Smashwords royalties are 85%
of the net profit!
Smashwords royalties vary based on the sales outlet, and the method of the sale. For sales that originate at Smashwords.com or at Stanza, Smashwords pays authors 85 percent of the net proceeds and keeps 15 percent for itself. Normally, this will be the list price minus the PayPal processing fee.
"Net proceeds" means the sales price paid and received less payment processing fees, affiliate fees, retailer discounts, costs due to erroneous or fraudulent transactions, credit card charge-backs and associated fees. Therefore, 85% of "net proceeds" does not equal 85% of the book's sales price.
You might prefer that Smashwords' royalties be based on a percentage of the retail price. That would certainly be easier to compute and it would be the same however the book was sold. However, it would have to be much lower to allow for distributors and wholesalers who get up to 55% discount. Even though the amount you make will vary with where and how your book was sold, you will make more money with the 85% of net profit royalty.
On May 22, 2009, Smashwords began offering a net royalty rate of 70.5% of net profit for sales originating with an affiliate. Authors who do not wish to participate in the affiliate program may opt out.
Starting in September 2009, Smashwords began distributing books via major online retailers. In most instances, Smashwords will continue to compensate authors at a rate of 85% of the net proceeds received by Smashwords from the retailers. Since some retailers take up to 50 Percent of the list price, your royalty may be approximately 42 percent of the list price.
Smashwords will notify authors of the individual compensation rate they will receive from Smashwords for sales at each major channel partner, and will give authors/publishers the option to opt out of certain channel partners if they wish.
Actual proceeds to the author may be greater than estimated if a customer purchases multiple books at the same time, thereby spreading some of the per-transaction fee across more than one book.
Authors may ship complimentary copies of their work.
For the record, I am not affiliated with Smashwords. I did publish my book, The Misadventures of Russell Quigley, with Smashwords. I scanned the front cover to use as my Smashwords cover. It took two tries to qualify for the premium catalog. I am delighted with the rapid expansion of their distribution. Smashwords started small, but I believe they will be a major player.
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