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Copyright Melanie Spiller 2011. Do not copy without permission.
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Royalties and Advances

Earning money is part of the motivation for writing, but how you get paid may not be as straightforward as youíd hope. I donít mean to put anybody off, but writing big fat technical books is no way to get rich. There are some publishers who behave differently, but in my many years of publishing, what Iím about to share with you describes the adventure honestly. If youíre going into this line of work, you should know whatís coming.

 

Magazine and online publishers talk in terms of price per word or a set figure for a given project, and book publishers talk in terms of royalties and advances (unless youíre the reviserómore about that later).

 

Royalties are a percentage of the profits of the book. The profits mean about 50% of the price of the book. The other 50% goes to the cost of producing the book.

 

First-time authors can make as little as 2%, hugely best-selling super-authors might earn 15-20%. So if the book is priced at $60, you get, say 10% of $30, times the number of copies sold. If you figure that the publisher wonít take your book project on unless selling 10,000 copies is feasible, thatís:

 

10% of $30 = $3

$3 x 10,000 = $30,000

 

That doesnít sound too bad, unless you consider that itís the wages for about six months of nearly full-time work.

 

Advances are different. Advances do not mean ďwages;Ē they mean ďadvances against royalties.Ē That means that you have to earn back the advance before you earn any royalties. So for you, the author, royalties are like gambling and advances are like price per project. You get paid your advance based on milestones met, but you wonít necessarily earn meaningful royalties unless the book does well. You donít have to give advance money back if your book doesnít sell well.

 

Most publishers set advance payment milestones at first 25%, 50%, 75% and final submission of the manuscript, and some have additional milestones, like when you sign the contract, at final author review, and when the book is in print. The cash paid is usually evenly divided among the milestones unless you have a known history of being late or bailing, in which case there might be penalty clauses or the payments might be heavily weighted at the end of the project.

 

Itís not very likely that the publisher will give you the $30,000 in advances that your royalties promise; a third or half is much more likely. Divide that across your milestones. So you might get $10,000 across three or four months and then have to wait until the royalties start coming in. You have to earn back the royalties first, so you might wait a year or more to see a check worth cashing.

 

Letís say your book comes out in December and youíve accepted 10% and $10,000. At the end of the first six-months of sales, if your projections of 10,000 sold are accurate, youíll have sold at about 7,500 copies. Thatís:

 

$3 x 7,500 = $22,500

 

Youíve got to subtract the $10,000 you took as an advance, so that first checkóa year after you began the projectóis $12,500. Thatís not too bad, but sales usually drop off after the initial release of a product, and ensuing checks will be smaller and smaller. I remember one time putting a check for $8 in an envelope to mail out to the poor author. I felt like we should have put S&H Green Stamps in with it. But anyway, youíre looking at $22,500 over a year. (And that's with a good advance and a good royalty rate. First-timers are not usually so lucky.)

 

There are other scenarios, too. If youíre collaborating, for instance, you'll split everything. If your team earns 10%, youíre only getting half of that unless your partner agrees to some other arrangement. At six months, 5% of that $60 book is:

 

$1.50 x 5,000 = $7,500

 

Subtract your half of the advances (your advance is still $10,000 now split in two), and youíre getting $2,500 in royalties for six months of sales. If there are additional authors with their names on the spine, youíre splitting again and again. You might be getting 2- or 3%. Most publishers raise both royalty and advances for teams of three or more because no one will work for 3- to 6-months for $3,000 and 2%, but you still canít expect to get rich.

 

Another interesting spin is to gamble on book sales. You might agree to a lower starting percentage with a ramp up based on how many books sell. Itís unlikely that a publisher will break out a percentage before the 10,000 copies sold mark (thatís a minimal profit point), but you might get something like 7% at 10,000 copies, 10% at 12,000 copies and 12% at 15,000 and more copies. That way, youíre betting that the book will sell more and the publisher is hoping that it does but bets that it doesnít.

 

Revisions are another animal. If youíre revising your own book, you can expect to earn the same royalties and advances or slightly more, and do less work. Yay! The publisher wonít ask you to revise unless sales were decent in the first year, so you should be able to make some financial guesses based on the kind of product changes in the wind and the sales on your existing book and the old version. Donít hesitate to negotiate with the publisher if you know that the changes to the product are earth-shattering.

 

Revisions mean that you only have to touch text and images changing in the new version. Thatís likely to be most of the images, but usually thereís a fair amount of functionality that stays the same. Youíll still spread the work over three to six months, but youíll be editing to the upgrade, and most likely only creating a few new chapters from scratch. Itís a lot less work to revise.

 

Some authors chose to hire work-for-hire (WFH) as subcontractors for the original book or to revise an existing book to a new version. WFH wages come out of the authorís pocket. Sometimes, the publisher cuts the check for the WFH writer, but the money is subtracted either from advance monies or earning percentages. If the WFH revises a whole book, youíll still earn some royalties because itís your name on the spine, and you might possibly take a little of the advance, but the WFH author will get most of the advance and usually no or very little royalty.

By the third revision, the reviser gets to put their name on the spine whether you like it or not. You have to have some involvement with the book to keep your name there and to keep your earnings high. Itís only fair to the reviser. The publisher may choose to remove your name at that point, unless they think the continuity sells books. Very few authors have enough cult following to warrant having their name on books they didnít write, and youíll have lost all control over the content. Remember that youíre doing this for marketing purposes, so just having any old book out there with your name on it doesnít seem like that great an idea. If youíre the reviser for a book like that, I hope you make it financially worth your while.

 

There are other issues as well, such as foreign licenses, steep discount clauses, and reserved monies, that Mike Gunderloy covers in his article on this same subject. Youíll find that at http://www.larkware.com/Articles/AdviceforWritersPart4.html.