Writing a really useful ebook is not a painless task: it takes considerable time and energy to write a piece of work that is factually correct, to-the-point, as well as enjoyable to read. So unless you are just writing for the thrill of it, you should carefully assess what your options are in terms of your royalty payments. How much royalty you will obtain is depending on a variety of factors.

Of course, "payment" or "royalty" is not an entirely easy matter to talk about. Unquestionably, the concept of royalties is in essence about the particular quantity of dollars or pounds sterling that you may get with a certain publishing contract. But there are also other aspects of an agreement or contract that might be just as important, and maybe even more so. Such aspects can be, for instance, the duration of the agreement, the issue about the precise time for payments, and so on.

Here in this article, however, I am going to limit myself to an account of the total amount of royalties a writer or author can expect to receive when using different types of royalty deals. For brevity's sake, I shall only list four royalties scenarios, although there are other types of deals as well.

1. Publisher's "List Price Percentage" Royalties

The first model that is seen at major publishing houses is the "List Price Percentage" model. This is probably the easiest one to calculate, since it only deals with two factors: the list price and the author's percentage. In this arrangement, the author typically gets between 10 and 20 percent of the e-book list price.

An illustration: An e-book sells for $20 and the royalty model says that the author will have 15 percent of the list price from the sale of every ebook. This means that the author could expect to be paid a royalty of $3 per e-book (0.15 x 20).

Big publishing houses such as Random House and Simon & Schuster have previously used this type of arrangement for deals with ebook authors. Nowadays, however, these and other publishers are moving on to another model, namely the "Net Receipts" model.

2. Publisher's "Net Receipts Percentage" Royalties

Another arrangement is the "Net Receipts Percentage", or the "Net Proceeds Percentage" model, which is used when authors are trying to get a deal with major publishing houses to publish and market their e books. At present, numerous publishers apply this royalty model, including Macmillan, Random House, and Simon & Schuster.

In this royalties scenario, the royalty is computed as a percentage of the net sale, not the list price. The given percentage that the writer receives is generally between 10 and 25 percent of the net proceeds.

For instance, if the royalties deal is such that the author gets 20 percent of the net sales, then the calculation may look something like the following. If we assume a list price of $25, and also assuming that the net sales for the publisher is, say, 60% of the list price (i.e., the retailer gets 40 per cent), the author would get a royalty of $3 per ebook (0.20 x 0.60 x 25).

3. Self-Publisher's "Flex-Price Net Receipts Percentage" Royalties

Now let's look at different types of self-publishing royalties scenarios. One royalty model is built on the idea that you publish your e-book all by yourself, but still use one or several retailers and distributors to market it. For instance, you may use a distribution channel such as Lulu.com.

The "flex-price net receipts" royalty scenario is based on the idea that the author will keep a certain percent of the net sales. But the exact percentage number is usually, compared to the second model, much higher.

Another benefit for the author when comparing it to the second model, is that he might get more control over the product development. Not only will he be able to have more power of the editing and design, but he will also, most importantly, be able to set the list price himself.

4. Self-Publisher's "Full List Price" Royalties

The fourth option is to do everything by yourself. In this case you will be doing not only the publishing of the ebook but also the advertising and promotion, as well as the sales. This means that you almost certainly have to have your very own web site or blog through which you promote and sell your ebook.

Even though there may be no distributors or external retailers to worry about, the author may here need more technology to set up some kind of e-business solution. Note, however, that the technical aspects of selling products on the internet may not be as overwhelming as many think. Relatively simple-to-integrate payment processing solutions such as PayPal.com work well.

In any case, the royalties in the fourth model are relatively easy to calculate, since the author basically will keep all the proceeds for himself. But it is important, to be really fair, to also realize that some of the operation costs, such as for example costs related to the payment processing system or to the web site, may have to be taken into consideration as well.

Conclusion

Choosing which type of arrangement would work best is not always so easy. But you might ask yourself: "How interested am I in marketing, really?" If your answer to that question is "a lot", you might want to consider either royalties model 3 or 4.

But if you are not, initially at least, very interested in marketing, perhaps you should consider either royalty model 1 or 2. The problem with both of these models is, however, that it is not so easy to get signed up by a major publishing house. But even if you should, somehow or other, fail getting signed up, you could always resort to model 3 or 4 later on. A serious writer never gives up!