Remainders: What do authors get?
My friend Mark Leslie Lefebvre sent me an interesting question today:
I also had a question about remainders (since I know that some of your older titles or books that have gone into paperback have gone into remainder status -- after an incredibly great run as a traditional trade book, of course). Remainders/Bargain Books are a win-win situation for consumers and for bookstores (lower retail, higher margins) but what about the author?A good question! Tor's boilerplate remainder clause says this:
When Tor remainders your old stuff, is there any sort of compensation given to the author (ie, some sort of token royalty payment for that liquidated stock?) I've only seen this from a customer's and a bookseller's perspective, so was curious as to the author's side of things.
Remainder Sales. On copies of any edition of the Work sold in a remainder sale or a special stock reduction sale, a royalty of ten percent of the excess, if any, of the net amount received by the Publisher over the average cost of copies of that edition.Now, let's try to parse that out. Most Tor hardcovers have a cover price of US$24.95, and on copies sold in the US, authors get 10% of that on the first 5,000 copies (which is $2.50 a copy), 12.5% on the next 5,000 copies (which is $3.12 a copy), and 15% on anything over 10,000 copies (which is $3.75 a copy). The deal is similar with all other commercial SF publishers.
[On the other hand, it should be noted that very few SF novels sell over 5,000 copies in hardcover; for the majority of SF authors, the effective royalty on all copies sold in the US prior to remaindering is 10%.]
But what about those bargain-table remainders? Well, Tor sells the remainders of its US$25 hardcovers to whoever wants to buy them (and the author does get first dibs) at US$1.75 or so a copy. And what royalty does the author get?
Not 10% of cover. Not 10% even of that $1.75 (which would be 18 cents), but rather 10% of the amount by which $1.75 exceeds the average manufacturing cost of copies of the actual book ... which, in my experience it never does. I don't know what it costs Tor to print its hardcovers, but I do know from my experience editing RJS Books that we pay over $5.00 a copy.
Mark is right: Tor does remainder all my books (and all its other authors' books) eventually; the average sell-through for a hardcover (the percentage of the copies printed that actually sell during its initial release) is only about 50%; there are always remainders -- even of superstar authors like Stephen King and Michael Crichton. Tor even oh-so-helpfully remaindered Hominids the very month it won the Hugo.
And he's right that bookstores love selling remainders, because although they've bought them up at $1.75 a copy or so (albeit on a non-returnable basis), they can sell 'em at whatever they like, and you'll often see them sold for more than three times that much. A $5.99 remainder is $4.24 of profit for the bookstore (compared to the $2.65 the bookstore would pocket on a mass-market paperback priced at $5.99, assuming the store got a fairly a typical 44% discount from the publisher).
So, yes, remainders are good for bookstores, and they allow publishers to recover some of their costs, but, in fact, in most cases, the author doesn't make a penny off them.
Just so you know.