One company says they pay 100% royalties while another one brags about their 20% royalties. What is going on?
There are two basic ways that companies use to calculate royalties.
ROYALTIES BASED ON NET
Net Profit = Gross Profit (or Gross Revenue) minus Expenses
The companies that claim to pay “100% royalties” are actually taking out all their costs first (printing, handling, other fees), and then paying you what’s left over. They, of course, control their costs and can put anything into the mix so it’s very difficult, if not impossible, to figure out how much you’ll earn if a company is claiming to pay “100% royalties.”
Unfortunately, many authors don’t read the fine print and assume they’re getting 100% of the list price of the book after the book is in print and all their setup fees are paid. I, personally, would never do business with a company that tries to trick people into thinking they’re earning more than they will, or that even uses that verbiage to lure people into their website.
One well-known POD publisher claims to pay 100% royalties and also claims they earn no money on each sale…but they charge a handling fee on each transaction. My opinion is this: Marketing verbiage like that is a big fat lie.
Other companies don’t claim to pay 100%, but also pay a percentage based on their net profit. Like the first example above, they control the dollars coming out of that Gross Profit (Gross Revenues) so, again, it’s difficult, if not impossible, to figure out exactly how much you’ll end up getting.
ROYALTIES BASED ON LIST PRICE
When a company promises to pay you a specific percentage of the list price, you always know what you’re getting. At Booklocker.com, you earn 35% of the list price of a book sold through Booklocker.com.
$11.95 x .35 = $4.18
You earn 15% of the list price for books sold through other retailers/wholesalers/distributors – $11.95 x .15 = $1.79
We’re not the only POD publishers who use this simple and fair method for calculating royalties!
I would only recommend doing business with a POD publisher that pays a specific percentage based on the list price. That way, you always know how much money you’re going to make on every single sale.