GIVEAWAY: I am (again) excited to give away a free copy of the new 2013 Guide to Literary Agents to a random commenter. Comment within one week; winners must live in Canada/US to receive the book by mail. Good luck to all and Happy Holidays! (Update: Allison won.)
If you’re going to wheel and deal with literary agents and editors, you’ll end up spending more time than you’d like discussing rights, contracts, advances, royalties and a whole lot of other
boring important stuff. That said, I want to address the most common questions regarding how advances and royalties work. In other words, how does the payment process work when you sell a book? Here are some FAQs:
1. How do writers make money?
You sign a contract with a publisher. In exchange for signing over the North American and English language print rights to your book and possibly other rights, as well, you are paid one of three ways:
- flat fee: a set amount of money upfront that’s yours to keep. The amount does not change no matter how well the book sells. For example, if your flat fee is $10,000, the amount remains the same no matter if the book sells 10 copies or 10 million.
- royalties: a small amount paid to you for every book sold.
- advance against royalties: a sum of money upfront to you with the promise of more (royalties) should the book sell well.
2. Which of the three methods above is most desirable?
An advance against royalties. It’s probably the most desirable, and it is by far the most common. It’s like you get both #1 and #2 combined. Let me explain exactly how an advance against royalties would work. For this example, I’ll keep it real simple (for my own sake). Let’s say the publishing house offers you an advance of $60,000 and royalties of $3/book. Note that the upfront advance of $60,000 is not in addition to royalties, but rather part of royalties – meaning they’ve given you royalties for the first 20,000 books (times $3/book) upfront. Since they’ve already paid you the royalties of the first 20,000 books, you will not start actually making an additional $3/book until you sell copy 20,001. The royalty possibilities are essentially endless. You can make $3 a book forever as long as it keeps selling in bookstores and on Amazon.
3. What if my book bombs? Do they get the money back?
No. Any upfront money — a flat fee or advance — is yours to keep no matter what. But you’re on to something here with that question. If your book tanks and the project is a financial failure, that is a huge hurdle to get over in order to sell another book. Yes, a huge advance means a large sum of guaranteed money (sweet), but a small advance means more reasonable expectations for you to meet, and a greater chance for your book to be profitable — making you “a valuable author” in a publisher’s eyes. So I highly suggest that all authors build their author platform, get on social media, and speak at writers’ conferences to sell more books and make yourself more attractive in terms of selling future titles.
4. How much are royalties per book?
Totally depends on the cost of the book and your contract and how much it is to produce copies of the work. If your write a hardback novel, you may get $3/book. If you write a niche nonfiction, it’s probably more like $1/book. And keep in mind if you write with a co-writer, that percentage drops in half. If you work on a picture book with an illustrator, that percentage would also drop in half.
(On that note, here find a growing list of picture book agents.)
5. How much money can authors expect from their first advance?
This is the big question that never gets answered. The reason it never gets answered is not because editors are being coy, but rather because there is no answer. The answer depends on the book’s genre/category, the size of the house, the scope of the deal, your platform, your agent’s skill, and much more. There are just as many $3,000 deals going on in a day as there are $100,000 deals. That’s why there is no answer. No one wants to throw a figure out there that is interpreted as fact.
6. Are there any trends in money and advances these days?
Yes. Sadly, advances are trending down. That’s bad. But the good news, if your book sells well, there’s still plenty of money to be made on the back end with royalties.
7. When do you receive the money after you sign your contract?
It depends, but know that money is usually split upon into multiple payments. For example, if you sign a deal for $12,000, you may get $4,000 (one third) upon signing the contract, then another one third upon completion of editing/writing the project, then the final one third when the book is released.
8. Do writers get the checks from the publisher?
Personally, I don’t. The check gets sent to my literary agent, who cashes it. She then sends me a check from herself for the amount of 85% of the original. An agent’s standard commission is 15% of all monies made off the book. Her financial success is directly tied into yours, which is why she fights so hard for you and tries to guide you toward a good deal.
(On that note, hear from published authors on How to Find a Literary Agent.)
9. How do I make sure that I’m getting paid properly?
I’m honestly not sure, and that’s why I encourage you to find a literary agent. It’s the agent’s responsibility to be in touch with the editor and accounting department to make sure the royalty statements (payments) accurately reflect proper totals that take into account sales, returns, foreign territory sales, and film rights, etc.
10. On that note, do you make money for selling foreign rights and film rights?
Traditionally yes (as long as you don’t have an unfortunate contract that deems otherwise). If a production studio wants to buy your film rights off you, they have to pay you — and that isn’t cheap, either. They will likely option your book, meaning that they buy the film rights temporarily in exchange for a more limited amount of money. Either way, you’re getting paid.
For every foreign territory (country) that you sell to, that’s more money. It works the same way as over here. You get a small lump sum with each territory (an advance) with the possibility of more (royalties) should the book sell well. If the book sells in 10 territories, let’s say, that’s a great — and easy — way to make money off a project.
11. When multiple publishing houses are interested in your work, should you just go with the highest bidder?
Not necessarily. Money will play a big, big role in the selling of the book — but there is more to consider. Are they promising a thorough marketing and publicity plan? Do they seem excited about the book? (Excitement translates to them featuring the book prominently in catalogs and bookstore shelves.) What rights and percentage splits are they asking for in exchange for that money? Do they design and produce beautiful books? Do they have a history of keeping their books in print for years and still promoting them down the road? Do they publish 10 books a year or 400? — and how will that play out in how your book is handled? All these questions factor in big time. In my opinion, it’s better to take a $10,000 deal with a house that loves the book and will push it than a house that offers double the advance but not a whole lot of love. It’s love and enthusiasm for a book that will give it the best possible chance to sell well.
What else is there to know about money and writing?
Lots, I suppose, but those are the big points. Before you sign a contract, your agent will go over it with you step by step and explain everything. Good luck!
Photo courtesy Flickr’s _J_D_R_