Outskirts Press is among only a handful of self publishing companies that pay “100% royalties” – and by “handful” I literally mean less than 5. In fact, while I didn’t do an exhaustive search, I’m only familiar with 2 others that pay 100% royalties in the same manner we do, which is to say, regardless of where the book sells. Some others claim to pay “100% royalties” but then you quickly discover this is only if the book is sold from the publisher’s own website.
That example of the “fine print of self publishing” is why it becomes difficult for authors to truly know what to expect, or what they are going to get, when they choose a self publishing company. I discussed another example in my last posting, with the Amazon-published book that earned over $5 every time the book sold from Amazon, but only $1.45 when that same book sold anywhere else.
Outskirts Press pays 100% author royalties regardless of where the book sells. So let’s discuss what “100% royalties” means in this context. Regardless of where you see that terminology, you are almost always going to see some reference to “profits” within the same context, and that is because publishing companies that refer to “100% royalties” are actually referring to 100% of the “profits” of the book. So regardless of where you publish, and regardless of what the publisher’s “royalty” claims are, please do not ever expect to receive $20 for a $20 retail price book. That would be a 100% retail royalty, which no publisher pays.
Almost all self publishing companies make their royalty claims based upon the profit the book generates, so when you see that one company pays 100% royalties and another pays 20% royalties, both those percentages are coming from the same number – the profit the book has generated. The profit of a book is determined by the following calculation: Retail price – trade discount – production cost = profit.
All publishers earn a “profit” on the book. Then the question becomes, how much of that profit do they give to the author?
All hardcopy books must be printed, and all printers also earn a “profit” on the production cost of a book. Authors who have independently self-published their own books (or explored that option) know that they often get different printing quotes from different printers even though the actual book itself might be exactly the same. This is because different businesses build different profit margins into all phases of production. And that is no different from a self-publishing company, where company X may have a “production” price of X while company Y may have a “production” price of Y.
And that production cost is why a 100% royalty for a $14.95 book doesn’t mean the author receives $14.95 every time the book sells. Let’s use one of my books, SELL YOUR BOOK ON AMAZON, as a very specific example, since I don’t mind revealing all the pricing of the book. It has a retail price of $14.95. I earn 100% author royalties for my book, just as all our Outskirts Press authors earn 100% author royalties for their book(s). So how do we determine 100% of the “profit” of a $14.95 retail price? We use the formula I mentioned above:
Retail price – trade discount – production cost = profit.
$14.95 – 20% (trade discount) – $5.36 (production cost) = $6.58 (profit).
I know this is confusing, so I’ll break it down even further. 20% of $14.95 is $2.99. So $14.95 – $2.99 = $11.96. This is the trade discounted price for my book.
Every copy of Sell Your Book on Amazon has a base production price of $5.36. This is the production cost we quote to the author (me) and this is the amount I pay for each copy from within my Author’s Center. Other books we publish have different base costs, which depends upon the page count, the trim size, etc.
The trade discounted price of $11.96 minus the production base author copy price of $5.36 equals $6.58, the “profit” of the book sale.
Then, depending upon the publisher you choose, you get a percentage of that profit. With Outskirts Press and two other companies I am aware of, that means you get 100% of the profit, $6.58. With one of our largest competitors, on the other hand, you would get 50% of that profit ($3.29).
So how is my Outskirts Press book earning $6.58 on Amazon, when a book published by Amazon (HCG Protocol) earns just $5.23? Next time I will discuss how Outskirts Press is beating Amazon at its own game by paying higher author royalties than Amazon’s publisher, even for books sold through Amazon.