How we calculate royalties

Who	When	Number	gross	print	Net
L	Nov-18	7	48	36.78	11.22
B	Nov-18	15	101.3	58.85	42.4
W	Nov-18	6	40.5	29.44	11.06
C	Nov-18	5	33.75	23.55	10.2
R	Nov-18	5	33.75	23.55	10.2
R	Nov-18	4	27	20.02	6.98
Al	Nov-18	1	8.25	6.83	1.42
F	Nov-18	5	33.75	23.55	10.2
G	Nov-18	30	202.5	118.94	83.56
Celebration event	Nov-18	20	120	76	44
LS US	Nov-18	1			2.48
LS UK	Nov-18	1			2.49
Amazon UK	Nov-18	3			3.9
W	06-Dec-18	3	20.25	7.29	12.96
I	18-Dec-18	1	8.25	6.83	1.42
LSUK	31/12/2108	6			14.94

Who, when and number are probably self-explanatory. Gross is the amount paid by individuals ordering directly with us. Print is the price we pay for printing and shipping. Net is the amount per order we receive after all costs have been paid. Note there are no gross amounts for receipts from Amazon and Lightning Source. We pay nothing out in advance. The downside of the latter is that we don’t receive the payment until 90 days later.  

The second half of the spread sheet looks like this (note this is taken form a different example):  

Net	royalty	profit		RA
11.22	4.7685	4.7685		6.4515
42.4	18.02	18.02		24.38
11.06	4.7005	4.7005		6.3595
10.2	4.335	4.335		5.865
10.2	4.335	4.335		5.865
6.98	2.9665	2.9665		4.0135
1.42	0.6035	0.6035		0.8165
10.2	4.335	4.335		5.865
83.56	35.513	35.513		48.047
44	18.7	18.7		25.3
2.48	1.054	1.054		1.426
2.49	1.05825	1.05825		1.43175
3.9	1.6575	1.6575		2.2425
12.96	5.508	5.508		7.452
1.42	0.6035	0.6035		0.8165
14.94	6.3495	6.3495		8.5905

At the end of the year, 31 December, the royalties are totted up and divided by the number of authors in a book. However, they are not paid until the end of March to allow for the 90 day delay.

The “profit” is used to offset set-up costs. Once those are covered, any profit is shared between the partners. At the moment we pay ourselves no wage for editing, designing and marketing books. However, changes are afoot – watch out for the next post.                 

Overheads on producing books

In all of the imprints we manage we award authors 50% of the profit on each unit sold even before we have recovered the overheads on the book. We also allow authors to purchase books at 75% of our recommended retail price and if they can afford to buy 50 or more in one go, at cost plus 10%.     

We try to be as transparent as we can and each month we publish charts showing the performance of our books. These are only for ones that have achieved sales in this calendar year.

What are the overheads?

These are the payments we have to make per title regardless of how many books we sell.

The chart below shows overhead costs for one book. This is found at the top of each book performance statement.

Distribution	8.4	4.77
IPG	4.89	18.02
Set up	71	4.7
ALDL	23.55	5.87
BL	9.48	5.87
		2.97
		0.63
		4.33
		35.51
		18.7
		1.054
		1.06
		1.66
		5.51
		0.6
		6.35
	117.32	117.604

Here is the key to the chart:

Distribution

We pay this annually per title. This hooks the book up to distributors and online bookshops world-wide. This includes companies like Ingrams, Gardners, Bertrams and retailers such as Waterstones, Amazon and the Book Depositary. All of our books have an ISBN, so any bookshop should be able to order a copy. We prefer to work through distributors. We find working directly with bookshops problematic.  However, authors can do this themselves if they purchase an Authors’ Kit (50+ books at cost plus 10%) and can offer the retailer a 40% discount. We offer retailers 35% discount.

IPG

The Independent Publishers Guild. We pay an annual fee to this and divide it among all the books we publish. We gain much useful information from the Guild and they run many events and training sessions that are extremely useful. The contribution per book is going down a little each year – it is being divided between more titles year on year. However, the annual fee goes up in line with inflation.

Set up

This represents a standard fee for set-up of paperbacks and includes Lightning Source  sending us a proof copy for £21. They offer us an electronic proof but we prefer to see the book in the flesh. This is one-off fee. However, if we need to make any alterations to the book we have to pay the set-up fees all over again. Ironically the set-up fee for full colour hardbacks can be less, and so far has been. It could also come out as more – we get a custom set-up fee for those.  

ALDL

Agency for the Legal Deposit Libraries. We have to send five copies to the agency.  These are then redistributed to legal deposit libraries: The Bodleian Libraries in Oxford, Cambridge University Library, the National Library of Scotland, the Library of Trinity College Dublin and the National Library of Wales. 

This is a one-off expense in the first year of publication. It varies from book to book depending on the size of the book and therefore printing and shipping costs.

BL

British Library. We have to send one copy of the book to the British Library. This is again a one off expense in the first year of publication and again varies according to the size of the book.

Company gains

The company takes the other 50% of the profit. These amounts are shown in the right hand column. You will see that this book has covered its costs – just. Will it cover the IPG and Distribution cost in its second year? (In fact it has!)