Wednesday, February 26, 2014

Indie or Traditional?


For non-writers who have wondered about the profitability of writing fiction I will attempt provide some answers, according to my knowledge and experience.    For e-books the indie author receives between 60% and 70% of the book price per book sold, as long as the price is between $2.99 and $9.99.   So for a title costing $4.99 the author receives $3.46 in most markets.  Some foreign markets like India, Japan and Brazil only result in a 35% royalty.   I assume it is something to do with the cost to transmit the e-book to those locations.   If an author sells 5000 copies of one book priced at $4.99 they have earned a little more than $17,300 gross at a 70% royalty.   From this must be deducted any costs associated with producing the book such as editors and covers.   Of course, taxes will be paid on your profits less your reasonable expenses.  

The profit on paperback books is less because there are costs associated with the production of the book that must be factored in.   The indie author sets the price for the book according to what they think is a reasonable profit.  I aim for $3 - $4 per book.   Bookstores do not typically carry indie books.  It's easier to deal with a few larger publishers than a host of indie writers.

Traditional or legacy publishing focusses on mass market or trade paperbacks.  E-books are an afterthought, at least at the present.  Traditionally published authors receive what is called an 'advance', usually paid out in 3 portions:   when the contract is signed, when the book is delivered and finally when it is published.   This is, in effect, an advance payment on assumed royalties.   These days $5,000. is a typical advance for new authors.  If the author has an agent, 15% is taken off the top of that $5,000.  The agent will have found a publisher for the author and helped negotiate the contract.  The publisher has taken care of formatting and covers as well as distribution to book stores.

Once the advance has been 'earned out', that is, the sales have equalled the royalty amount received, the author will receive additional royalties usually paid semi-annually.  If the author is receiving a typical 8% royalty on the sale price of a $6.99 book this amounts to 55 cents for each book. E-book royalty can be as high as 18 percent.   So you can see it would take a while for the $5,000. to be earned out.   I'll save you the calculation: it's 9090 books sold.  Actual royalties are a closely guarded secret and authors are prevented by their contract from disclosing their payments.  

There's lots to read out in cyberspace on this topic. Try this post by a U.K. writer who has tried both approaches.   Read and decide for yourself!

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