How Authors Make Their Money: Understanding Advances & Royalties
Ever wondered if you can make money off of book sales? Get the answer and more by reading up on how the money works in publishing.
It seems like authors in general have a hard time talking about money, and how much they make in book sales. Is it a lot? A little? Did they get an advance? What do you do after you get one? Well, it might surprise you to learn that authors typically don’t make much in sales. Wonder why? Keep reading.
Advances
What are they? When we’re talking about book advances, we’re referring to the advanced pay you get once a publisher decides to represent and produce your book. This is not an expectation for all publishers. Normally mid-size, and especially bigger publishing house, are able to afford to do this. If you were published through a small press like me (*cough* which is a great way to get your foot in the door as a debut author *cough*), you can expect to receive a few hundred or nothing.
How do they work? I read part of a book called Scratch: Writers, Money, and the Art of Making a Living by Manjula Martin and loved Cheryl Strayed’s take on advances. She and her husband were deep in credit card debt, and when her popular memoir, Wild, got sold to an imprint of Knopf, a well-known publisher, she was told she’d be receiving a $100k advance. Absolutely convinced that all of their financial problems would officially disappear, she soon realized that she wouldn’t actually be getting all of the money at once; she’d be receiving it in installments throughout the publication process.
Here’s what that looked like:
Getting $25k upon signing a contract with the publisher
Getting $25k once a decent draft of the manuscript has been delivered
Getting $25k upon the publication of the book
Getting $25k approximately one year after its release
Should I spend it or save it? And once an author receives their advance, it’s usually best if they don’t spend it all at once. In fact, it’s usually wise to keep a percentage of it (or about $2k-5k) to dedicate toward a small marketing budget. Some book launch or publicity services can easily charge an upwards of $10,000, so plan accordingly. Unless you’re Prince Harry or Jennette McCurdy, you shouldn’t expect to have a big flashy publicity campaign around your book, meaning the publisher will expect you to contribute toward the book’s marketing.
What does all this mean? Receiving an advance, whether it be a few thousand or a hundred thousand, is the publisher’s way of expressing how much they expect your book to sell. The higher the potential, the higher the advance. Timing, trends, platform, and just plain good luck often contribute to this. You won’t receive any additional royalties until you “earn out” your advance, meaning you’ll need to make that much in sales alone before receiving any additional income. Traditionally published authors working with large publishing houses, like Penguin Random House or Simon & Schuster, can expect to receive a cut of less than 10%, which doesn’t seem like much. And it isn’t. Unless you’re picked up by a film producer or a celebrity book club, you won’t get rich off of book sales.
Now if you’re a smart, forward-thinking cookie and you’re wondering how the publisher makes their money if a book doesn’t earn out its advance, then let me offer you this statistic I picked up from Joe Biel’s A People's Guide to Publishing: “95 percent of a publisher’s revenue comes from 5 percent of their releases.”
Crazy, right? Think about why all those big, fancy publishers like working with big, widely-known celebrities and Influencers. They know they’re going to sell millions of books. Prince Harry alone sold more books on Day 1 than Harry Potter did when it first came out. It broke records, y’all.
I’m telling you, the publishing business literally means business.
Royalties
What are they? Generally speaking, when you publish your book through a mid-size, but especially a big publishing house, you are selling your book to them. That’s what the contract is for. And selling your book to them means you are signing away most of your rights to the book, which is why many opt for hybrid of self-publishing. When this happens, the publisher pays you royalties in exchange for those rights. So really, you can think of royalties as interest paid to you by the publisher.
How do they work? In my case, I was lucky. I published traditionally through a small, independent Chicago-based publisher that offered me 30% royalties, instead of 10%, which is way more than a lot of other traditional authors get. It also states in my contract that I retain full copyright of my book, while my publisher has the exclusive rights to sell the book in all formats and all territories. This is why it’s helpful to have an agent who can represent you when signing a contract, so that:
They know you’re getting a fair deal
They know that you’re being compensated appropriately
They can identify any loopholes or fine print you would otherwise not notice
If it took, let’s say, $5 to produce a paperback novel and $15 to sell it, the total profit would be $10. Right? If we’re being generous and offer you a 10% royalty, the publisher would keep 9 of those dollars and you, the author, would pocket $1.
Like I said, no one makes their money off of book sales.
Is it bad to profit off your book(s)? Maybe the idea of benefiting financially from your book(s) disgusts you and you consider “profit” to be a dirty word. If that’s the case, you’re in the wrong business. You want to be a writer, not an author. Stick with blogging and newsletters then, it’ll make you happier, I promise.
If the idea of saying you’re making money off your book makes you uncomfortable, then all it takes is a learning curve. Profit, money, and royalties are not bad words. You deserve to be paid, or at the least recognized, for the work you’ve most likely spent years pouring your time, energy, and bandwidth into. Self-promotion won’t feel comfortable to you, but the more you lean into recognizing the business of books, the more you’ll be able to understand the landscape, advocate for yourself, and really create a large-scale impact with your book.
Final Thoughts
It can be difficult to talk with authors candidly about how they make their money because no one wants to admit they’re making money off their book(s) and how much. As far as the math goes, the numbers don’t lie. When you choose to publish with a large, reputable publisher like the Big 5 (Penguin Random House, Simon & Schuster, Hachette, HarperCollins, Macmillan) or even a mid-size publisher, you exchange money for credibility.
Sometimes, if you’re a nonfiction author and you treat your brand as a business, the credibility can help you get the money later on through higher consulting rates, paid speaking, and more. With fiction, I would say a lot depends on getting recognized by people with a lot of social influence, like BookTokers or celebrity book clubs.
Please, please, please be sure to do your own research as well. I am certainly not the one and only source of truth, so if you don’t like what I have to say or want a second opinion, please search for them. Consider picking up that book I mentioned earlier on, Scratch: Writers, Money, and the Art of Making a Living by Manjula Martin.
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