If you ask the average book author how they intend to make money from their book, most will tell you they expect it will come from royalties. In my 27 years of publishing and marketing, I found that few authors and even fewer would-be authors understand how book royalties actually work. I want to teach you the basics of that right now.

The sad truth is that royalties are significant only if you end up writing a blockbuster bestseller ... but extremely few authors ever do. In fact, the average first run on a book today is about 3,000 copies and most books never print a second run.

The average royalty paid by a traditional publisher to first-time authors is between 6 and 10% of net receipts. Net receipts means the price paid by the purchaser, but what that amounts to is often misunderstood by book authors.

For example, most authors who expect their earnings to come from royalties also expect to rely on commercial book trade distribution for their book. In other words, they expect to distribute their book through the network of wholesalers and bookstores. Here is how the math on net receipts actually works in that situation. This is the key to your royalties.

Assume your book retails for say $20, to make it easy. If the publisher wants the book to be distributed through commercial trade book distribution, using a network of wholesalers and bookstores, the publisher must give the wholesaler an average discount of 55%. That is $11 out of your 20, so the net receipt to the publisher is 20 minus 11 or $9. Now, let us assume the author gets 8% royalty, which actually is high for a first-time author. In this case, the author makes $0.72. The math on that is $9 net receipts times 8% royalty which equals $0.72 on each book. That is it.

So if you wanted to earn say $100,000 a year from your book, at $0.72 royalty, you would need to sell more than 138,000 copies of your book each and every year, year after year after year. As I hope you can see, if you hope to rely on royalties alone, it is a very tough road to hoe.

I will share with you a little known publishing industry statistic that illustrates what I mean. Out of every 1,000 writers that contact literary agents to help them find a book publisher, only 10 end up with a publisher -- just 1%. Out of those 10 who do get published, only 1 of those writers ends up making any money from the published book. In other words, out of every 1,000 writers that contact literary agents, only one gets published and makes any real money from their book. The other 999 do not.

Why are those statistics so dismal? In part, it has to do with the fact that traditional publishing is a mature industry with a greatly increasing number of writers wanting to do business with a dramatically shrinking number of big publishers. But the main reason is because those writers do not know there are other big strategies to earn money with a book besides royalties. As the statistics illustrate, 999 times out of 1,000, it just does not work.

My friend Mark Victor Hansen likes to remind authors that writing your book is just 10% of the work. He emphasizes that the other 90% of the work is marketing of the book. Most authors never get this perspective from their publisher or anyone else. If the 999 out of a 1,000 writers knew and applied a few of the other time-tested strategies, most of them would probably succeed.