Lots of traditionally published authors are making pennies for each book sold. Is the industry just greedy or is something else going on?
The answer may surprise you.
A few months ago I wrote an article answering the question, “How much should a publisher pay an author?” I think I hit a nerve with that one and quite a few people shared it. I saw a good follow-up question being asked: how much does a publisher make for each book they sell?
Let’s explore that together. I can give you a pretty close answer.
There’s no governing body that publishers are required to report their sales and earnings to, so no one really knows the answer to this question. But we can come up with some good estimates based on what we do know.
I’ve worked with hundreds of authors and publishers to help them publish books. Let me show you the numbers as I typically see them.
In order to understand how much a publisher makes, we need to understand how a book is sold. There are a lot of people involved and everyone takes a cut.
The publisher typically makes an agreement with a distributor, like Ingram. The distributor’s job is to handle the logistics of getting the book to the right bookstores—that includes things like warehousing, distributing, and collecting payments from the bookstores. Bookstores sell the book to the consumer. The bookstore and the distributor both take a cut.
How wholesale prices work for books
Most commodities, like basketballs or toilet paper, have a retail price (or MSRP—”manufacturer’s suggested retail price”), and a wholesale price which is a lower cost that the retailer pays. For instance, Walmart buys a basketball for $5 (the wholesale price), and then sells it to you for $10 (the retail price).
Books work similarly, but we use different terms. Instead of a retail price, with books we call it a “list price.” That’s how much the publisher says the book should be sold for.
For instance, the list price on my newest book, The Novel Matrix, is $15.95. That’s how much retailers like Amazon are “supposed” to sell it for.
Instead of a wholesale price, books have a “discount.” This is a percentage markdown from the list price that the bookstore pays. For instance, if the list price of a book is $10, and it’s offered to bookstores at a 30% discount, then the bookstore pays $7 for it. The bookstore keeps the $3 from the sale.
If the bookstore decides to offer the book on sale, the sale usually comes out of their cut. If that same bookstore sells that book on sale for $8, they still have to pay $7 to the distributor and they only make $1.
Book Sales for Traditional Publishers
We can break the publishing industry down into three major sections: traditional publishing, small press, and self-publishing. (If you’d like to learn more about this, grab this free guide from The Company.)
Traditional publishing is also called “Big-5” because it’s controlled by five mega-corporations. These five companies control 80%+ of publishing in America.
Traditional publishers usually offer their books at a 55% discount.
A typical paperback will sell for $12-$20. Let’s use a $15 book as an example.
That means that the bookstore will pay $6.75 to the distributor for that book they hope to sell for $15.
The publisher doesn’t get all of that money. They have to pay to print the book and they pay fees to the distributor. Depending on how they print and fulfill the book, they may also have to pay fees to warehouse the book and then ship it to the bookstore. It all adds up.
Reasonably, that may all add up to $3-$5 per book, which leaves the publisher with approximately $3 per book sold.
So that’s our answer—about $3 per book sold. With that $3, the publisher has to pay the author, pay for the production and marketing of the book, pay their staff, and pay for all of their overhead (including those fancy offices in New York and Chicago).
It doesn’t really end there though, publishers will often sell books at what’s called “deep discount” for special purposes, like for book clubs. If you have a reading club with thousands of members, the publisher may print a special edition of the book and give it to you at an 80% discount or more.
For that same $15 book, that means that the publisher is pulling in $3 from the book club before their printing cost. Since they’re able to print a predictable and large quantity, their expenses will be much less, but reasonably still $2 per book.
In those situations, the publisher may be making as little as $1 per book sold. Sometimes even less.
It’s possible that a publisher may sell some books directly to the public off of their website, in which case they may keep $10 or more per book sold. But honestly, when’s the last time you went directly to harpercollins.com or simonandschuster.com to buy a book? Probably never.
So to be generous, traditional publishers are bringing in $1-$4 per book sold. But that’s not profit, they still have to pay the author, overhead, and expenses with that.
Book Sales for Self-Publishers
Things work a little bit differently for self-publishers.
In many cases, self-publishers can remove some of the middlemen and distribute their book directly to retailers like Amazon. This reduces the fees they would typically pay to a distributor. (Although sometimes a self-publisher may choose to work with a distributor.)
Because self-publishers don’t have any prospects of getting their books into brick-and-mortar bookstores like Barnes & Noble, they can also set a lower discount. Online retailers don’t require as big of a discount to list the book on their site.
In an ideal situation, a self-publisher can distribute directly to Amazon at a 40% discount.
So for that same $15 book, the publisher will receive $9. However, they still need to print the book. The printing cost will be a little bit higher because a self-publisher isn’t working at the same volume as a traditional publisher.
So if that self-publisher pays $4 to print the book, they’ll keep $5.
For most self-publishing, it’s that simple. To be realistic, a self-publisher will bring in $3-$6 per book sold.
Just like a traditional publisher, that net isn’t necessarily “profit.” The self-publisher still needs to recover any money they spent to produce and market the book, and any business overhead they may have (although it’s probably much less than a traditional publisher).
What about Small Presses?
Small presses are conventional publishers, like traditional publishers, who aren’t controlled by one of those “Big-5” companies.
Small presses are a real mixed bag. In this category we have lots of mom and pop publishers and one-man shows, but we also have some companies with hundreds of employees.
Some small presses behave like traditional publishers, and their numbers will be similar to what we determined for traditional publishers.
Other small presses really operate in the marketplace a lot like self-publishers, and in that case, their numbers will be pretty similar to what we discussed for self-publishers.
The size of the business will determine how much overhead and other business expenses they may have.
With all of those variables, we can’t exactly pin it down. The closest we can get is to say that a small press will probably make $1-$6 per book sold.
What about E-books? How much do they make?
E-books are a lot simpler.
Generally speaking, the publisher will receive 60-70% of the list price of an e-book, regardless of what size of company it is.
What’s complicated is the pricing.
For a paperback book, regardless of who publishes it, the price will likely be pretty close to that $12-20 range.
Not so for e-books. Most professionally produced e-books are going to be in the $3-$10 range. But we see e-books listed for free (literally) all the way up to $20 or more. Even if we remove those outliers, $3-$10 is a huge range—that’s a 300% swing.
So the best we can do is say that for e-books, a publisher is likely going to make $2-$6 per book sold.
What does this mean for authors?
We all wish these numbers were higher. Publishers and authors alike, believe me.
The idea that traditional publishers may be bringing in as little as $1 per book sold is often shocking to authors. Even with a generous royalty rate, that doesn’t leave much for the author.
Just because a book sold 100,000 copies doesn’t mean that the author is set for life or anything.
If you haven’t read it yet, check out my article “How much should a publisher pay an author?” to see how that trickles through and authors actually get paid.
While self-publishers do make a lot more per book sold, they typically sell significantly fewer copies. Whether self-publishers end up making more than traditionally published authors has a lot to do with the hustle and savvy of the person who is self-publishing. It’s far from guaranteed.
If you’re pursuing traditional publishing, don’t be discouraged by your potential earnings. Truly, it’s unlikely that anyone is trying to rip you off, it’s just a tough business. As you can see, there are a lot of fingers in the pie and everyone gets their slice. There just isn’t that much to go around.
But the money is there.
Tell me in the comments, which of these numbers surprises you the most? Does it change your thinking about publishing in any way? Where do you want to create opportunities for yourself?
While you’re here, grab the first four chapters of my newest book, The Novel Matrix, for free! Fill out this form and I’ll send a download right to your inbox.
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