Knight Writing Press gets a lot of questions about  how we pay royalties, why we do it that way, and whether someone should bother to submit to us because of that. Hopefully this clears some of them up.

For starters, before you submit anywhere, you should always pay close attention to rights being asked for and take that as a major consideration in your decision. More rights granted by you should equal more money in your pocket (or an equivalent), and you should never grant/sell your rights to someone who won’t make use of them and prevents you from making use of them. That is a whole different topic, but important enough to always mention.

In general, I feel you should never sell your story (or novel) for less than you can, or less than you think it is worth. Always aim for your dream goal first, and then lower your sights if you can’t sell it there. For some people, the dream goal is the only applicable goal, and that is okay. You don’t have to sell your story to anyplace or anyone you don’t want to. Don’t let “pressure to publish” make you live with regret, and never let someone pressure you into an offer that you have to decide on right now. That rarely ends well for the author.

There are many different ways to consider the value you are getting for your story, two of the most popular being what you are getting paid for it, and what you are getting out of it. Meaning, some authors are very happy to earn what SFWA (Science Fiction & Fantasy Writers of America) considers to be pro-rates for a story. (Currently 8¢ per word.) Meanwhile others hold out for twice that or more, while some are happy with half that rate or less. Conversely, many authors are happy to “give away” their story for “a good cause.” This could be a charity anthology, a fund-raising auction, or *gasp* purely for publicity.

There are different kinds of publicity. It could be a newsletter, or a loss leader on Amazon. Or it could be an attempt at name recognition or to gain “association” with other big-name authors.

Whatever you choose to do with your stories, make sure you are happy with your decision. Just because someone tells you that you should or shouldn’t do something doesn’t mean it is or is not right for you. Make sure you have looked into your options and understand what you are getting into or passing up, and then make the best decision for you.

Which brings me to the topic at hand.

Some authors don’t want to submit to a publisher that pays in royalties only, such as Knight Writing Press. That is fine. That’s their choice, and, for them, it is probably a good one. They often have legitimate concerns about what they will receive as payment for their story.

Let’s look at some of those concerns and why they are valid.

First, some publishers charge a submission fee, meaning that the author has to pay the publisher for the privilege of having their story considered for publication. I personally do not agree with this practice at all. I firmly believe in the adage “money always flows to the writer.” Knight Writing Press does not charge submission fees.

Why do some publishers charge this fee? Some say it is to limit frivolous submissions, and there may be some truth to that, especially with publishers who only charge it after multiple submissions are received from the same author within a specified time period or for a specific project. Some claim they charge it to cover costs, such as paying the readers who sort through the stories. And there may be truth to that as well, as in today’s world there is a glut of authors submitting stories and a dearth of money-earning publications.

The problem is some publishers charge this fee for no other reason than to make money. And once you’ve paid the fee, they no longer have any incentive to publish your story, let alone spend more money to publish it or market it. Because they’ve already earned money. Much like vanity presses.

Like I said before, those are valid concerns.

Back to publishers who pay in royalties. This can be done different ways. In general, what most people think of when they hear an author is being paid an advance by a “Big Publisher,” is called an advance because it is an advance on future earnings of royalties. If that author’s book/story never earns enough such that the author’s percentage of sales is larger than the original advance, then the author will never receive any more payment for the story than that advance.

Some publishers may pay a flat rate for a story and never pay any royalties. This payment can be as low as “Look we published your story online, isn’t that great!” or one or two copies of the publication (if it is printed up), or a copy of the e-book. Or it can be $5. Or $10. Or $250. Or 8¢ per word. Or 1¢ per word. Or 45¢ per word.

Some may pay both a flat rate and then royalties immediately earned on top of that.

Some publishers, including Knight Writing Press as of this writing, offer a payment of royalties only, meaning there is no advance payment at all, only royalties paid after earnings are made.

Some of these publishers don’t pay the authors until the book has “earned out,” or made back the money the publisher already spent on covers, editors, formatting, etc., including, sometimes, paying the publisher itself. And some of these publishers set that “earned out” level pretty high. Sometimes high enough the authors will never receive a royalty payment because the book will never sell enough copies to “earn out.”

As you can see, more valid concerns.

Here is where Knight Writing Press differs from many of those publishers: Knight Writing Press’ authors earn royalties off of every storefront sale, beginning with the first sale. (I specify storefront sales as sales of “author copies” made to authors, at or near publisher’s costs, do not earn royalties anywhere. It is up to the individual author to resell (or keep) those copies to earn a profit.)

There are many different approaches a publisher can take to paying (or not paying) authors, and it varies wildly. There is no “rule” or law publishers have to follow for what they pay you.

This is why you need to decide what you are willing to sell your story for and not let someone else tell you what you should or shouldn’t do. The only “shouldn’t” advice I offer you is that you shouldn’t allow yourself to be taken advantage of. Pay attention and read and understand contracts, know what rights you are granting and what you are getting in return (realize some scammers use the EULA on websites as a contract enacted by the mere act of you submitting a story to them!), and never do business without a contract.

A big reason why some publishers don’t pay advances is cost. They don’t have the upfront money to invest in the book and hope they earn it back. This is true of Knight Writing Press, and that is why Knight Writing Press is using royalty sharing as payment.

Here are some numbers to explain costs and how it affects what Knight Writing Press can and cannot afford, and why royalty sharing works for us.

Let’s use the example of a 5.5×8.5 trim, 270-page paperback published to Amazon through KDP. It will cost $4.09 per unit and will earn a (self) publisher 60% of the retail price, or $5.48, when sold on Amazon.com at $15.95. When sold at other Amazon websites, (.ca, .au, .it, etc.) it earns a similar rate in local currencies, such as £3.40 at Amazon.co.uk. When sold through KDP to places “other” than Amazon websites, such as B&N or a local bookstore, it earns around 40% or $2.29. Conversely, a similarly sized book published through IngramSpark costs $4.96 per unit (plus a $49 “set-up” fee) and earns about 45% everywhere, or around $2.22 when sold anywhere.

My point of all this is to show how long it takes to recoup costs when a publisher pays advances.

If this book is an anthology, and if there are 15 authors, and the publisher pays them $10 each and one copy of the book (the cost of one book plus shipping comes out to around $8.50), it would cost the publisher approximately $275 to pay the authors. This would be considered a “token” payment, nowhere near pro-rates. And that is just to pay the authors. That doesn’t take into account the cover artist, the cover designer, the editor, the formatter, and more. Each of which generally costs more than paying another author.

An average pro-rate estimate would be, for a 70,000-word anthology plus two copies to each author, around $5,800. A typical “good” editor charges around 2¢ per word. That is an additional $1,400 cost. A typical “good” cover artist can be anywhere from $100 to $1,000. A formatter can be another $100 to $1,000.

Most of us don’t have $6k to $10k laying around to put together an anthology paid at pro-rates.

On top of that, add in the time and money costs of collecting, redistributing, and reporting taxes on the royalties earned and then paid back out to each author. It is expensive and difficult.

Knight Writing Press uses Draft2Digital, which, for the same book in the example, costs $4.49 per unit and pays $2.69 in royalties when sold everywhere. Those are, I think, reasonably comparable prices, easily made up for the time, effort, and money saved by Knight Writing Press to have Draft2Digital’s payment splitting program take care of the direct disbursement of funds and tax reporting, especially as Draft2Digital’s distribution program is wider (if you include e-book distribution, as Amazon only distributes e-books to Amazon sites.) than KDP’s.

At this time, Knight Writing Press divides the royalties up in equal shares (with flash fiction and reprints counting as ½ share) among all included in the making of an anthology. This is not only the authors, but includes the cover artist, the formatter, the editor, etc. This puts us all in the position of benefiting from each sale, which encourages everyone, not just Knight Writing Press, to promote the book.

As I said before, Knight Writing Press’ authors earn royalties off of every storefront sale, beginning with the first sale. On average, as of this writing, Knight Writing Press’ authors earn approximately 15¢ each time a book is sold. This means that if there are 15 authors in an anthology, and each promotes the anthology on their social media (virally, not paying for promotion, and separate from any marketing done by Knight Writing Press) enough to sell 10 books each, then each author will have earned around $22.

Remember back to the earlier example of the cost of paying authors $10 each and one copy of the book would cost the publisher approximately $275? That goal is met when around 8 books per author have been sold. It is exceeded when the authors realize they continue to receive royalties if they continue to sell books after that point.

And that is the point where Knight Writing Press feels it has made a better offer to the authors than one $10 payment and one copy of the book. Because Knight Writing Press was able to afford this arrangement and create the book, and the authors have the potential to continue to earn much more than that token payment.

One last thing I would like to mention.

Some feel this is not a valid marketing plan. Some feel the publisher cannot/should not be dependent upon or expectant of the authors to help market the book.

I would like to say again, this is a valid concern, and authors who feel that way should not submit their stories to publishers who depend upon or expect authors to promote and sell their books.

But then… how many publishers do you think want to publish authors who can’t/won’t/don’t want to at least try to convince their readers to buy ten copies of their book?