Royalty Statement vs Point of Sale Numbers

Have you ever looked at a royalty statement and thought "WTF does any of this mean???" 

Perhaps you compared the royalty statement to your Book Scan data or publisher-provided sales tracker and thought "Wait... this is double what the portal says! How?!" 

Or, even more distressing, you got your second royalty statement, only to see the cumulative number of books you've sold went down? How the hell did you sell negative books??

Fear not, weary author! Today, I'm breaking down how book sales are counted in all those different places*.

*To the best of my knowledge, anyway. If you have a correction, let me know!

BookScan & Point of Sale Data

As your books move through the publishing ecosystem, there are two types of numbers you'll run into.

First, there are the number of copies that your publisher has shipped to retailers. I'm sure every publisher calls this something a little different (because of course they do), but the Penguin Random House portal calls this "Units Shipped." 

The next type of data is called "Units Sold," and these are the copies that retailers sold to actual customers. The moment when a human being buys your book from a bookstore is referred to as the "Point of Sale" or POS. The major POS tracking system used in publishing is called BookScan, which supposedly tracks "85%" of physical book sales. 

The physical bit important to note. BookScan doesn't include ebooks or audiobooks, which can cumulatively be easily 50% of your sales, depending on the genre and age category you write. 

If you're with a publisher that has an online portal (like PRH, S&S, and others), you'll have a sales dashboard that shows your weekly sales numbers, broken out by format (print vs ebook vs audio).

As far as I'm aware, the number of ebooks and audiobooks will be fairly accurate (maybe? probably?) but the physical copies will always be lower than your actual sales.

Why?

Because many (most?) independent bookstores do not report their sales to BookScan or to publishers directly.

If you have a book that does particularly well at indie bookstores (for example, a number of Indies have prominently displayed my book, With All My Haunted Heart, for spooky season!) those sales will not be reflected in either BookScan or your author portal - if you're at a publisher that has one.

This unfortunately means your sales will look a lot lower than reality. 

Don't worry, though! Those sales will show up on your royalty statement.

Eventually.

 
How Royalty Statements Calculate Sales

Royalty statements are notoriously hard to read, and to make things even more complicated, every publisher formats theirs in a totally different way.

Consistency? In publishing?

Don't know her.

While the way everything looks on your statement will vary, the basic formula for how sales numbers are calculated is thus:

Units Shipped to Retailers [MINUS] Units Returned to Publisher 

Seems fairly simple, yes? 

It is . . . except that bookstores have a (seemingly) unlimited amount of time to return unsold stock to the publisher's warehouse. This means it can be years before the publisher has a truly accurate account of how many books are returned unsold. 

How long they have is unclear. I reached out to bookseller friends (at both indies and B&N) and no one could definitively say what the deadline to return books is. 

According to Google (which could be wrong), B&N is allowed to return books all the way until 6 months after the book goes out of print. 

If that's accurate, that means the number of books returned to your publisher could go increase several YEARS after those units were originally shipped. (This industry is wild, y'all.) 

This return policy helps bookstores stay in business, but it's also why your contract will have something called Reserve Against Returns.

To account for anticipated returns, your publisher won't give you credit for the full number of books shipped to stores until a certain period of time has passed. (In one of my contracts, that time period is four accounting periods, aka two entire years.)

This gives the publisher buffer time to see whether those books will actually be sold or if the bookstore will send them back and get a refund from the publisher. (Though I think this mostly becomes a credit on their account to buy other books? I don't know. That's above my pay grade.) 

Let's do some easy math to illustrate:

Let's say your publisher sent out 1,000 copies of your book. By the time your royalty statement is calculated, we'll pretend bookstores only returned 10 copies to the publisher. 

This doesn't necessarily mean you sold 990 copies. 

Especially if your book came out the near the end of the royalty period, it's likely bookstores simply haven't processed returns yet.

It's fully possible that another 800 copies will get sent back to the publisher before the next royalty statement, leaving your actual sales closer to 190 books.

You (should!) be able to see the number of copies your publisher is reserving against returns somewhere on your statement. That number will continue to adjust as actual returns come in and as new reserves are held against future shipments of books (if you have any). 

This is whole "shipped books minus returns" calculation for sales numbers is why your second royalty statement show that you sold fewer total copies than the first one. If your publisher held back fewer copies in the reserve than the number of books that were actually returned, you'll see that negative sales number show up. 

It's not fun to see negative sales numbers, but it doesn't actually mean actual readers bought and returned your book. It simply unsold stock returning to warehouses. 

 
So... How Many Copies Have You Really Sold?

Thus we get to the crux of the matter. How the hell are you supposed to know how many books you've sold??? 

Getting a 100% accurate count is basically impossible, but based on the whole "books out minus books returned" publishing math, the longer your book has been out, the more accurate the data becomes. 

You can look at your BookScan or Author Portal numbers as the bare minimum of what you've sold.

Depending on when your book came out within your royalty period, that first statement may be pretty useless.

If your book came out in the last month or two of the accounting period (which varies based on your publisher / imprint), all you're going to see is the number of books sent to stores minus the contractual amount of reserves your publisher can hold.

This tells you absolutely nothing about actual POS transactions with readers. (Boo.) 

By the second or third statement, you'll start to get a more accurate number of actual sales. 

So, you know, like 12-18 months after your books come out. (Again, this industry is very weird.)

What Numbers to Care About

If you're the kind of person who craves hard data... traditional publishing will probably feel incredibly frustrating. 

And if you're trying to look at your sales numbers to determine what kind of career you can expect in the future?

Don't. 

I recently interviewed a friend and colleague, Camille Pagán, for my podcast, and her career perfectly illustrates this point: the sales of your debut (or whatever book you're releasing next) do not determine who well you will do over the long-term of your career! 

On the podcast, Camille shared that her debut - which sold for six-figures at auction - only sold about 4k copies total in the first several years it was published. Her publisher wouldn't buy her option, and the next book she sold to a publisher was for "very low five-figures." 

Then that book went on to sell hundreds of thousands of copies. 

Some books hit. Some don't. None of this is linear and none of it predicts future success. 

Camille has sold nearly one MILLION copies of her books and is getting ready to release her 12th book this coming spring.

Looking at your sales numbers may give you a general sense of whether your publisher will buy your next book... 

But also, your pub may surprise you. In both good and bad ways. 

You can have great sales and get dropped by your publisher. 

You can have less-than-stellar sales and get another deal. 

Whatever you do, don't tie your self-worth as an author to the sales of your books. Don't equate the quality of your books with your sales number, either. 

And remember: books can continue to sell for a long, long time. Years. Decades. 

No matter what your royalty statement says today, things can look a lot different in 2, 5, 10+ years.

The best thing you can do is continue to write books you love. 
 

Final Thoughts

I'm sure there are some nuances I missed since - for now - I've only gotten royalty statements from Penguin imprints, but I hope this primer gives you a better understanding of why there's so much disparity between the different sales numbers you run across in your career.

I had originally planned to include actual numbers from my own royalty statements compared against my PRH portal, but there was a lot to say already without them. 

If you'd still like to see those specific numbers, let me know! I'm happy to do a part 2 and examine what some of these discrepancies look like on an actual royalty statement.

Until next time, happy writing.

-Isabel 

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