Publishing Contracts - Understanding Reserve for Returns
I had a conversation with an author recently about the Reserve line on his royalty statement, and thought other authors might benefit from a quick primer.
Books sold to most resellers - stores like Barnes and Noble and Borders for example - are returnable. That is, if the book stores don’t sell them all, they can send them back to the publisher for credit. Publishers don’t always know when (or if ) these returns will occur.
Because the publisher credits authors with these sales as they leave the warehouse and head to the store, it is possible that some of the books we have paid an author for will eventually come back to us. To account for this fact, publishers often hold back a percentage of payments due to an author to account for the possibility of returns. In the case of my publishing program that amount is 20% and is listed on the royalty statement as Reserve for Returns.
If the books don’t come back the reserved amounts are released to the author.
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Thanks for that bit of info, Chris. I’ve always wondered how that worked.