All About the Benjamins: Author Advances & Royalties

advances and royaltiesI’ll be the first to admit: I’m not an expert on the business side of being an author. I’m not even an expert on the author side of being an author. But a lot of you have asked questions about how the money side of things works. I’m gonna do my best to explain it!

The first money that an author makes when getting a book deal is called an advance. The advance can range wildly, and while it’s uncommon that an author will go around sharing what their advance was, there is an insider publisher code used to put advances into certain categories:

  • a “nice deal” ranges from $1 to $49,000
  • a “very nice deal” ranges from $50,000 to $99,000
  • a “good deal” ranges from $100,000 to $250,000*
  • a “significant deal” ranges from $251,000 to $499,000
  • a “major deal” ranges from $500,000 and up

Usually (I think– at least for mine!), the advance is given out in chunks. Mine was a two-book deal, and I got 50% of the advance after signing, 25% will come now that I’ve turned in book #1, and the last 25% comes after I turn in book #2.

My agent gets 15% of this, 20% of any foreign sales.

So then what?

I have to “earn out” my advance– that is, earn it back.

Here are my royalties terms, directly from my contract:

royalties

So, first I “earn out”/earn back what they paid me in my advance, and then after that, I would get a royalty check twice a year (if people are still buying the book). That’s the goal: that the book would be so popular that people keep buying it long after it’s released. They call this the long tail.

So, here’s a hypothetical scenario using small, easy numbers.

Say an author gets an advance of $10,000.
Their agent gets $1500.
Let’s say their book costs $10.
At a rate of 10% per book, the author would make $1 back toward their advance this way.
So they’d need to sell 10,000 books before they’d “earn out” their advance and start collecting royalty checks.

Simple, right? 🙂

*mine.

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