Net Profits on royalties - common or shady?

[Dave Watson]

Hey folks. Wondering if anyone with a bit of knowledge about modern publishing contracts can help me out with this one.

So I got a contract offer for my fourth novel (yay!) from an independent publisher and everything looks ok with it, except that the royalties are paid on Net Profits, which after doing some research means that instead of simply getting 10% or whatever of the sale price of a book, your percentage is calculated after expenses like distribution and production have also been deducted.

Some of the info I've found on this says it's quite a common way for small publishers to work these days, while others say it's not industry standard and a definite red flag, though some of that info is a few years old, and may be outdated by now. Anyone able to clear it up? In the emails to me, the publishers have been very keen that I take my time with the decision and have a professional contract checked look over the agreement, so it doesn't feel like anyone's trying to rip me off, and they seem genuinely excited about the book. Any info, as always, much appreciated.

[Bayview]

I've found net profits are common with e-first publishers, but not with publishers who are likely to sell considerable print books. I'd be wary of it, if I thought a lot of print was going to be sold, because calculating the net seems a bit tricky. For e-books, my publishers who pay net pay based on the entire sum they receive from the third party vendors. If they sell a book from their own website, "net" and "cover price" are identical. If they sell a book through Amazon and get 70% of cover price, then that's net. But for print? Shipping costs, etc... could get really complicated.

At the very least, if you think you're going to be selling a significant number of print books, I'd ask for them to clearly explain how they calculate the costs they'll be deducting.

[Dave Watson]

Nice one dude. Yes, think I need a full breakdown of what costs would be deducted from print sales. Heard stories of some publishers including the price of business lunches etc.

[Aquilo]

Nice one dude. Yes, think I need a full breakdown of what costs would be deducted from print sales. Heard stories of some publishers including the price of business lunches etc.

Bay's had novels published with multiple publishers, and she's seen many a publisher fail, so I'd follow her advice.

And it's good they are giving you time to look over a contract and get it vetted: please, please do that!!! There are so many pitfalls, especially if there's nothing that mentions a termination clause that's fair to you, not just the publisher!

[Ralph Rotten]

Dave, you weren't planning on getting rich by writing, were you?

[Dave Watson]

Dave, you weren't planning on getting rich by writing, were you?

Not planning for it as I've been in the game long enough to know how unlikely fabulous wealth is. That's not to say I've given up on the six book and movie deal scenario though...

BTW after I asked, the publisher has indicated they're ok with paying RRP instead of net profits.

[Ralph Rotten]

Congrats on the contract!
Tis always good to hear members succeeding.

[marosabooks]

Vanity presses also do net profits, it is how they make you pay for your own editor THEY hire.