Royalties Explained

Where does the money go? It's one of the most common questions we hear from authors.

Every book sold has several people and organizations involved in getting your book from you to the printer to your reader. So how is your royalty calculated?

Retailers, distributors, and printers are all paid before the remaining amount becomes the author's royalty. The exact amount also depends on the book itself—factors like page count, trim size, paper choice, binding, and color printing all affect manufacturing costs. The following examples show a print on demand model, as opposed to a traditionally printed book.

Traditional Printing versus Print on Demand (POD)

Traditional printing is the process of printing a large quantity of books at one time—typically hundreds or thousands of copies. The books are paid for upfront, delivered all at once, and stored until they are sold or distributed. The production method is done with traditional inks on press, or high-quality digital methods and materials

Print on Demand (POD) is a printing method in which books are printed one copy at a time, only after a customer places an order. There is no need to purchase or store inventory because each book is printed and shipped as it's needed. The quality of POD methods and materials has greatly improved in the past several years.

Traditional Printing

• High up-front investment

• Author is responsible for storage of inventory

• Risk of unsold books

• Reprints require another investment

• Best when exceptional quality or large format is desired (like a high end coffee table book)

Print on Demand (POD)

• No up-front printing expense

• No inventory to manage or store

• Books are always available online

• Easy to update files before future printings

• Can be ordered in bulk for events, as needed

• Book size can be limiting if a specific size is desired

The Basic Formula

For books distributed through IngramSpark, the calculation is straightforward:

Retail Price – Wholesale Discount – Print Cost = Royalty

For books printed and sold through Amazon KDP, the calculation is slightly different:

Retail Price × 60% – Print Cost = Royalty

While the formulas are different, the principle is the same: your royalty is calculated from what remains after the sales channel has taken its share and the book has been manufactured.

Following the Money

Let’s look at a paperback with a retail price of $19.95 and a print cost of $5.50.

If your book is sold through IngramSpark

For this example, we'll use a $19.95 paperback with a 55% wholesale discount and an example print cost of $5.50.

• The reader pays $19.95 for your book.

• $10.97 (55%) is the wholesale discount.

  • While the exact split can vary depending on where the book is sold, an industry estimate based on information provided by IngramSpark suggests that the wholesale discount is often allocated approximately as follows:

  • $7.98 (40%) to the bookstore or retailer for selling the book.

  • $2.99 (15%) to Ingram for distribution services, including warehousing, order processing, shipping, and logistics.

• After the wholesale discount, $8.98 (45%) remains.

• $5.50 is used to pay the cost of printing the book.

• $3.48 remains as the royalty.

The important takeaway is that the 55% wholesale discount is not simply a bookstore's profit. It covers the costs of getting your book into bookstores and other retail outlets. The exact allocation can vary depending on how and where the book is sold, but the example above provides a helpful illustration of how the distribution system works.

If your book is sold through Amazon KDP

Amazon uses a different royalty model. Instead of a wholesale discount, Amazon generally retains 40% of the retail price and calculates royalties from the remaining 60%.

For the same $19.95 book:

• The reader pays $19.95.

•  Amazon retains $7.98 (40%) as its retail share.

• $11.97 (60%) becomes the royalty base.

• $5.50 is deducted to cover the cost of printing the book.

• $6.47 remains as the royalty.

Why Doesn’t Every Book Earn the Same Royalty?

Printing costs vary from book to book. The more expensive a book is to manufacture, the less money remains after printing costs are deducted. Several production decisions directly impact print cost, including:

• Page count

• Trim size 

• Paperback versus hardcover

• Case laminate versus dust jacket

• Black-and-white or color interiors

• Standard versus premium color printing

• Paper type and weight

• Specialty finishes

For example, a 180-page black-and-white paperback will cost much less to print than a 300 page hardcover or a full-color children’s picture book. Even if both books sell for the same retail price, their royalties may be very different.

Pricing Is a Balancing Act

One of the most important decisions we make is suggesting your retail price. We’re balancing several priorities, while trying to maximize royalty. 

• Keeping the book affordable for readers

• Remaining competitive in the marketplace

• Covering manufacturing costs

• Meeting retailer and distributor requirements

• Providing a meaningful royalty for the author

Price a book too low, and there may be little—or even no—royalty left after printing. Price it too high, and readers may choose another book instead. Finding that balance is one of the many decisions publishers and authors make together.

Transparency Matters

At Mission Point Press, we believe authors should understand how the publishing business works. Royalty statements shouldn’t feel mysterious. Every pricing recommendation, every production choice, and every distribution decision has a reason behind it.

Our goal is to help you understand not only what your royalty is, but why it’s calculated that way. The more you understand the business side of publishing, the better equipped you’ll be to make informed decisions about your book. Publishing is a partnership, and we believe transparency is an important part of that relationship.