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Sunday, February 27, 2011

Advances, Royalties, and a Closer Look at My Latest Royalty Statement

I’ve posted before about why I got into ghostwriting, and how eliminating the need to market and promote a book after it’s published increases my hourly rate. That being said, I have authored—and continue to author—my own books, both for traditional and POD publishers. So I’m always interested in issues like the size of advances, royalty percentages, and the like.

Today, average advances are shrinking, in part due to the economy (publishing’s a business like any other) and to the ghe glut of “celebrity” books hitting the shelves. When Snooki and The Situation (both of Jersey Shore “fame”) get book deals, that’s bad news for midlist authors like me. The more money publishers shell out for these kinds of titles, the less they have to spend on non-celebrity authors like myself.

Forget the idea of getting rich on royalties. That typically doesn’t happen as 4 out of 5 books don’t "earn out," or make back their advance, which is technically an advance against royalties. Until your book earns out, you won't receive another penny from your publisher--regardless of how hard you work to sell it to potential readers.

To understand how this works, let's take Six-Figure Freelancing as an example. When it sold in 2003, it garnered a $15,000 advance. (Alas, a book on six-figure freelancing doesn’t assure a six-figure advance.) I have an “escalation” clause, which means that my royalty works out to be $.89/book for the first 10,000 sold, $1.12/book for every book thereafter. (I make considerably more, $3.88/book, for its e-version.)

Every six months I receive a royalty statement from Random House that tells me how many copies I sold in a specific six-month period, and how quickly (or slowly) I’m approaching that magic “earning out” figure. Six-Figure Freelancing sold about 4,600 copies in 2005, the first year it was published, and about 1,200 copies annually since then.

Let's take a look at my most recent royalty statement for Six-Figure, which covers the six-month period ending September 30,2010. During that time, I sold 82 e-books (a total of $318.49), and 338 trade paperbacks (for a total of $372.29). Total copies sold during this period? 420. This is the lowest amount of sales I've ever had in a six-month period, but the highest number of e-book sales. (For comparison, during the previous six months, I had sold 40 e-books and 478 trade paperbacks, for a total of 519 copies.)

More importantly, so far, my cumulative sales equal 142 e-books and 11,378 trade paperbacks, a total of 11,520 copies. That's not bad at all. My total royalties are $10,939.83, which includes $273.68 of subsidiary rights income from licensing rights to a book club. But the most important figure to my mind is $4,060.17, or the difference between my earned royalties and my advance. Once the book produces that amount of royalties, I'll start earning additional royalties--but until that happens, it's Random House that's making money right now, not me.

This doesn't mean I'll give up on the book; it's an excellent guide for writers, continues to build my platform as a writing expert, and helps me reach more readers. But realistically I won't see any royalty checks for it for another four to five years...which means I'd better keep making money in other ways in the meantime!

Readers, what do you think? Did this post help you understand advances and royalties better?


  1. I'm not planning on writing books any time soon, but I just wanted to let you know that I was one bought one of the 82 e-books. Besides that, the information is good to know.

  2. Thanks, Allison, for your comment, and especially for buying Six-Figure Freelancing! I think the trend of increasing e-book sales will continue and am looking forward to seeing how that plays out. :)

  3. Thank you so much for opening up--I know how it works in general but the specifics are great. I'm hoping four years for you instead of five. :)

  4. Thanks, Eliana! And I'm actually hoping for three years if e-book sales continue to grow. :)

  5. Thanks Kelly for giving us the inside scoop on royalties. I always learn so much from your blog and this post is no exception. I understand the advance vs. royalties process much better now. Thank you!

  6. Thanks, Kim! That was the idea--when people see a specific example, they tend to "get" it more easily. :) I think the take-away message is that you should assume that you probably won't make royalties (other than your advance), so you have to decide whether you're willing to do a book for its advance. Thanks again for your comment. :)

  7. I went into accountant mode reading this and I'm curious, it seems Random House isn't really making money yet, either, they had already advanced that amount before they brought it in, so they're still recovering the initial investment, right?

    Sorry, the line "'s Random House that's making money right now, not me," just...I don't know.

    This is a great post. It's nice to get an idea of how long it will take to earn royalties after an advance.

    Now, I'm in full question mode, sorry, but would it be better to ask for a small advance and receive royalties sooner, or is it best to go with a larger advance and wait it out? Also, has a book never earned back it's advance and what happens then? You've completely fired up my brain, I need to go write now, thanks!

  8. Hi, Diane!

    Thanks for your post. Remember, that RH is getting all of the money for the cost of the book, and it "breaks even" long before my advance earns out. Even if they're taking in, say, only $10-12/book (the cover price is $14.95), you can see that they'll recoup their investment (what they paid for the advance, plus costs of editing, design, production, distribution, etc) pretty quickly if the book is selling well. Make sense?

    And as for your question, see my above comment to Kim--in my opinion, it's better to get the big advance and wait it out...remember, your book may *never* earn out. (If it doesn't, nothing "bad" don't have to pay back your advance or anything like that. You as the author just don't make royalties.)

    Hope this is helpful! :)

  9. Very interesting for those of us breaking into the's all a dark hole of confusion when you're starting out...that NO ONE wants to discuss or thank you for some honesty about the figures...and elusive topic normally...keep it coming...we all need to write to live and live to's entrenched in our souls, sadly...

  10. Thank you, Jackie. I agree there's a lot of misinformation out there and that's why I believe in sharing info--it empowers all of us as writers.