Every­one always asks me how much money I make on my books. In fact, it is a favorite ques­tion with cer­tain nosy rel­a­tives of mine. Con­trary to pop­u­lar belief, it is not mil­lions and mil­lions of dol­lars. (I know. I’m bummed about that too). So today, I thought that I would talk a lit­tle bit about roy­al­ties to try to answer this question.

For those of you who don’t know, roy­al­ties are the amount of money that an author earns on sales of her books. Most authors are given an advance up front. These advances can range any­where from a few thou­sand dol­lars to a few mil­lion dol­lars. I’ve even heard of advances as low as $500 to $1,000.

For every book that’s sold, authors get a per­cent­age of the cover price. For exam­ple, on the mass mar­ket paper­backs of Spider’s Bite and the other books in the Ele­men­tal Assas­sin series, I get 8 per­cent of the $7.99 cover price.

That works out to 64 cents per copy.

Yep, that’s right. I get a whop­ping 64 cents for every copy of Spider’s Bite that is sold. (Tech­ni­cally, it’s 63.92 cents per book, but I’m round­ing up to make the math easier.)

Now, every sale, every 64 cents, counts toward an author’s advance. Say you got a hypo­thet­i­cal advance of $10,000. (And no, I’m not going to tell you how much my advance was. That’s between me and Uncle Sam). You would have to sell 15,625 books to make back that $10,000 that the pub­lisher has already given you. Any books you sold beyond that you would also get 64 cents on — but the pub­lisher would have to pay you or give you what’s known as roy­al­ties for all of those books sold.

Say you sell 20,000 books at 64 cents a book. Alto­gether, you would have earned $12,800. Since you made more than the $10,000 the pub­lisher orig­i­nally paid you, you would get a check for $2,800. (Of course, I’m not tak­ing into account the 15 per­cent that your agent gets right off the top of all of your advance and roy­alty payments).

You always hope that your book earns out the advance — you always want to have made more money for the pub­lisher than they paid you in the first place. That makes them more likely to want to buy more books from you, if they know your titles are con­sis­tent earn­ers for them. If your book doesn’t earn out its advance, you don’t have to refund the money … but you might not get another con­tract for more books either. Pub­lish­ing is all about sales, just like any other for-profit busi­ness is. You can write the best book in the known uni­verse, but if it only sells 500 copies, I doubt your pub­lisher will want you to write a sequel.

Now, the mass mar­ket paper­back roy­al­ties are only one kind of roy­al­ties that an author can make on her books. You get roy­al­ties for e-books, audio books, and every for­mat that your book is sold/packaged in. And, of course, all of the per­cent­ages and amounts dif­fer. Even your mass mar­ket paper­back roy­al­ties can dif­fer. For exam­ple, the per­cent­age can go up to 10 per­cent or even higher if you sell above a cer­tain num­ber of copies (like 150,000).

As far as e-books go, I get 15 per­cent of the price. So, for exam­ple, if you bought a Kin­dle ver­sion of Spider’s Bite (priced at $6.39 on Ama­zon), I would make 96 cents on that sale. (Again, tech­ni­cally, it’s 95.85 cents but I’m round­ing up to make the math eas­ier). And this is just gen­er­ally speak­ing. There are so many dif­fer­ent for­mats and per­cent­ages, that you’d have to be an accoun­tant to under­stand them all.

Of course, the more the cover price is for your book, the more money you get on every sale. For exam­ple, if your book is a $25 hard­cover and you get 8 per­cent of the cover price, then you earn $2 per book com­pared to 64 cents for a mass mar­ket paper­back. If your book is a $14 trade paper­back, you get $1.12 per book.

And it goes on and on and gets more com­pli­cated from there. Some­times, I think authors have to be accoun­tants, lawyers, Web site experts, and writ­ers all rolled into one to really under­stand all the ins and outs of the business.

So there you have it. A lit­tle bit about roy­al­ties. Any ques­tions? I’ll answer what I can in the comments.