Understanding royalties and payments in self-publishing is crucial for authors to make informed decisions about their publishing strategies and to maximize their earnings. Here’s a comprehensive guide on how royalties and payments work in self-publishing:
1. Royalty Structures
Percentage-Based Royalties
- Retail Price: Most self-publishing platforms offer royalties based on the retail price of your book.
- Royalty Rates: Typically, royalty rates range from 35% to 70% of the retail price, depending on the platform, pricing, and distribution options.
Platform-Specific Rates
- Amazon Kindle Direct Publishing (KDP):
- eBooks: 70% royalty rate for books priced between $2.99 and $9.99; 35% for books outside this range or in certain countries.
- Print Books: Approximately 60% of the book’s list price minus printing costs.
- Apple Books: 70% royalty on all eBook sales.
- Barnes & Noble Press: 65% royalty for eBooks priced between $2.99 and $9.99; 40% for prices outside this range.
- Kobo Writing Life: 70% royalty for eBooks priced between $2.99 and $9.99; 45% for prices outside this range.
Print-On-Demand Royalties
- Print Costs: For POD services, the cost of printing each book is deducted from the sales price before calculating your royalty.
- IngramSpark: Offers varying royalty rates depending on the wholesale discount you set (typically between 40% to 55% of the list price).
2. Calculating Royalties
eBooks
- Example: An eBook priced at $4.99 on Amazon KDP at a 70% royalty rate:
- Royalty: $4.99 * 70% = $3.49 per sale.
Print Books
- Example: A paperback priced at $14.99 with a printing cost of $4.85 on KDP:
- Royalty: (60% of $14.99) – $4.85 = $8.99 – $4.85 = $4.14 per sale.
3. Distribution Channels and Their Impact
Exclusive vs. Non-Exclusive Distribution
- Amazon KDP Select: Offers higher royalties and promotional opportunities for exclusivity but restricts distribution to other platforms.
- Wide Distribution: Allows you to sell on multiple platforms (e.g., Apple Books, Barnes & Noble, Kobo) but may offer lower individual platform-specific benefits.
Global Markets
- International Sales: Different platforms offer varied royalty rates based on the country of sale, which can affect overall earnings.
- Currency Conversion: Royalties are often paid in the currency of the platform, so be aware of conversion rates and potential fees.
4. Payment Schedules and Methods
Payment Schedules
- Monthly Payments: Most platforms pay royalties on a monthly basis, usually 60 days after the end of the month in which the sales occurred.
- Thresholds: Some platforms have minimum payment thresholds (e.g., $100 for a bank transfer).
Payment Methods
- Direct Deposit: Common for platforms like Amazon KDP and Barnes & Noble Press, providing a convenient and fast way to receive payments.
- Checks: Available but less common due to higher processing times and potential fees.
- PayPal: Offered by some platforms, providing a quick way to receive payments internationally.
5. Taxes and Withholding
Tax Forms and Reporting
- W-9 (US Authors): Required for US-based authors to provide to platforms for tax purposes.
- W-8BEN (International Authors): Required for non-US authors to avoid or reduce tax withholding on US-based sales.
Withholding Tax
- US Tax Withholding: Non-US authors may be subject to withholding tax on royalties earned from US platforms, typically 30% unless reduced by a tax treaty.
- Tax Treaties: Many countries have tax treaties with the US that can reduce withholding rates. Submit the necessary forms to benefit from these treaties.
6. Deductions and Expenses
Platform Fees
- Distribution Fees: Some platforms may charge additional fees for wide distribution or premium services.
Printing Costs
- POD Expenses: Printing costs for physical books are deducted from the sales price before calculating royalties.
Conclusion
Understanding the intricacies of royalties and payments in self-publishing allows authors to make strategic decisions about pricing, distribution, and platform choices. By being aware of how royalties are calculated, the impact of distribution channels, and the various payment methods and schedules, self-published authors can better manage their earnings and financial planning. Additionally, staying informed about tax obligations and potential deductions ensures compliance and maximizes net income from book sales.
