What Book Format Will Make Me the Most Money?

By Jonathan Babcock

Whether you’re planning to publish traditionally or independently, it’s important to understand what your budget might look like and how it translates to the possible profits you’ll make.

There are a lot of factors that determine your income as an author. Top among these are the size of your advance on royalties and the percentage of royalties that you earn for each book sale. We’re going to dive into what advances, royalties, and ‘earning out’ mean for you financially if you publish traditionally, as well as how self-published authors make money through a royalty system similar to traditional publishing.

Most importantly, we’ll discuss what book formats will make you the most money. Not all formats will make as much money, and not all of them will sell as many copies. So how can you tell which book format will bring in the most cash?

Royalty Rates from Traditional Publishers

If you’re planning to publish traditionally, you’ll likely receive a certain percentage of the profits from each book sale. The money you make is called a royalty, and the actual percentage you receive is called the royalty rate.

There’s a lot of variation here. For instance, a debut author will receive a lower royalty rate than an author who’s written a New York Times bestseller. Other factors include whether or not you receive an advance on royalties, the book’s length, and even how well your book sells. With some contracts, you’ll begin earning higher royalties after selling a certain number of copies.

Despite the variations, there are still some average royalty rates for each book format:

So let's say that your hardcover novel sells for $15. For each copy sold, you’ll make $2.25. If you sell 5,000 copies of your hardcover novel (which would be pretty good), you will get a bit over $11,000.

Unfortunately, that doesn’t mean that you now have $11,000 in your pocket. Most publishing contracts will give you an “advance on royalties,” which is essentially a lump sum paid out before you ever sell a book. Once your book launches, every royalty you earn goes towards paying off that advance.

If you fall short of paying off that advance (which most authors do), you don’t have to pay the money back. But it does mean that you won’t make any money from your royalties.

Let’s say that in our example, your advance on royalties was $15,000. You’ll need to sell more than 1,600 additional copies of your hardcover just to pay off the advance (called earning out), and only after that will you begin receiving royalties.

For the sake of the example, imagine that you pay off your advance on royalties and still sell another 3,400 copies (10,000 copies total). You’ll make around $7,650.

However, there are still financial costs to consider after that $7,650. Many traditionally published authors have an agent (someone who helps the author market their book to publishing houses), and most agents receive approximately 15% of your earnings. That means that your cut would come out to around $6,500 when all is said and done. The agent also receives 15% of your advance.

If you want to hear about an author’s experience with royalties and advances, check out Kit Frick’s blog post on how her book, I Killed Zoe Spanos, earned out its advance.

Earnings for Self-Publishing

If you’re planning to self-publish, it’s a totally different ball game. Not only do you set your own prices, but you also get a much higher percentage of the money from each sale.

While all earnings are technically yours, you will need to pay your distributor, and they typically take a certain percentage before sending the remainder to you. Because of this, the percentage that you ultimately receive is similar to a royalty.

There are a lot of distributors out there, including IngramSpark, Kobo, Kindle Direct Publishing (KDP), and Barnes and Noble. Since KDP offers fairly average rates, we’ll use them as an example. Their royalty rates are as follows:

(KDP doesn’t handle audiobooks, so while you can sell an audiobook through Amazon, the actual royalty rate is determined by your contract with Audible).

Different distributors charge different amounts based on their services, so it’s important to find the balance that’s right for you. No matter what distributor you choose, however, you’ll receive more money per sale than through a traditional publisher.

Does that mean that you’ll make more money by self-publishing? Not necessarily. You’ll need a strong marketing plan and good sales in order to make those high royalty rates worth it since you won’t have the reach and distribution opportunities that come through traditional publishing.

Retail Prices

The last thing to understand is the retail price for which most books sell. While this will vary by the length of the work, the fame of the author, and the publisher (or if you self-publish, you set it yourself), there are some normal ranges:

There are a lot of factors that go into retail prices, but cost of production is a major one. A professionally produced audiobook, for instance, can easily cost upwards of $5,000 to create, on top of the host of costs associated with preparing the book for publication.

What’s important to note is that not all traditionally published authors receive royalties based on the retail price of their physical books. Rather, their royalties come from the bulk price that publishers give to retailers (these are called net royalties). Typically, the bulk price is about half of the retail price, so a hardcover that retails for $25 would be sold for around $12.50 per copy in bulk. You receive royalties based on the $12.50, not the $25. If you’re receiving net royalties instead of retail royalties, however, you will typically receive a higher royalty rate.

Putting it all together

Getting back to the original question, when you multiply retail prices by royalty rates, which format makes the most money?

The answer, by quite a large margin, is audiobooks for traditional publishing and hardcovers for self-publishing. Check out the table below.

(Note: This table doesn’t factor in advances on royalties. Print costs also still need to be removed from the estimates for self-publishing, which reduces the profit margin by a significant amount).

Given that audiobook production costs need to come out-of-pocket for independent authors, hardcovers likely hold the #1 spot for self-publishing.

Hardcovers are also priced higher than paperbacks in bookstores, increasing the total royalties.

So is that it? Do audiobooks bring in the most money for some and hardcovers for others?

Not quite…

Reader Preferences

Despite the rise of the internet and the increasing prominence of digital entertainment, print books still outsell ebooks at a 4:1 ratio. Additionally, 37% of Americans only read print books (the number is even higher in Canada, at an astonishing 56%).

Among print books, hardcovers seem to be the preferred choice. Although they’re more expensive than paperbacks, they’re also more durable. This makes them more desirable not only to many readers but also to libraries. There’s also a level of snobbishness since many critics won’t review books that are in paperback only.

In 2019, total book sales revenue in the United States came to 26 billion, of which 74.7% came from physical books. Ebooks only came to a tenth of that, at 7.48%, and the remaining 17.82% came from other formats, including audiobooks.

Looking at those stats, there’s no doubt that hardcovers are the winner for both traditional and self-publishing.

But wait… there’s more

Even though hardcovers will most likely be the top-performing book format for you, it’s still important to promote all of the formats you publish through. Yes, some formats will make you far less money, but every sale counts towards your budget and platform. A reader who grabs a cheap ebook copy may not bring you much cash, but if they buy future books or tell their friends about you, that’s still invaluable.

Audiobooks are also on the rise, and they’re seeing faster growth than any other segment of the publishing industry. While you may not have control over this if you publish traditionally, self-publishers could find it well worth their money to invest in the creation of audiobooks.

Stats from the Audio Publishers Association suggest that nearly twelve times more audiobooks were produced in 2020 compared to 2010. Podcasts have made consumers more comfortable with audio content, and advances in technology are making audiobooks more accessible and portable.

Bottom line? Just because hardcovers will bring in the most cash doesn’t mean you want to neglect other book formats!