How to Calculate Royalties

Authors get paid in the form of royalties to write books. These book royalties can be confusing if the math behind them isn’t understood. It is safe to say that although authors may earn a fair wage from advances and royalties, it is the publisher that assumes all of the risk associated with the book. If the book doesn’t sell, then no royalties will be generated.

Determine the price of the book. Standard paperback books sell for around $7.95. Trade paperbacks sell for about $14.95. Hardcover books are pricier, coming in around $21.95.

Figure the number of sales. This should be the anticipated sales, if the book is still unpublished, or the actual number of books sold if it is on the shelves.

Apply the royalty percentage. A generous amount would be 8 percent, but 6 percent is closer to the standard for new writers. Regardless, the royalty percentage will be listed in the author contract.

Use a formula to calculate the royalties. Multiply the royalty percentage by the price of the book. Then multiply that amount by the number of books sold. For example: 6 percent royalty x $7.95 price = $0.48 x 10,000 sold = $4,800 royalties earned.

Subtract any advances from the calculated royalties. The advance is generally paid to the author before the book is published and is held against the royalties. If royalties accumulate above the amount of the advance, they are paid to the author. If the royalties do not exceed the advance, the author receives no more payment.