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[GWL]: Analyzing royalty rates

I've noticed that on this list many feel that a royalty based upon "net" 
instead of retail price is somehow illegitimate.  It isn't.  Many also 
seem to feel that royalties based upon net earn less than those based 
upon the retail price.  That isn't true either.  It may or may not be, 
depending upon the back end of the contract and the primary type of 
sale.

Most contracts (all I have seen) that are expressed in terms of retail 
price have various clauses in the back end that reduce the royalty in 
various situations.  For example, your contract may reduce your royalty 
by half:
1) for all direct mail sales
2) for all sales at discounts above a certain amount (which can be as 
high as 55%).
3) for all special sales (there goes your seed-company-catalog sales 
royalty)
4) for all export sales.

Contracts with royalties based upon net often have fewer or even none of 
these special reductions.

If your contract calls for a 10% royalty based upon retail sales and 
includes reductions #2 and #3 above, you will be making only 2 1/2% on 
books sold through seed company catalogs.  

If you have a royalty of 10% and the back end of your contract includes 
#1, your real royalty on direct mail sales is 5%, not 10%.

If you expect your book to sell primarily through direct mail and/or 
through seed companies, the devil is in the details, and some companies 
that state their royalties in terms of net are among those that give you 
the best real deal.

Carol Deppe
Author of BREED YOUR OWN VEGETABLE VARIETIES:  THE GARDENER'S AND 
FARMER'S GUIDE TO PLANT BREEDING AND SEED SAVING (See table of contents, 
excerpts, & reviews at http://www.chelseagreen.com.)  

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