Miss Snark, recently a nonfiction agent told a member of another board that "most" book contracts are going to royalties of 10% on wholesale price. I was surprised to hear this; I can't imagine either agents or authors going along with it. In your experience, is this the new trend
First there is no such thing as "wholesale price". The only price that is ever printed anywhere is the retail price and all prices to wholesalers and others are discounts based on that retail price. The distinction is important. To wit:
$20.00 retail price. This is the price printed on the book, that you pay at the local indie store.
$10.00 WalMart's price to you. This is what they charge you when you buy your books with tires, a case of cough syrup, a cake, three gallons of gin, and an electric cattle prod.
Wal Mart gets a discount of 55% off the retail price. They sell it to you for 50% off the retail price. Of such small sums, in great volumes, is a fortune made.
Now, the indie store on the corner where you buy your books, talk to the owner, and pet the cat that reads Proust, that store owner pays a 48% discount off retail for the books she sells to you at full retail.
Now in case some of you aren't good at math, I'll just tell you: the indie store owner pays more to buy it from the publisher, than you can buy it for at WalMart. Naturally some of them take umbrage at this.
Anyway, what does this have to do with how royalties are counted.
It used to be they paid you based on the number of books sold. More books, more money. Yum yum, sign me up for that.
Well, as you can see, paying you $2.00 for a book sold at the indie store means the publisher keeps a decent chunk of change:
LESS: $9.60 discount taken by indie store owner (48% of $20)
EQUALS: $10.40 gross to publisher
Less: Commission to author: 2.00 (10% of hardcover retail price)
Equals: $8.40 first net to publisher.
You sell enough of that you'll make some dough.
Now: look at the Wal Mart equation
Less: $11.00 (55% discount given to big box store and HIGHER)
Equals: $9.00 gross to publisher
Less commission to author: 2.00 (10% of hardcover retail price)
equals: $7.00 first net to publishers
well, it didn't take long for publishers to realize that authors were not absorbing the pain of box store discounting so they changed how royalties are calculated.
They started factoring in the discounts.
Now it's 10% on retail price for books sold at standard discounts
and 6-8% for books sold at "steep discounts".
And some of the smaller publishers pay you a percentage based not on retail price but on "net"... the price they get after the discounts are taken.
The only way to figure out if its a good deal or even acceptable is to run the math.
I do it with every offer.
This has been going on for years.
It's industry standard now.
Doesn't mean we have to like it.
And the reason there is no "wholesale price" is cause the price changes for each wholesaler depending on what discount they get: its not a standard number. Discount is the piece of info that lets you calculate how much they paid per book.