How do book royalties work?

In My Humble Opinion
1

AIUI the author of a book typically gets 15% of sales. Is that based on the cover price that the reader pays or on the wholesale price that the bookstore pays?

If the cover price, what happens when the book is discounted? For example, the new Louise Penny novel will be out in August. It has a list price of $28.99. If Ms. Penny gets 15% (including her agent’s cut), she’ll get ~ $4.35 per copy. Amazon though is selling it for $20.29. Does that mean that Ms. Penny gets only ~ $3.04 per copy?

If the wholesale price is used as the base for the royalty amount, how much is that wholesale price as a percent of list?

I want to take this to what is at least sort of a limit. The thread on Dollar Tree reminded me that I fairly frequently buy books there – the variety available is extremely limited, but I’m happy to give a book a try if it looks like maybe I’d like it because it’s only a buck*. How much does the author receive from the Dollar Tree sales?

  • A sort of amusing story: I donate books I no longer want to the AAUW for their annual sale. Dropping off a few boxes once, I got into conversation with the president of a local chapter. I mentioned that several of the books were purchased for $1 at Dollar Tree. She laughed – they routinely list all hardcover books for $2 at their sale.
2

Royalties are always based on cover price. Doesn’t matter what the retailer sells it for.

However, excess copies are remaindered, or taken off the record and sold to jobbers. They no longer generate royalties. That’s what dollar stores sell.

3

And remember most authors get advances–and the advance may be greater than the royalties from the books actually sold. For example Andrew Cuomo is getting more than $5 million for his book on handling the Covid crisis–but how many people will actually buy the book?

4

My publisher topped out at 10% of the actual price the publisher sold the book for. That percentage drops to 5% if:

  1. The selling price was discounted over 20% (virtually all major bookstore’s purchases).
  2. The books went overseas.
  3. The books were sold by direct order from the publisher.
  4. Others I can’t remember.

I took delivery of hundreds of books that I had pre-sold myself and requested a 19% discount instead of the standard author’s discount of 20% so I made more on the royalties. Over the years I got very few 10% royalties. On the positive side my publisher never remainders books. If they have one on the shelf it is still for sale.