Friday, June 29, 2012

How Advances Work

by Jill Williamson

So you've taken the time to write a book, to rewrite it over and over, to edit it, to find an agent, then work on the book with your agent, and it finally sold. Sweet! That was, like, three years of work with no pay, though. But now you're getting a big advance, and then the book will start selling and you'll make even more money, right?

Not quite.

As per the scenario for the amazing novel The Crowl getting published (see part one here and part two here), ABC publishers gave you a $5,000 advance on the book. Think of this advance as a loan. It would be like your boss down at Subway giving you a year’s salary in advance. You’d still need to work to pay it back, but you’d get the money ahead of time—in advance.

This is not something you have to pay back. But it is an amount that you must reach if you are ever going to earn a penny more from your publisher on your book.

Your book advance is calculated on how many copies the publisher thinks they can sell. And once your book comes out, you must sell enough copies at your royalty rates that add up to $5,000 before you make any more money on your book. This is called "breaking even" or "earning out" your advance. Sadly, the majority of authors don’t ever break even. In fact, many bestselling authors don't break even because they get such huge advances that the book never earns out.

That's why I prefer smaller advances. My goal is always to break even in the first year, if I can help it, which I sometimes can’t. But a smaller advance is easier to earn back and, I feel, gives me an easier chance at looking like a success to my publisher.

Once you break even, then you'll start to receive more money on your book. You'll receive the royalty rate from your contract on all future sales--so 8% if you’re selling copies under 20,000 units. You'd refer back to your contract to check these rates.

Also, returns count against you. Ever quarter you’ll get a royalty statement. The first one might look something like this:

If you can't read that image, click here. I uploaded it to my website in a larger form.


All this to say, the vast majority of authors need to have written multiple books that have earned out, are all still in print, and earning royalties before they could really make enough money to live off of. It adds up, but it takes time.

Two things to keep in mind here. First, learn to write more than one book. And second, support authors and the publishing industry.

If you have a favorite author, make a point of buying his or her books new, because authors don't make any royalties off used books or books you get free from their publisher. In fact, if you want to be an author, I suggest you make a point of buying at least one new book for every five you buy used. Because you know what it's like to be working hard to get published, and someday you're going to wish that someone would buy your book new.

And don't think that ebook piracy isn't a big deal. It is. Every ebook that someone emails to a friend without paying for it is another lost royalty for that hardworking, underpaid author.

Thoughts on this topic? Questions about advances or royalties?

27 comments:

  1. Scary... So if you don't earn back the 5k, your career is doomed? Do you have any control over how much of an advance you get? If so, how much do you ask for? 2k?

    I do make a point of buying books from my favorite authors... They have to watch themselves, because if I no longer like their books, I stop buying them! I guess you guys make less from ebook sales?

    What about libraries and loaning books you buy to friends? Obviously as a reader, I can't buy everything I read, but I once saw two authors whining about this because it lost them money.

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    1. Allison, those are great questions. I can't speak for all writers, but I'll share my thoughts on it. It doesn't bother me when I hear of somebody checking my books out from the library or loaning them to their friends.

      One reason is that I'm not just a writer, I'm a reader. I get that there are lots of books and you just don't have money for all of them. I check out books from the library and swap books with friends all the time.

      Another reason is that I've seen loans (both library and between friends) generate sales. Where someone saw Me, Just Different in their school library, checked it out, then liked it so much they ordered Out with the In Crowd and So Over It.

      Same thing happens with friends. I loaned by mom Miss Fortune by Sara Mills and when she adored it, she ordered Miss Match. (She also went to Sara's website, found out what authors Sara liked, and ordered THEIR books. My mom rocks.)

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    2. Haha, awesome mom! :D Yeah, I've had that happen where I checked a book out from the library, and been so impressed I bought it and it's sequels. In fact, half of the authors on my self got there because I checked out their books from the library first.
      Though you'll be happy to know I have the ebook version of the whole Skylar series. (I devoured them in a weekend. :D) Bought them because the library didn't have them. (Another reason why I buy books! Just today I bought a dystopian, Water Wars, because the library didn't have it.)

      All I can say about authors who whine about libraries and loans to friends, is that they only write to make money. They can't be casual readers if they don't understand that readers can't afford to buy every book they read... Or at least not the hardcore readers! :)

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    3. Allison,
      You career is not doomed if you don't earn out. If you don't earn out over and over with multiple books, that doesn't look good. But the publisher can still make a profit on your book when you don't earn out. And as long as the publisher is making a profit, they are usually happy. I've never heard of an author asking for a lower advance. I suppose you could... *shrugs*

      I love having my book in libraries. One thing I try to suggest that readers do when they email me and ask if they can have a free copy (happens more than you would think), is to suggest they ask their school or public librarian to order the book for their library. Most libraries will consider patron's requests.

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    4. Steph, Does your mom like fantasy? LOL Joking.

      But my mom is the same way. I got her hooked on Jenny B. Jones' books and she got her school library to order them and got her students hooked on them.

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  2. I would buy every book i read if I could, in fact i make a point of buying the rest of a series if I buy or someone offers me the first book. But when it comes to new series and I see all the books for the series are at about 20 euros each (thats about 25 dollars) I cant really afford to buy all the books. Thats why I read books from the library and ask friends to borrow me their books... I hate doing it because I love having books on my shelves but there is no way I can afford all the books I read :)

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    1. Totally Bruno. It seems to me that books in the U.S. are much more affordable than other countries. Like Jill said in her post, it's good to buy at least SOME of the books you're reading.

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    2. Yeah... books are really expensive overseas. Have you gotten an ebook reader yet? It seems that those books will have similar prices across the board.

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  3. Thank you for the post! I think this is something that everyone should be aware of, especially teens aspiring to become authors.

    I love going to the bookstore and buying books to put on my shelves, too. However, it's not always realistic to buy all your favorite books --which is horrible for the authors who put so much time and effort into their writing! I guess I see why it's so important for authors to build platforms and get their names out there.

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    1. Jill, YES. That's exactly why it's so important. And why it often takes new authors a few years (or more!) to establish themselves.

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    2. Yeah... People don't tend to buy up a book like crazy unless everyone is talking about it. So word of mouth is so important. So if you can't afford to buy every book that your favorite author(s) write, you can talk about them and "like" them on FB and do all that free online word-of-mouth that really helps your author(s).

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  4. I almost always buy my books, and about 98% of those I buy new. I don't even use the library. Now part of that might be because I'm a little spoiled and I like shiny new things...But I really think there's just something super special about buying a book in the flesh so to speak. It's like a sliver of that author's journey, especially when you get to flip to the back and read the acknowledgments, the author's bio and so on.
    My friend always downloads e-books illegally, and I get so mad at her!!! I think that's one of the reasons I refuse to buy one. I might give into the temptation...I also just really enjoy flipping the pages and smelling books!
    Just out of curiosity, do authors make the same off of hardcover books, paperback books and e-books? Or is there a difference?

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    1. Kayla Anne, I read your comment thinking I COULD HAVE WRITTEN THIS POST. I'm an only child who was raised by two book lovers who buy books constantly ... and who passed their habit onto me. My husband was finally like, "You know, there's a library right here in our neighborhood..."

      The hardcover/paperback/ebook question is one I can't answer, but I bet Jill can :)

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    2. There are different royalty rates for all editions, Kayla Anne. I don't remember what the going rate is for hardbacks, but usually everyone (author included) makes a whole lot more on an e-book sale than they do a paperback.

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    3. Way to stand against ebook piracy, Kayla! You are my hero! Woot woot! :-)

      Yeah, every publisher is different on the ebook thing. I tend to make the same on ebooks and paperback at Marcher Lord Press, but I make more on ebooks because I sell many more ebook copies.

      With Zondervan, which is owned by HarperCollins, the royalty is higher on ebooks than for paperback. So you can make more on the ebooks.

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  5. Last night I was watching the Olympic swimming trials. My mom said something about all the years of hard work can be taken away in a mtter of seconds.....I thought it's kindof like writing. We work so hard for so little

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    1. Nodding my head sadly. Very true. You have to love it, or it's just not worth it.

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    2. Well, I'm pretty sure I was born with lots of love for reading, writing, sports, & the Olympics! I gave up my Olympic dreams years ago.....let's hope I do better with writing :)

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    3. We do work hard, but not all the rewards are monetary. Just getting to sit on my rear everyday and make up stories is pretty cool. And don't forget the thrill of having books printed that you wrote. Or the power of getting emails from readers telling you that your book impacted their life. And when I get to talk at schools or writers conferences and meet readers, it is so much fun.

      What was your Olympic dream? I'm just curious. *grin*

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    4. I'd have loved to play any sport :) but mainly soccer & sometimes softball!

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  6. This post was quite useful! I never really knew what an advance meant in a book deal (though, because I knew what an advance was, I don't know why I didn't know).

    Piracy always annoyed me. Thank you for mentioning how bad it is!
    But as for telling people to buy new books... if I write a book that isn't good enough for people to want their own brand-new copy, I won't expect people to buy it new. Readers aren't greedy for saving money. But, of course, I read Amy Dacyczyn. She wrote "The Tightwad Gazette". So yeah.

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    1. LOL!

      I wasn't trying to accuse readers of being greedy. I simply wanted to make readers aware that the authors they love might not be buying a mansion and a new Land Rover. And that if they are a HUGE fan, they might consider buying a book new. Give one away as a Christmas or birthday gift. Those types of things. I can't buy every book new that I want. But when I find an author I love and want to support, I'll buy their books every once in a while.

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  7. This is a great post! It answered a lot of questions for me! It does make me wonder: can you negotiate for a lower advance/higher royalty? And what important thing might you have to give up in return for that? I
    I have to keep reminding myself that the money doesn't matter...because writing good stories is incredibly important and impacts people in ways that can just blow your mind (and can't be measured by a paycheck)...something like this has a worth that comes from God, not from the world, and so the world can't reward you for it. Really, when you think about it, how many truly worthwhile, impacting things do pay well, if they pay anything at all? The reward of a labor of love comes from seeing the way it impacts people and knowing you made a difference, or at the least - actually, most - did what God wanted you to do. And really, that's the greatest reward there is: the approval of an eternal, loving God means a lot more than money from a fickle world. At least, that's what I think, and try to remind myself of.

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    1. I'm going to ask my agent about asking for a lower advance and higher royalty and see what she says. I'll write a post about it once I get her answer. It's a great question!

      I love what you said about things of worth have a cost. It's sacrifice, really. And all truly worthwhile things require a sacrifice, and writing is no different.

      And take it from a girl who tries her best to sacrifice. God will reward your faithfulness. I don't sacrifice to earn a reward, but he blesses my sacrifices. I have seen it over and over and over in my life. So keep at it, Anonymous! You're on the right track.

      "Those who sow with tears will reap with songs of joy." -Psalms 126:5-6

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  8. This totally opened my eyes... but I am very glad that I've bought at least 10 books brand spanking new from my favorite authors. :) I'm glad it goes to a good cause to keep our awesome authors writing.

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  9. My very favourite books are on a particular shelf in my room (the rest are on the ~10 other shelves in the room) and I always make sure to buy them new, because they feel so shiny and lovely. I'm pretty sure my family has contributed an astonishing amount to the book indusctry because we must have at least 1,000 books in the house! If I read a chapter of one at the library or online or something and I was intrigued, or if I got a recommendation from a friend, I might borro it from friend!

    I'm constantly loaning books to my friends, and I'm also a book reviewer on my blog! It really works out for authors though, because I know for example that my best friend bought the rest of the books in the series when I lent her the first one because she loved it!

    About piracy ... I'm not sure. It's not good, of course, but there are some people who wouldn't be able to read otherwise. Still, if you can at all I say buy books. About 40% of my books are bought new, 20% bought from charity shops (I just love going on big book hauls and seeing what I find!), 30% come from Netgalley or directly from publishers from review and 10% from friends :)

    I also used to read all my Mam's books - when I was 7 I had the reading age of an 18 year old so I burned through those pretty fast!

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