If you deal with publishers as an author, you'll need to understand a bit about royalties -- it's the main way that you have to make money from your work.

There's a lot that you need to take into consideration before you can really understand what the royalty offer from the publisher means to you. Here's a quick guide. Of course, I also want to promote Packt so I've put Packt's position on each of these points in a tasteful turquoise color. But I hope this is a useful guide, even if you've no interest in working with Packt!

1. The quoted royalty rate. This is the percentage that a publisher will quote at you. "We pay a 10% royalty" or whatever. Obviously, the higher this is, the better. But it's not the only figure that matters. At Packt, the royalty is 16%.
2. Different rates for different media. Some publishers will offer a different rate for ebooks, another rate for when your content is translated, and so on. Most of the time, most revenue comes from print sales so that's what matters most -- but it's worth checking other revenue sources too. Packt's 16% extends across all media.
3. What about returns? Some publishers will hold back a percentage of royalties earned from book sales, incase those books are later returned. If copies of your book are sold to a book store, and the store still has them on their shelf 3 months later, the store's likely to return those books to the publisher and get a refund. Most publishers allow bookstores to do this, and they'll hold back 20% of your royalty earnings in case the books are returned later. At Packt, most of our sales are on a "no returns" basis. Our readers can get a refund if they don't like the book, but that's quite rare and a form of customer service. In any case, we don't hold back any of your royalties in reserve. 16% of the money that we receive, goes to our authors.
4. Check the publisher's revenue per unit. If you write a book with a cover price of $40 and you're on a 10% royalty, don't expect to receive $4 per book that's sold. Most publishers offer big discounts to retailers. It's not unusual for a publisher's revenue per unit to be less than 50% of the cover price. At Packt our average revenue is about 75% of the cover price.
5. Any other deductions? Some publishers quote a very high royalty, but it's a percentage of profits rather than revenue -- or they deduct a proportion of editorial and printing costs. This can work well for authors, especially if they write a best seller. But it also leaves them in a position where they might earn no money at all if the book doesn't cover these costs. Certainly they'll start seeing money later. At Packt, the only cost we deduct is your advance -- the money you already received from us.
6. What unit sales can you expect? You should ask this question, but don't expect a straight answer. Obviously, your earnings are royalty% multiplied by unit sales -- so it's important to at least make expected sales part of the discussion. Different publishers have different unit sales expectations. Packt is set up so that we and our authors can make good money on lower unit sales than most other publishers. Other publishers are optimized so that they do really well out of best sellers, but don't make anything at all on "average" books.
7. What will your publisher do to earn its share? It used to be that if you wanted to get your book published, you had to accept that a publisher got 90% of the revenue. Not any longer -- as an author you have far more power now. So ask your publisher what they are doing that justifies keeping so much of the money for themselves. Bear in mind that publishing is not a wildly profitable business most of the time. The royalty the publisher offers will be "fair", but different publishers invest their share of the booty in different things. Packt does: book concept development, getting your book peer reviewed, editorial work, layout and production, printing, distribution, and marketing.
8. Does the author have to pay anything? Some publishers quote a very high royalty, but charge the author up front for various services. These publishers make most of their money selling services to authors, not selling books to customers. Unless your main interest is to "see your book printed", it's best to avoid these sorts of publishers. Lulu is a good option in these situations. With Packt, authors don't pay us a penny -- all the money flows one way.

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If you want to discuss writing for Packt in more detail, contact me on davidb@packtpub.com or visit the Packt Author Website.

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