1. Intro
3. Understanding Advance Sizes
4. How Advances Break Down into Real Money
5. How Poor Sales Affect Future Deals
I have something a little different for you today. My fabulous agent Joanna Volpe and I have decided to make an entire series of posts on how advances and income operate in traditional publishing.This first post is meant to elucidate and expand on some of things I said in August -- and honestly, Jo had to correct a few things, too.Yeah, eight years in this business, and I still don't understand how a lot of things operate. (*grumble, grumble*)The reason that we're formatting it this way (my post + her insights) is because we need to actually lay some ground work before we can fully dig into the nitty gritty in future posts.So read on to learn a bit more about incomes and advances in traditional publishing!My original post is in black, and Jo's comments are in quotes!
1. Intro
Alright. So...I'm nervous to share this post. Why? Because it's about money, and money is a touchy subject for most people. Plus, I might get a call later today from an angry agent + publisher who don't want me sharing this kind of information. YOLO!
From Jo: LOL! I love your transparency. Never stop!
That said, since I am all about more transparency in this industry, I need to practice what I preach. On top of that, understanding advances is SO important to building a career, and it's one of those curtains that no one ever lifts.
From Jo: It’s so true. There used to be a great post up that shared a major, bestselling author’s first contract, and that talked about the reality of monies, but I can’t seem to find it anymore. Perhaps someone made them take it down?? (Or, note from Sooz: maybe one of you all can find it?)
So today, we're going to talk about advances in traditional publishing. How do they work? What is "normal?" And what are the pros/cons of large vs. small advances?Disclaimer: Advances + income in traditional publishing are extremely varied. Because it's such a touchy subject, though, my knowledge is limited to what people tell me + my own experiences. If your experiences doesn't match mine, that doesn't mean yours is wrong!Additionally, it's all relative. What I consider a lot of money, you might call peanuts -- and vice versa! So consider that not only while reading this post, but also when discussing advances with other authors.
2. What is an advance?
An advance is a set amount of money publishers pay an author for the right to publish their book(s).
From Jo: More specifically, an advance is a set amount of money that is designated as an advance of your royalties. Meaning, advances and royalties are one in the same. It’s a publisher’s way of saying “I think your book will make at least $10,000 in royalties, so I will pay you that amount IN ADVANCE, to do the work. And then you won’t make any additional monies or royalties again until AFTER you’ve brought that amount in. Basically, it’s the publisher loaning you $10,000.00.
This money is paid prior to publication -- and note! Any publisher that makes YOU pay them is a scam. Period.
From Jo: YUP.
Sometimes, publishers will buy one book from an author. Sometimes, they will buy several. There is no "right amount of books" to sell to a publisher, and often the decision is based on lots of factors (the current market, how "commercial" the story is, whether it's a series or standalone, etc.).
From Jo: And sometimes, if a publisher buys more than one book, they will request to make all of the books “jointly accounted.”What this means is that that add all of the advances up for each book and require the author to earn back the total of all of the advances first, before earning any additional monies or royalties on any of the books. So if you sign a 3-book deal, with an advance of $10,000 per book, then you will need to earn back $30,000 in royalties first before earning any additional monies or royalties.This might not seem so bad, but think of it this way: if you are writing a big epic fantasy series for adults, and your books come out years apart, and the first book had an advance of $10,000, but has already earned $28,000 in royalties…you should be taking home that $18,000 because your next book doesn’t publish for another 2 years! However, you can’t…because you need to earn back the full $30,000 first, and you’re still -$2,000 in the red.
When I sold Something Strange & Deadly in 2010, I was very lucky to sell 3 books up front. At that time, publishers wanted series/trilogies. So although I hadn't actually envisioned my book as a trilogy, you can bet I turned it in to one! To be contracted for three books was/is the dream. It means you're guaranteed an income for at least a few years (on a book per year schedule).
Nowadays, the market isn't as strong, and publishers are all about standalone books. As such, we're seeing a lot more single book deals. This isn't bad! It just means that we, the authors, are having to constantly work toward selling more, and the job security is much shorter term.
From Jo: Yes. Publishers are shifting the risk more to the side of the authors by doing this. There are other ways they shift the risk, too, but that could be an entire post unto itself!
> What does it mean to earn out an advance? Earning out is when the book sells enough copies to essentially pay back the advance. So if a publisher bought your book for $10,000, then you would have to sell enough copies to make back that $10,000 for them before you start to see any royalties.
Now, the catch here is that for each book sold, only a percentage of the listed price goes toward that advance. That percentage is the royalty rate, so if your royalty rate is 8% on a book that costs $9.99, you would only make $0.79 per copy sold.
With that $10,000 advance, you would have to sell 12,658 copies to earn out.
And for the record: that's a lot of copies. Most books won't sell that much in a year, much less in a lifetime. (So for all you authors out there like me, don't worry if you're not selling at such a rate. And for all of you who ARE, congrats!!)
> How are advances paid? This is where being a writer gets really wonky: the pay schedule is so weird and frankly, pretty unstable.
Typically, advances are divided into 3 installments and paid:
· Upon signing of the contract
· Upon "delivery and acceptance of the manuscript" (so when the book is deemed finished)
· Upon publication of the book
NOTE: Sometimes, publishers split the advance into 2 payments. I've also heard of it being split into 4.
From Jo: For the really big advances they will even split it into 5! They want to spread the risk out over multiple years.
UPDATED NOTE FROM SOOZ (2022): The standard is now 4 payments! It sucks. Like…it really sucks, not going to lie. It means we get paid one single advance spread over the course even more years.
As you can see, there's no real telling when each event will happen, so you can't rely on a regular income. This is also why banks do NOT like giving writers loans.
From Jo: It’s true! As agents, we have to track these moments on the timeline, but they are moments that are entirely out of our hands after the on-signing payment. So we have to constantly follow up with progress on drafting, revisions, production in-house, on-sale dates, etc. All of these things are moveable for various reasons, and when they move, the payments move, too.
> But what about royalties? Assuming you've earned out your advance, then you will get royalty checks twice a year. If you're a popular author, these could be huge! For most of us...well, they're not -- IF we're even getting them at all.
From Jo: Twice a year at the big, traditional houses. Some mid-size or smaller presses will pay once a year or quarterly. Digital first and/or start-ups will sometimes even pay out monthly.
Royalty checks also tend to taper off, since books don't stay popular forever. Don't EVER assume sales will remain steady, and don't EVER spend as if the sales will stay high forever.
Like, don't ever do that, okay? Seriously, I mean it.
From Jo: I can’t emphasize this more either!! Even Harry Potter doesn’t sell nearly at the levels it used to. This is the same for ALL BOOKS.
> How are advances decided? There are a lot of factors at play, deal size starts with the editor who is hoping to acquire the project. The editor will make what's called a "P&L" (profit & loss statement -- here's a great breakdown) in which they project how many books they think will sell + how much it will cost to produce the book + how much to offer the author as an advance.
This then goes through several departments for approval. It might not survive all the departments, though -- in fact, books are often killed during those key meetings. An editor loves the book, but the rest of the team doesn't think it will sell in the current market.
If the editor (and others) think the book will sell A LOT, they'll offer a large advance. If they think it's a quieter book, then the advance will be lower. This has nothing to do with the quality of the book, of course, but more to do with the current trends, future market projections, and just the general reach/size of the publisher.
And of course, advances aren't always accurate predictors of success.
From Jo: SO, SO TRUE.
One more thing: advances will go up, up, up if publishers are competing with each other to acquire a book. This might happen in an auction or sometimes publishers offer what's called a "pre-empt" -- a one-time offer intended to buy the book and keep it from going to other houses.
From Jo: This is one version of a pre-empt, but you can also receive a pre-empt offer when a book is on submission to multiple houses. It’s basically the publisher saying “What can I give you to take it off the table?”
3. Understanding Advance Sizes
So what is a "normal" advance size? Honestly, there is no single answer to that. Every genre is different, every publisher is different, and deal sizes fluctuate along with the market.
Additionally, my research online has yielded HUGE variation in results. I frequently see the figure "$1,000-$5,000" listed as the average for a debut author's advance. I have no idea where that number came from, though (and as a scientist, I like hard sources).
From Jo: This will vary greatly between fiction and non-fiction; picture book and novel; genre to genre; printed book or digital original. It will also vary for the authors who are agented vs the ones who aren’t.
Anecdotally, I've never heard of an advance that low (unless it's for shorter fiction). However, according to "the internet," this seems to be a more standard advance rate in the adult romance genre or from smaller presses.
That said, my experience is in YA, which does tend to favor large advances.
From Jo: I don’t think this is quite accurate. YA just tends to publish a lot more hardcover fiction, and hardcovers do yield higher profits (and therefore higher advances) than original paperbacks or digital originals, which are found more in the adult publishing world.
Of course, what was normal in YA when I was first selling my series is NOT what's normal now. The advances have shrunk for debuts because the market has gotten much riskier. YUP.
And of course, what I consider large, you might consider small. It's all relative!
I found the figure "$38,000" listed as the average YA debut advance in this survey from Hannah Holt. But since it only surveyed 48 people, I wouldn't consider it very accurate. It also listed 20,000 copies as being a standard debut year sales rate.
Erm, no. That sales rate seems incredibly high to me.
From Jo: Yeah, I agree that this doesn’t feel accurate. It definitely is high for a debut.
And I'm not just saying that because my own first series tanked! I'm basing this on what I know after speaking to many mid-list (average performing) authors. We'd be lucky to sell 20,000 copies over the course of a book's entire life!
On that note, $38,000 does seem like a fair evaluation for average YA advance.
From Jo: I don’t know about this one. So many factors would need to be considered—are all of these authors agented, and are all of the deals made at the big publishers? If so, then maybe this seems right. Maybe.
Although, remember that averages -- especially when there's only 48 people in a survey -- can be easily skewed by outliers (massive or tiny deals).
SO INSERT ME SHRUGGING HERE. The lack of transparency in this business means it's almost impossible to gauge what's normal. All I know for certain is that there does not seem to be a standard advance size across genres or publishers -- or even within genres or publishers..
The fact is that MOST authors must continue to work day jobs to support their families and pay their bills. Even people who make what I would consider "large" advances are hardly Scrooge McDuck-ing it.
From Jo: This is true.
4. How Advances Break Down into Real Money
To really get into the nitty gritty of the money, I'm going to use my own books as an example. (Ugh, I feel sick sharing this info. Transparency, Sooz! Transparency!).
When I sold Something Strange & Deadly in 2010, it was during the time of "big advances" in YA. And, as mentioned, it was also the time of trilogies. Twilight and then The Hunger Games had catapulted the market, and publishers were buying YA books left and right.
I was very fortunate to sell 3 books for $60,000 per book. This was a huge amount of money to me (it still is!), and it allowed me to leave science and write full time. And frankly, I thought I was pretty hot shit and that my book was going to do really well.
From Jo: Should we talk about territory here? Because that’s important, too. $60,000 for North American did give us the opportunity to sell the German rights….(Sooz Note: Future newsletter! Also, I should mention, my Germany publisher cancelled the book before it ever got published…before they went under as a company. Insert sad face here.)
UPDATED NOTE FROM SOOZ (2022): I’ve now had multiple foreign publishers go under before they could publish my book. It’s not a stable industry!
HAHAHAHAHA. What actually happened is that when the book came out, it didn't sell. Like at all. I have not earned out my advance, and I likely never will.
From Jo: I just love those books though. So frustrating.
Now, let's look at how my payments were given. Because I want you to see why, even though $60,000/book might sound like a ton (or it does to me!), it quickly shrinks.
I received $80,000 the first year because I signed 3 contracts. That means each book was divided into 3 installments of $20,000 payments. Because there were 3 books, I ended up with $60,000 for my "on contract" payment.
Later that same year, I received $20,000 for "delivery and acceptance" -- and that brought me to that 80K total.
$20,000(x3) for on contract + $20,000 for D&A = $80,000
That was a lot of money to me. And still is. I was very, very lucky indeed.
I do feel the need to point out, though, that I actually got less than most of the authors I was friends with at the time. Back then, this made me feel like I was somehow "less than" they were as a human. And then when my series went onto sell poorly...
Yeah, I really let that affect my self-worth. Which is ridiculous! The joyous elation I felt when the deal was first offered is what I ought to have felt the entire time.
MONEY IS RELATIVE, remember? And so is success! So for the love of god, please don't compare yourself, okay?
From Jo: Very good advice!
Ahem. Now back to the payments.
The second year, I received a total of $40,000. I got $20,000 when the book was published + $20,000 for "delivery and acceptance" of book 2. The third year, I received another $40,000 -- $20,000 when book 2 was published + $20,000 for "delivery and acceptance" of book 3.
The fourth year, I received $20,000 for the publication of book 3, and that was my income for the entire year. Which is still a lot of money, but definitely a steep drop off. (And also why banks don't like authors!)
So laid out, it looked like:
· 2011: $80,000
· 2012: $40,000
· 2013: $40,000
· 2014: $20,000
But -- and this is SUPER important -- YOU MUST ACCOUNT FOR TAXES + AGENTS. Agents take a 15% cut of the advance/royalties. They're worth every penny, but that can be a lot of money!
THEN, because I am self-employed, I pay a little over 30% in taxes. So my annual incomes actually looked more like:
· 2011: $47,600
· 2012: $23,800
· 2013: $23,800
· 2014: $11,900
That's a big difference in numbers, isn't it?
It's also not accounting for the massive costs that go into self-promotion and travel. The reality of publishing is that 99% of authors have to fund everything themselves, and phew! That adds up fast.
From Jo: Preach!!
I also feel it's important to note that I am very lucky my husband's job has benefits. Most authors must ALSO carve out a chunk of their income to pay for health insurance, and that is a big expense. It's also something to consider if you're thinking about quitting your own day job to write full time.
From Jo: YUP!
5. How Poor Sales Affect Future Deals
Now, remember how I said my books didn't sell? Remember how I said that I won't ever earn out? On the one hand, that was okay! I mean, I still got that incredible income for a few years, and I truly cannot complain.On the other hand, a book that doesn't sell hurts the author moving forward. This can actually be a pretty huge con. Large advances can harm a debut author in the long run if their books don't sell well.
From Jo: Large advances that don’t earn out may affect an author’s future income within the SAME publishing house. But that’s not exactly the case outside of that publishing house.
Why? Because publishers can check an author's sales at any moment on Bookscan. All they have to do is type in my name, and they can see just how poorly SS&D has sold.
From Jo: Yes, but this has nothing to do with the advance. This strictly has to do with sales. They don’t actually know what Harper paid you. Publisher’s just look at the sales. So even if Harper paid you $5,000 per book (which you would have earned out!), and you exceeded expectations, a different publisher would STILL be eyeballing low sales numbers on Bookscan.This is one of my biggest gripes with the publishing industry! Authors really don’t have much control over promotion or distribution of their book, and even when an author does get a lot of publisher support and promotion it’s very book-focused only (meaning, publishers don’t focus on building author brands—they focus on book brands, and to an extent, I understand why they do this).YET…the fate of their future sales and income is tied directly to their name, and their name only.
Thus, when it came time for me to sell a new book, I was NOT a desirable product for publishers. I've talked about this at length before, but I truly thought my career as Susan Dennard was over before it had even begun. As such, I will be forever grateful to Whitney Ross and Tor Teen for taking a chance on Truthwitch. I honestly still don't know why they risked buying 4 books from me upfront, but I will love them forever because of it.
From Jo: Because the characters and world are SO, SO GOOD. And at the end of the day, editors got into this business to find brilliant stories. So the previous sales numbers are taken into consideration when offering, but it doesn’t mean they won’t offer. It just means there will be more challenges than the first time around.
I sold Truthwitch + 3 sequels to Tor Teen at the very end of 2013 for $30,000 per book. I also sold Sightwitch to them in 2017 for $20,000.
So if you look at the payment schedule on that:
· 2014: $40,000 for signing the contract
· 2015: $10,000 (for delivery + acceptance of book 1)
· 2016: $10,000 (for publication of book 1) + $10,000 (delivery/acceptance book 2)
· 2017: $10,000 (for publication of book 2) + $13,333 (contract + d/a of Sightwitch)
Again, you have to remove 15% of the income here as part of agency fees + 30% for taxes. That leads to:
· 2014: $23,800 (+ the $11,900 I got for Strange & Ever After!)
· 2015: $5,950
· 2016: $11,900
· 2017: $13,883
I mean...it's not a lot of money. And again: I'm not trying to sound ungrateful or like I'm complaining -- lord knows I am not -- but I bet this isn't the income people imagine when they think of New York TimesBestselling authors!
Now, on the plus side, Truthwitch managed to sell well it's first year! YAY! Thank you, Misfits & Daydreamers! Thank you Witchlanders! We hustled and we made it happen! That's why I hit that bestseller list.
Those good sales during the first year also allowed me to earn out, which means I over-performed. This also means, I got my very first royalty check in late 2016. These aren't huge checks, mind you, and they get smaller and smaller every 6 months. But it IS a some more money coming in.
Windwitch took much longer to earn out, but it did just recently (yay!). Sightwitch is alas not even close, but I hope that maybe one day it will.
This is the nature of series, though -- most will sell fewer and fewer with each release. People buy book 1, but only the people who enjoyed it will read book 2. And only the people who enjoyed book 2 will read book 3...and so on and so forth.
This is also why piracy can be so, so harmful. My advances were strong, all things considered, but I'm hardly rolling in the dough over here. (Hence why I asked for a bit of help with maintaining the newsletter!)
Moving forward, I now have the benefit of having over-performed, which will look good when it's time to sell more books. And I am so, so, SO grateful for that. However, I can't get complacent! All it takes is one round of poor sales, and I will once more become toxic to publishers.THAT SAID, I don't want to frighten any of you who are facing large advances that will never earn out. Publishers will start to make money off of your book long before you actually see any royalties. Royalty rates are notoriously low (8-12% on average), and those low rates help the publisher turn a profit.(And this is also why many people have moved to self-publishing. They might have to foot the bill up front, but all that income is theirs!)It's incredibly difficult to gauge whether or not your book is deemed a success for the publisher, and I urge you -- if you're worried -- to have a serious conversation with your agent about it. They will be better able to read your royalty statements (you get these twice a year, even if you haven't earned out) and assess how you're doing. Just because you think your book is doing terribly doesn't mean it actually is. You might even be making the publisher money, you just don't realize it!
So there you have it. The most transparent and terrifying post I've ever written -- and now with my agent's notes too. (THANK YOU, JOANNA!)