Book Royalties

Book royalty calculations at Mill City by distribution model and retailer

While Mill City Press doesn’t take a piece of your book sales, some additional third parties who handle the book may get a cut. This will depend on which distribution package you are in.

Below are book royalty examples for a 200-page paperback with a black-and-white interior, 6” x 9” trim size, and full color cover that we’ve priced at $15.00 (retail). This pricing is just to demonstrate how royalties break down--feel free to insert your own numbers into these formulas.

Royalties under Basic or Advanced publishing packages (a.k.a. POD Distribution)

Example A: Direct sales by author at events, through Paypal, etc.

In any direct sales scenario the author makes 100 percent of the sales price, less whatever she/he paid to print the book and any postage costs incurred that weren’t covered by the end customer. In order to sell your book on your own, you would need to have ordered copies in advance. Direct sales opportunities include speaking events or selling through your website, where you may choose to install and manage your own credit card processing system (i.e., Paypal). You do not have to pay fees to a distribution company in the direct sales scenario because you are acting as your own distributor.

Example B: Sales through author's website with Mill City Press book fulfillment

If you use our book fulfillment service to sell books through your website (one that we build for you or one that you obtain on your own), there are a few fees. There is a one-time fee of $499 that covers the cost to set up the service, create a unique order page for your book, provide a custom reporting system, etc. Then, when we actually fulfill orders for your book, there is a $1.50 per book pick-and-pack fee as well as a 4.5 percent credit card processing fee (assessed by our bank and calculated based on the total amount paid by your customer). Let’s say that your customer paid $5.00 in shipping, so their total order amount was $20.00. If we were handling your book fulfillment the formula would be:

$15.00 (retail price)
-$3.90 (print cost)
-$1.50 (fulfillment fee)
-$0.90 (credit card processing fee)
$8.70 net to author

If you’re using our book fulfillment service, you’ll need to have books (at least twenty-five copies) printed and shipped to our warehouse (we can’t fulfill orders unless we have inventory in stock).

Example C: Orders through Amazon and other online retailers

Selling the book through Amazon.com (or other online retailers) becomes a bit trickier from a math perspective, as these third parties do take a percentage of each sale (20-55 percent). Mill City Press authors with POD distribution (included in the Basic and Advanced publishing packages) can set the trade discount percentage anywhere between 20 and 55 percent of the retail price. The “trade discount” is the fee the online retailer (e.g., Amazon.com) is paid to sell your book.

For authors with POD distribution, the online retailer payouts would work as follows.

You would take the retail cost of the book minus the trade discount (we use 55 percent as an example below, but you can plug in any percentage), minus the print cost to get your net profit.

$15.00 (retail price)

-$8.25 (55% Amazon fee)
-$3.90 (actual print cost) 
$2.85 net to author

We advise our authors to plan a retail price based on the highest trade discount payable. When calculating your printing costs and trade discount, plan on giving 55 percent of the retail price to online retailers like Amazon.com. That is near the top of what you’d have to pay. In some cases you may pay less, but budgeting for the highest trade discount possible is simply more realistic.

There are some theories that Amazon’s algorithm, ranking, etc. is based in part on how large a discount Amazon receives for the book. For example, when you visit a book’s page on Amazon and see that the book is being offered for 30 percent off, that 30 percent is coming out of Amazon’s share of the sale revenue. If Amazon gets the full 55 percent trade discount, they can do that. If they are getting a 20 percent trade discount, you know they won’t be passing on any part of that sum as a discount / incentive to prospective buyers of your book.

Example D: Orders through brick-and-mortar retailers

Any brick-and-mortar retailer we’ve ever dealt with requires at least a 40 percent trade discount and requires that a book be marked as returnable in order for it to be considered for purchase. If you can sell directly to such a store without a distributor / wholesaler, you may be able to save the additional 15 percent (that you’d pay on top of the 40 percent). If you manage to sell directly to a bookstore (which is rare), this is an example of how it might look from a royalty perspective:

$15.00 (retail price)
-$6.00 (40% trade discount)
-$3.90 (actual print cost)
$5.10 net to author

Royalties under Professional or Premium publishing packages (a.k.a. Expanded Distribution)

The biggest difference between Expanded Distribution and the POD model is that, in Expanded Distribution, authors need to have books stocked in our warehouse. This is because, with Expanded Distribution, our distributor is the one handling sales of your book to retailers and wholesalers. Our distributor works directly with wholesale and retail book buyers, meaning that your book actually has an audience with these folks. Because of this connection, the likelihood of selling books to the trade is greater than with only POD distribution. This advantage, however, has a tradeoff--you are adding another party to the mix that needs to be paid for its efforts. In this scenario, you need to keep your print costs low, which can mean printing a significant number of books

Our distributor takes 18 percent of the wholesale cost. The wholesale cost is the price at which a retailer or wholesaler can purchase a copy of a book (after the trade discount has been applied). Let’s say you have a book with a retail price of $15.00, and it’s being sold to a retailer that receives a 40 percent trade discount. In this scenario the wholesale cost of the book would be $9.00. The distribution fee is 18 percent of that wholesale cost ($9.00), making the net wholesale cost $7.38.

Example E: Direct sales by author at events, through Paypal, etc.

This is same as Example A (see above). Direct sales are not affected by the distributor because you are selling the book on your own and therefore acting as your own distributor.

Example F: Sales through author's website with Mill City Press book fulfillment

Authors with Expanded Distribution who are also using Mill City’s book fulfillment service have the same fee structure as outlined in Example B (above). The inventory that you ship to our warehouse will be used for both trade orders (per the distribution program) as well as orders through your author website (per the fulfillment service).

Example G: Orders through Amazon and other online retailers

Unlike the scenario in Example C above, for authors in Expanded Distribution the trade discount offered to Amazon and other online retailers must be set at 55 percent. Additionally, there is a distribution fee of 18 percent of the net wholesale price for each order.

For authors with Expanded Distribution, Amazon.com (and other online retailer) payouts would work as described below. For the purposes of demonstration, we’re using the same 200-page paperback to calculate your earnings.

$15.00 (retail price) 
-$8.25 (55% Amazon discount) 
-$1.22 (18% of the remaining $6.75, net wholesale cost: $15.00 - $8.25 =$6.75) 
-$3.90 (actual print cost)
$1.63 net to author

Example H: Orders through brick-and-mortar retailers

Many brick-and-mortar bookstores have existing relationships with our distributor. So, if Barnes & Noble wants to purchase a copy of your book, the buyer at B&N will contact our distributor and will place an order. B&N typically gets a 40 percent trade discount and requires the book be returnable.

Below, please find a potential royalty breakdown for instances when a bookstore orders your book directly from our distributor.

$15.00 (retail price)
-$6.00 (40% trade discount)
-$1.62 (18% of $9.00 net wholesale price: $15.00 - $6.00= $9.00)
-$3.90 (actual print cost)
$3.48 net to author