Calculating eBook Royalties

The first step in calculating eBook royalties is understanding that not all eBook retailers and wholesalers pay the author or publisher the same amount.  Typically, eBook royalties are higher percentage-wise than those for the printed version of the same book, even though the sale price is lower.  Since there are no shipping fees, storage costs, and other physical distribution costs, there are less parties to "take a cut" from the sale of an eBook.

Typically, an eBook retailer will keep a certain percentage of the retail download price of the eBook, and there will be a small fee deducted for the “delivery fee” (whenever a customer purchases and downloads an eBook, there is a small fee, usually a few cents, that is charged to the customer – this is similar to a credit card processing fee).

It’s typical for an eBook retailer like Amazon.com or Apple iBookstore to set their royalty rates based on how the author prices their eBook. For instance, Amazon.com has set a limit. If you price your book between $2.99 and $9.99, you get to keep 70% of the royalties! If you price your book under $2.99 or over $9.99, you only get 35% of the royalties associated with the retail download price.

A good example of various ebook royalties can be found at http://www.publishgreen.com/royalties-in-depth.  While the royaly calculations are based on this company's ebook royalty structure, you may find viewing the actual math helpful.