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Helping to Change the World…Word by Word

The Steve Laube Agency

The Steve Laube Agency

Helping to Change the World Word by Word

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Home » Get Published » E-Books

E-Books

Author Accounting 101

By Steve Laubeon April 17, 2023
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You are a published author. You must be rich!

You are an agent. I know you are rich.

If it only were true.

Let’s attempt to explain some of the bottom-line basics of Author Accounting. Please remember this exercise is generic; your mileage may vary. I will use some simplified numbers, so we can all follow the math.

Let’s start with a $20.00 retail-priced book. The publisher sells the book for $10.00 to a vendor (like Amazon, Barnes & Noble, or christianbook.com). That creates a net receipt or net price for the publisher.

The net price is $10.00. The author’s contract dictates that the publisher pay them 15% of the net price. That would mean when this book was sold to the vendor, the author’s account was credited $1.50.

This particular author was paid an advance of $4,500 to write the book. That money is like an advance on your allowance when you were a kid. You must pay back the advance before you earn more money. So if each book sold earned the author $1.50, then how many copies must sell before the $4,500 is earned out? The answer is 3,000 copies. On the 3,001st copy, the author earns an additional $1.50.

The additional money is paid to the author periodically, not as it is received. Most publishers pay the author twice a year. Some pay quarterly.

But because the royalty is based on a net price, the royalty paid will depend on each sale. Some books will be sold at $10.00, some for $12.00, and some for $6.00. It all depends on the situation. For example, the books you see on the spin racks in the grocery store or the airport are sold to rack jobbers at a very high discount to enable them to pay each person in their distribution chain. The author gets less money but sells more copies.

Be aware that some contracts pay the author a royalty based on the retail price and some on the net price. So, if the royalty rate were based on the retail price (like a 7.5% of retail rate for paperback, which is a standard number among the “Big Five”), then the author would still receive $1.50 per book no matter what the publisher sold the book for. The majority of publishers in the Christian market use net receipts as their basis for paying royalties.

Out of that $4,500 advance mentioned above must come the author’s expenses: research materials, conference fees, travel expenses, etc. Some, not all, are deductible at tax time. (Tax time is tomorrow for those of you in the U.S.) And those are only the business expenses. If you are a normal person, you have housing, a car, food, clothing, etc., to pay for as well. But unless that advance is a lot higher, it’s going to be tough to pay your mortgage with the advance money you have received. (Plus, advance money rarely comes all at once. Typically, it is paid out over time. Some publishers pay on signing the contract, on the acceptance of an author’s “acceptable” manuscript, and later on publication of the book.)

When I teach this subject in-person, I usually stop here and ask, “Is this making sense?” “Are you following the math?” Most will answer yes, but the room is deathly quiet because I’m talking about money.

I will often ask the room, “Can you make a living as a writer?”
D.Q.Y.D.J. is the correct answer.

Don’t Quit Your Day Job.

That sounds grumpy and negative, but it is a reality. Most authors do not start their careers with a million-dollar advance and a legion of fans. They build them slowly but surely over time. In the beginning, they struggle mightily to make ends meet and justify the time and energy, just like anyone starting a small business.

The writing profession is a marathon, not a sprint.

Why is your percentage so small? Read Tamela’s article “Why is My Royalty Check So Small?” for a quick answer.

A number of writers are turning to independent opportunities by self-publishing via e-books and print-on-demand in the hope of greater income. There is no debate from me as to the potential for success. A number of writers find this as the solution to their money problems.

But just like every small business venture, there are successes and failures. Your mileage may vary. There is no single solution for every writer. One writer I know has a steady income from e-books but still works at a day job to make ends meet. This writer would be considered successful by any standard but still has to supplement their income. The writer has grown the writing side of their world to the point that they must now decide whether to make the jump to full-time writing in the hopes that revenue will increase because they will have the time to devote all energy to writing and marketing their books.

And if you are interested in Publishing Economics 101, see this post.

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Category: Book Business, Career, Contracts, E-Books, Economics, MoneyTag: Author, Economics, Money

Book Industry Trends

By Steve Laubeon November 7, 2022
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Publishing is partly an exercise in guessing what might be the next surprise bestseller. Some of it is an educated guess based on certain trends we see in the industry and in society at large. Any exercise in naming these trends bears the risk of expressing the obvious or being out of date the moment they are stated. So bear with me as I tinker with some of the factors that are either influencing …

Read moreBook Industry Trends
Category: Book Business, Contracts, E-Books, Get Published, TrendsTag: book industry, Trends

A Is for Agent

By Steve Laubeon March 14, 2022
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by Steve Laube

I thought it might be fun to write a series that addresses some of the basic terms that define our industry. The perfect place to start, of course, is the letter "A." And even better to start with the word "Agent."

If you are a writer, you've got it easy. When you say you are a writer your audience lights up because they know what that means. (Their perception is that you …

Read moreA Is for Agent
Category: Agents, Book Business, Book Business, Career, Creativity, E-Books, Legal Issues, Publishing A-Z, Writing CraftTag: Agent, Book Business, publishing

When Editorial Errors Matter

By Steve Laubeon September 20, 2021
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by Steve Laube

Writers make mistakes. It happens. Often an editor’s job is to be the safety net and catch those tidbits that find their way into an early draft of a manuscript for any number of reasons.

The simplicity of “cut & paste” has created more opportunity for error than ever before. I've seen half sentences left in their original place because the writer failed to cut and …

Read moreWhen Editorial Errors Matter
Category: Book Business, Craft, E-Books, Editing, Grammar, Steve, Writing CraftTag: Editing, Errors, Writing Craft

Three Significant Announcements Regarding E-books and Audiobooks

By Steve Laubeon January 29, 2018
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Last week there were three significant announcements from Apple, Google, and Walmart of interest to all authors. First the three bits of news and then a few observations. Apple Apple announced that their iBooks app is being renamed to simply Books. Accompanying it will be a complete redesign of the reading app, their store, and the addition of an audiobook tab to make it easier for users to access …

Read moreThree Significant Announcements Regarding E-books and Audiobooks
Category: Book Business, Book Sales, E-Books, Economics, News You Can Use, The Publishing Life, TrendsTag: Audio Books, Book Sales, ebooks, Technology

Print and Prejudice

By Steve Laubeon May 1, 2017
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For the last ten years, since the unveiling of the Kindle reader, there has been a constant conversation about reader’s preferences. Print or Ebook? While ebook sales grew exponentially and paper sales stagnated many declared victory for the ebook. I have a number of friends who have not purchased a paper edition of a book for quite some time. Some libraries have removed all their books and gone …

Read morePrint and Prejudice
Category: Book Business, E-Books, Personal, ReadingTag: Book Business, ebooks, Reading

Switching or Grinding Gears?

By Dan Balowon September 8, 2015
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Each year in the U.S. more titles are published indie/self-pub than by all traditional publishers combined. Some authors publish only indie or traditional, but some entrepreneurial folks are known as “hybrid” and use whatever model works best for the situation at the moment. Many clients of the Steve Laube Agency are hybrid authors and it works just fine. There are some things you do for an indie …

Read moreSwitching or Grinding Gears?
Category: Book Business, Career, E-Books, Economics, Editing, Marketing, The Publishing LifeTag: Hybrid Authors, Indie Publishing, The Publishing Life, Traditional Publishing

Did You Feel the Tremor in the Industry Last Week?

By Steve Laubeon March 3, 2014
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by Steve Laube

I know what it is like to feel the earth move under my feet having experienced the '64 Alaska earthquake firsthand. (The above picture is from the neighborhood where we lived called Turnagain Arm.) Therefore I know the difference between a 9.2 Richter scale quake and a tremor that registers near 2.0 on the scale.

Last Thursday Amazon announced they were reducing the royalty …

Read moreDid You Feel the Tremor in the Industry Last Week?
Category: Book Business, E-Books, Get Published, Steve, The Publishing LifeTag: Book Business, E-Books, publishing

Is Christian Fiction Dying?

By Dan Balowon January 28, 2014
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Last year, a couple Christian publishers stopped publishing fiction.  Some publishers are nervous about it and in a wait-and-see mode. Others are excited about growth potential.  The answer to the title question is no, but it is certainly interesting to explore the reason behind such widely diverse opinions on the subject.

NOTE #1: For full disclosure, I am a member of the advisory board for …

Read moreIs Christian Fiction Dying?
Category: Awards, Book Business, Dan, E-Books, Get Published, TrendsTag: fiction, Trends

Embracing Change

By Dan Balowon January 14, 2014
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On September 3, 1967 the world changed. It was a day remembered for chaos and disillusionment, despair and confusion.  No, it wasn’t because the last episode of “What’s My Line?” aired on U.S. television.

The above picture is what happened in Sweden the day the country switched from driving on the left to the right side of the road.  Their neighbors, Norway and Finland had already changed, but …

Read moreEmbracing Change
Category: Book Business, Dan, E-Books, Get Published, The Publishing Life
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