Since the announcement that I sold my book, can you guess what the most frequent question I’m getting is?
It isn’t “When does it come out?” or “Can I be your groupie?”
It’s: “Wow! When are you going to quit your job?”
I try to steer them back towards the groupie question that I know they nearly asked, but it never works. They really want to know if I’m going to stay at my job, now that I’m “filthy rich.”
After all, when you sell a book, you are generally paid an advance. This is an advance payment against royalties that your book will earn. So authors are all filthy rich, yes?
If by yes, you mean no, then yes.
Let’s look at book advances more closely:
Why pay an advance to an author?
The idea is that you’ll have enough to live on while you write the book. It’s an early financial commitment by the publisher. It’s an opportunity for the author to feel really cool as they see their work vindicated by an actual number.
Despite many of the fanciful expectations that I’m about to demystify, it is a wonderful feeling. You’re finally going to get paid to write. What could be better?
How does it get paid out?
In parts. In my research I’ve seen everything from two payments to five, usually spaced out at specific benchmarks in the publishing process.
Three payouts seems to be common. Let’s say you just sold your book for $10,000. You might get 1/3 up signing your contract, 1/3 upon delivering the manuscript, and then 1/3 upon publication.
Publishing houses plan their catalogs in advance. Well in advance. I found out about my book on October 20, 2011, with about half of it already written. When we discussed when it might come out, we never talked about anything earlier than the fall of 2013.
This is not necessarily because I couldn’t write it quicker. It’s because there are a zillion considerations to take into account when releasing a book.
If you really want to get into the nuts and bolts of all this I’d recommend reading Putting Your Passion Into Print. There is a lot of the book that talks about what happens after the deal, including advances.
So let’s say that you got $10,000 as an advance, but your book wasn’t going to come out for another 18 months. Actually, let’s choose a bigger number: $50,000. Well, if your first payout comes a couple of months after the call from your agent, you’re not getting your first check of $16666 right away regardless.
Then maybe you take another year polishing your manuscript, delivering it, and getting it accepted. Then you get another installment of $16666.
Then maybe your book comes out a year later. Do you see where I’m going with this? As fun as it sounds to look at that big number and pat yourself on the back, you might not want to go polishing up your middle finger right away so that you can go deliver it to your boss.
If you’re going it alone and managed to catch a publisher’s attention, you won’t have to pay an agent a commission on the sale of your book. If you’re like me (tall, semi-handsome, agented), some of your advance will go to your agent.
15% seems to be a reliable standard.
And getting paid out in these lump sums places you square in the middle of Taxland, perhaps a portion of Taxland with which you are unfamiliar. You’ll lose some of that money to taxes.
How big are advances?
I’ve heard everything from $1000 or less to upwards of one million. Obviously, first time authors are going to command less. Perhaps this came to me in a fever dream, but I think I remember hearing or reading that Jonathan Franzen was paid a million bucks before writing The Corrections. But he was Jonathan Franzen and he certainly made that money back for the publishers.
Do you ever have to pay it back?
Unless you break your contract, the chances of having to pay back your advance are tiny. If you hold up your end of the bargain, you should be fine.
But if your publisher wanted a memoir about the plight of the inchworm and instead you turn in a screenplay that you hope will become the next Tyler Perry film, you might find yourself paying back that money.
But you do have to earn back that advance
And here we come to the somewhat sobering part of the initial excitement. If you’re a writer hoping for a long career of fat royalty checks, first you have to pay your publishers back for the advance against royalties that they gave you.
What’s a royalty?
It’s your cut when you sell a copy of a book.
What do you mean you have to pay back the advance?
You pay it back in sales of your book. So if I’m the publisher and I give you $20,000, you have to do $20,000 in sales before you start earning royalties on sales. Don’t fuss. I gave you that money. Now you have to put your money where your mouth is and write a book that will earn back its advance because it’s just that damn glorious.
And of course, that’s what the publisher wants.
Sobering part #2:
Let’s say your book is a $20 hardback. If you sell a copy, that does not mean you just paid back $20 on your advance. You can only apply your royalties to paying back your advance.
Your royalty percentage will be spelled out in your contract. Let’s say that it’s 20%, just to pick a number that’s easy to work with.
Advance = $20,000
Cost of book = $20
Royalty = 20% of each copy, or $4
Then here’s the formula for repayment:
It’s not $20,000 – $20 = $19,980 left to go
It’s $20,000 – $4 (your royalty) = $19,996 left to go.
Yes. But keep in mind that the publisher’s hope is not to break even with you. It’s to make money off of your work! So hopefully they’re going to be pulling out all the stops to help you make it to the stage where royalties start coming in.
So are you more likely to pay back a big advance or a small one?
Well, just going by the numbers, you’ll be able to pay off a small advance and make it into royalty territory sooner because you’ll have to sell fewer copies.
But a larger advance might have as good of a chance at paying it back, or better, depending on how much marketing might and majesty the house decides to bring to bear on the project.
If your book is going to be a hardcover, it’s going to cost more than a paperback. This means that your royalty on a $25 hardback will be more than on your mass market or trade paperback.
Also, the royalty rates on the different formats vary. So not only do paperbacks cost less, but you’d probably get a smaller percentage/copy as well.
So convince them that you are a sexy hardcover, if possible.
On that note:
I’d love to see how many authors actually quit their jobs and just write while they live off their advance. I’m in a good spot: I love my job and don’t have any plans on quitting anytime soon.
I could do it if I absolutely had to, but it would not be fat living.
Once you figure out that you’ll get paid in installments that may be spread over a couple of years, that you’ll lose some in taxes, that you have an agent, etc, the number isn’t quite as big as when you heard about it on the phone.
But don’t get me wrong: hearing about it on the phone remains extremely, exquisitely sublimely wonderful.
And that brings us to you and me. In order for me to pay back my advance, I’ll need to sell a lot of books. I would really appreciate it if each of you readers set aside some money that you can use to buy 1000 copies each.
Okay then writers, ask questions if you’ve got them. I’ll give you answers based on what I’ve learned, without giving away any specifics of my own deal.
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