Multiply the royalty by the number of copies we project that we will sell.
For example, if we think First Time Author X will sell a total of 15,000 copies of her first novel (meaning that we will print 45,000 copies), and we're going to charge $6.00 even for each copy, the very most we can pay her without accounting bouncing our deal memo back is $7200. A conservative company would pay $3500 - 4500. A not so conservative company might pay $4500 - $6500.
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For example, if we think First Time Author X will sell a total of 15,000 copies of her first novel (meaning that we will print 45,000 copies), and we're going to charge $6.00 even for each copy, the very most we can pay her without accounting bouncing our deal memo back is $7200. A conservative company would pay $3500 - 4500. A not so conservative company might pay $4500 - $6500.
Does that make sense?