Easy Royalties allows royalties to be calculated on one of five base figures (in additon to a flat rate per book sold);

1. Retail (list price of the book)
2. Gross (also known as net receipts before withholdings).
3. Receipts (after withholdings)
4. Margin (after with-holdings and production costs)
5. Net (after withholdings, production costs and overhead)

The most common methods are Retail; usually used for trade books, and Receipts, also known in the industry as Net Receipts.

Lets use as an example a $20.00 trade paperback, with a unit cost of $4.00 that is sold at an average discount of 50% in foreign markets via an overseas distributor who charge a 30% distribution fee and assume that the royalty rate is a flat 10%. The company’s marketing expense is about 10% of sales.

Retail: $20.00 list = $20.00

Gross: $20.00 list x 50% discount = $10.00

Receipts:  Gross of $10.00 less distributor’s withholding of 30% = $7.00

Margin: Receipts of $7.00 less unit cost of $4.00 = $3.00

Net (Net Profit): Margin of $3.00 less the overhead  charge of $1.00 (10% x $10 in gross sales) = $2.00