Quote:
Originally Posted by Ralph Sir Edward
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So take the $12.50 the publisher received for the book and subtract author royalties ($2.50), hard costs ($3.75) and overhead ($2). Conservatively, the publisher is left with $4.25 per book after paying all the bills. In essence, the publisher is making more money per book than the author is making. (And no, there's nothing wrong with that.)
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let's say the publisher printed fifty thousand copies and sold half of them. They received $312,500 from bookstores ($12.50 x 25,000 copies sold). They credit the author her royalty of $84,375 ($2.50 x 5000; $3.125 x 5000; $3.75 x 15,000). The author hasn't earned out — she's still in the red $15,625. The publisher is left with $228,125. Out of that they pay $150,000 on printing ($3 x 50,000) (should be $187,500 $3.75 x 50,000) and $50,000 in overhead. So the publisher is left with a profit of $28,125 (loss of $9375). Even if they write off the rest of advance, they're sitting on $12,500 (loss of $25,000 ($15,625 + 9375)). Maybe they remainder the rest of the books for a dollar each , so they just got in another $25,000 (and royalties aren't paid on remaindered books), so now the publisher has $37,500 (breakeven $0). Did you follow that? The book did NOT earn out, but the publisher still made money broke even.
I know I'm a math geek, but I want the argument to be right. The breakeven point is 50% of sales in this example....
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Also, the average royalty is $3.375 not $2.50. Subtracting from $12.50 - $3.37 - $3.75 - $2.00 = $3.375. The publisher and author receive the exact same amount on an individual basis. This is why Ralph Sir Richard broke even. Any further books sold above the initial 25,000 would be profitable to the publisher and after about 4200 additional books profitable to the author if the royalty rate is constant. Any little change in the assumed costs and this fails.