Royalty contracts have an option to pay royalties on net revenue. Net revenue is the net sale amount (often called net receipts) less expenses.
Example: A royalty contract states that royalties are paid on the net receipts derived from eBook sales after the deduction of Ingram distribution expenses.
A publisher that uses a 3rd party; such as Bookmaster, Ingram Content, or National Book Network to distribute their eBooks will incur a distribution fee. If the fee is 10% of revenue the net revenue received by the publisher on $1,000 in sales is $900.
|Net Sale Amount||$1000|
|Less Expenses||$ 100|
|Net Revenue||$ 900|
Deductible expenses are entered in the Expenses tab of the sales record.
The expense total is shown in the Details tab Expenses section as a deduction from the Net sale amount. The result is the Net revenue number.
If all of your contracts allow for the deduction of distribution expenses you can import the net sales received from your eBook distributor; after the deduction of their distribution fees, as the net sale amount and ignore the total expenses field.
If all of your contracts don’t allow for the deduction of distribution expenses import the revenue received by your distributor; before the deduction of their distribution fees as the net sale amount. Import the distribution expenses if you want to see the net profit on your sales.
If you have contracts that allow for the deduction of distribution expense (basis: Net Revenue) and contracts that don’t (basis: Net sale amount) you will need to import (or enter) the revenue earned before distribution fees are deducted and the distribution fees.