Leanpub Royalties & The Startup Chef Charity Book

published Dec 10, 2012

Recently, Hunter Walk from YouTube and Maya Baratz from ABC News launched a co-authored book on Leanpub called The Startup Chef. The book is comprised of 75 favorite recipes from leading entrepreneurs, investors, writers and other members of the startup/tech community. Proceeds from the book’s sale will go to charities devoted to feeding the hungry, including people affected by Hurricane Sandy. (The two charities are Save Our Strength and the Rockaway Plate Lunch Truck.)

Some people have been (naturally enough) curious about the exact numbers, so here’s a brief explanation:

Leanpub’s Standard Royalty Rates

At Leanpub, we’re committed to paying authors really high royalties. Our royalty rate is 90% minus 50 cents per sale, which is, to say the least, very competitive. (The 50 cents is to cover a portion of transaction costs; the rest of the transaction costs are paid from our portion of the sale).

Another way we have of maximizing author royalties is our variable pricing model, reflected in the cool pricing sliders you’ll see on every Leanpub book’s purchase page. Simply put, the variable pricing model lets customers pay what they want for a book. The author sets a minimum price (which can be as low as zero) and a suggested price, and then the customer chooses what to pay by dragging the slider up or down. Here’s a screenshot showing what that looks like:

So in this example, if someone were to pay $20.00 for Brian Marick’s book, Brian would receive $17.50.

You probably noticed there are two sliders there: one on top for how much you’re going to pay, and one on the bottom for how much the author is going to earn. One thing we’ve found is that customers often use the bottom slider to set the price, which means they’re more interested in figuring out how much they want the author to get, than they are in the overall price they’ll be paying. This, of course, only works because our royalty rates are so high that customers can basically ignore the difference between what they’re paying and what the author is getting.

The Startup Chef Charity Royalty Rates

Now, since The Startup Chef cookbook is a charity project, we do not want any profits from it. This means we’re just subtracting the transactions costs (which go to PayPal, not us!) from each sale, and passing on everything else to the charities.

That means the ‘royalty’ from each sale is 97.01% minus 30 cents (because the transaction fees are 2.99% of the price plus 30 cents). That means that if you pay $20.00 for The Startup Chef, the charities receive $19.10 (alternatively, if you pay $10.00, for example, the charities get $9.40).

Here’s a screenshot of what that looks like:

Since any donation you make will inevitably have some kind of transaction costs associated with it, this is pretty much like giving to the charities directly - only in this case you (or someone you’re giving the book to as a gift) get a bunch of cool recipes to try!

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