’s “Net Receipts Percentage” Royalties

Another royalty model is the “Net Receipts Percentage”, or the “Net Proceeds Percentage” model, which is applicable when authors are trying to get a deal with major publishing houses to publish and market their e books. Presently, many publishing houses utilize this royalty model, including Macmillan, Random House, and Simon & Schuster.

In this case the writer will receive a certain percentage of the net sales of the ebook. This percentage typically amounts to between 10 and 25 percent of the net proceeds.

For example, if the royalty agreement is such that the author gets 20 percent of the net proceeds, then the calculation can look something like this. Assuming a list price of $25, and also assuming that the net sales for the publisher is, say, 60% of the list price (i.e., the retailer gets 40 percent), the author should get a royalty of $3 per e-book (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 all on your own, but still use one or more retailers and distributors to advertise and sell it. For instance, you might use sales channels such as Lulu.com.

In this scenario the author will obtain a particular percentage of the net proceeds of the e book, and in this way it is quite comparable to the second model above, the one named “Net Receipts Percentage”. But even if the models are similar, the “Flex-Price Net Receipts Percentage” has the major advantage that your cut per book will be radically higher, assuming that you will sell your ebook for more than simply a dollar or two.

Another great difference is this. Since you are self-publishing your ebook, you may actually decide yourself what the list price should be. Because of that you will have additional flexibility in terms of picking a product price that may bring in maximum royalty for you.

4. Self-Publisher’s “Full List Price” Royalties

Option number four is to do everything on your own. In that case you will be responsible for not only the publishing of the ebook but also the marketing, advertising, and promotion, as well as the sales. This means that you almost certainly must have your own site where you promote and sell your e-book.

Note, however, that you do not necessarily have to have a very complex e-business architecture integrated with your website. You could very well instead use a more straightforward solution such as the payment processing used by paypal.com, or other comparable solutions.

Anyhow, the amount of royalty to be estimated from this fourth royalty model is quite easy to estimate, as you will keep all the proceeds for yourself. Obviously, however, depending on the exact solution you are using, you may wish to adjust the figures, in order to properly account for costs related to services such as the site hosting or the payment processing, etc.

Final remarks

It may not be very easy to determine which royalties scenario works best for you. One issue might be, for example, how interested you are in marketing. If you are very interested in promoting your own e-book or e-books online, then royalties scenarios 3 and 4 may very well be good for you.

However, if you are for the most part a writer, and not so interested in internet marketing, it might not be a bad idea to first look at the first and second royalty models. The downside with these two royalty models is, however, that it may not be so easy to get published; but if you don’t get lucky, you can always try models three and four as your plan B.

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.

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