This post, from JA Konrath, originally appeared on his A Newbie’s Guide to Publishing blog on 2/18/11.
So I just got off the phone with an acquaintance of mine. She’s a writer whom I met last year at a conference, and she called me asking for advice.
First some background. She’s hit the extended NYT list several times in both hardcover and mass market, and has a backlist of ten books. She was just offered a contract from one of the Big 6 for $200k a book, for a two book deal.
The royalties offered are industry standard 25% for ebooks on net.
She’s thinking about releasing the book herself, and needed some help crunching the numbers. She’s had several previous contracts for $200k a book, but so far none of her books have earned out their advance, even six years later. (This is common, by the way, even though she’s had multiple printings. If I’d been paid $200k for Whiskey Sour or Afraid, I wouldn’t have earned out either.)
Here’s what I told her:
The 25% the publisher is offering is actually based on net. So you’re getting 17.5% of the list price. (Amazon gets 30%, they get 52.5%–which is obscene)
When your agent gets her cut, you’re earning 14.9% of list price on ebooks.
For a $9.99 ebook, that’s $1.49 in your pocket for each one sold.
If ebook prices go down (and they will) it would be 75 cents for you on a $4.99 ebook
If you release a $4.99 ebook on your own, at 70%, you’d earn $3.50 an ebook.
Let’s say you sell a modest 1000 ebooks per month at $4.99.
That’s $9000 a year you’d make on ebooks through your publisher vs. $42,000 a year on your own.