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?