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Tuesday, May 22, 2007

Pay Day!

The most common question I get after 'How do you find the time?' and 'Why do you write?' is 'How much do you make?'. Some people think it's rude to ask about money, whatever, if you have any specific questions, go ahead and ask. Let's face it, all of us write for the money, at least in part. So, here's a breakdown of how it comes to you.

ADVANCE-- A pre-payment of expected royalties. Obviously, this is great--you get paid when the publisher accepts your book, sweet! It's also a sign of the publishers expectations, they expect to make MUCH more than whatever your advance is which means the pressure's on. If your book doesn't sell enough for you to have earned your advance, you'll be expected to pay it back and you will likely never publish with that publisher again. In the LDS market, advances are rare.

ROYALTIES--This is the standard payment method. It is a percentage of the book price but will vary from one publisher to another. Typically, a traditional publisher will pay 12%, 10% or 8% and it will either be retail or wholesale. All of these factors make a big different. For example if your contract outlines that you receive 10% wholesale and your book's wholesale price is $10 (wholesale equals about 60% of the retail price) then you make $1 a book. It doesn't seem THAT different than if you made 12%, but if you sell 1000 books, the difference is $200 in royalties. If instead you made 8% of retail $16.66 (note to self, do math before you write blog) that's $1.33 per book and $330 dollars more if you sold 1000 books. Keep in mind that the royalty will change in regards to any promotional prices of the books. For instance some publishers have a lower royalty on books sold in the first ninety days, other's will sell at a discount to some buyers and if you make 10% on wholesale, and the wholesale price to a specific buyer is only $6 instead of $10, you'll make 60 cents instead of your dollar. I once showed on my statement that my publisher had sold 200 copies of one of my older books for about $2 each. Since I was paid 10% on wholesale I made about $12.

PAYMENT SCHEDULE--If you receive royalty payments the schedule will vary from one publisher to another. Some pay monthly, some pay quarterly, bi-annually, annually or even every two years for some books. My first five books were published by a publisher that pays every month, but six months in arrears, so I get paid in May for books sold in October and multiple titles are paid in one check. If any of my titles are returned in that same month, it's subtracted out of my royalty. If my royalties are not more than $50, I don't get a check that month and won't get one until the months add up to more than $50.
My two most recent books are paid twice a year based on sales for the first half of the year and the second half of the year. If my book comes out in May (which both have) sometime in August I get paid for the sales between release and June 30, then come February, I get paid for sales between July 1 and December 31.
For me, I get smaller checks every month, and larger checks twice a year--in time to pay off Christmas and summer vacation. However, it was only a year ago that I was breaking even with my editing, paper, ink, conferences, promotion, and postage expenses. For the first six years of my career I had a hobby that paid for itself, and maybe a pair of shoes now and then.

When you get your contract, be sure to study the terms of royalties so you know what to expect. I know several authors read this blog, if you have anything to add/correct please leave it in the comment trail

Have a lovely

5 comments:

Janette Rallison said...

This is why I suggest that authors be careful in the LDS market and get an agent for the national market.

LDS Publisher said...

You should NEVER, EVER have to pay back an advance under any circumstances! An advance is a calculated risk on the part of a publisher. You get to keep it whether or not your book sells. That is part of the definition of "advance."

Any publisher that requires you to pay back an advance is ___ Well, I can't think of a strong enough word to express what a lousy deal I think that is. As an author, a payback clause would be a deal breaker for me.

However, it is most likely true that if you don't earn out your advance, you probably won't be published by that publisher again because they will have lost money on your book--unless your next book is significantly different or better or for some reason the publisher really likes you (like you're their mother, or they want you to marry their daughter or something).

Josi said...

My bad--I went back to my notes and realized that I took that portion of the advance info from a case where the writer was accused of plagiarism. The publisher was threatening to have her pay back the advance--totally different from a regular situation. Thanks LDSP for pointing it out. Aren't blogs niiiiiiiiice.

Jeff Savage said...

Josi,

Great blog! There's not enough information on this kind of kind of thing for LDS authors.

A couple of comments.

First, LDS pub is absolutely right. You never have to return an advance--unless the advance is based on a ms. you don't deliver. Then you would have to return the portion of the advance you received.

Second, not selling out an advance is not as big a deal as many think it is. It will not automatically result in no more deals with the publisher, and it definitely does not mean the publisher lost money on the book.

Let's take a trade paperback mystery as an example with a typical PB royalty of 6.5% and a retail price of $14.95. Now let's say that you got a $5,000 advance.

Based on these numbers, you would need to sell just over 9400 books to earn out your royalty. Let's say you only sold out the first print run of 7500. That's not a bad number of sales for a first book by a regional publisher.

Your $5,000 advance is only part of the total cost of publishing the book. The publisher could make a profit on 7500 hundred books, and actually be okay with your sales as a first book. Based on a margin of 30% you publisher would bring in over $30k.

The bigger issue is do your sales continue to go up with future books. If your initial sales are very small or if you can't build an audiance, you are far more likely to be cut than if you don't earn out your first advance.

Anonymous said...

Well, okay. In the example Jeff gave us, his math is correct. I was thinking more along the lines of selling less than 1,000 books.

LDSP