Gary, while royalty payments calculated on retail or cover price are desirable, many smaller publishers do pay on net. With an ethical publisher, this means the book's retail price less wholesalers' discounts (anywhere from 40-60%).
Less ethical publishers do sometimes try to "Hollywoodize" their net royalty payments. Things to watch out for:
- Anything other than wholesalers' discounts and applicable taxes deducted from net. Some publishers also deduct shipping and handling, which can add up to a lot, and some deduct a whole menu of costs including printing and/or publicity.
- Royalties paid on "net profits" rather than just on "net." That one, easily-missable little word can mean the difference between fair royalties and a pittance.
As I noted, royalties paid on retail are best. Yes, with a higher percentage paid on net, you do make more on books direct-sold by the publisher--but if a small publisher is doing a good job of marketing and distribution, a sizeable portion of its sales should come from third-party vendors.
- Victoria