“Reserve for Returns” Clause: How the publisher can reduce your royalties
March 30, 2010
In order to show a profit for every title, most traditional publishers provide themselves with a financial cushion against books that get returned to the warehouse due to overstocking, damage, or lower than expected sales. In your contract’s “Reserve for Returns” clause, the publisher will specify a certain number of royalty periods over which it will reserve or hold back your royalty income in order to cover the anticipated expense of returned books. Royalty pay-out to you doesn’t even begin until after the publisher has recouped your advance, so depending on the quantity of your printing, a “Reserve for Returns” clause as written by the publisher could diminish your income from royalties for quite some time. This is one industry secret you will want to watch out for when you review your contract.
