Advances Part Two
Yesterday we discussed advances and there were several questions, so today we’ll talk about them some more. First, what is an “advance” anyway? An advance is a “pre-payment” of the royalties the publisher expects you to earn on your book.
Let’s say the publisher has agreed to pay you a royalty of 8% on the retail price of the book, and your book is going to sell for $14.00. You are going to earn $1.12 for each copy of the book sold. So if the publisher has paid you an advance of $5,000, how many copies do you have to sell to earn out your advance? Your break-even would be 4,464 copies. In other words, your publisher has already paid you the royalty on those first 4,464 units sold. If and when your book sells more than that, your additional royalties will start accruing at the rate of $1.12 per book sold. The publisher will issue royalty statements (usually twice yearly) showing how many copies have sold, and if they owe you any royalties, a check will be included.
If your book never gets to the break even point, i.e. if it doesn’t earn out the advance, you don’t have to pay back any part of the advance. That’s the risk the publisher takes.
Here’s a very important concept to remember if you want to be a career author: The best chance you have for success is for your first book to do well. One of the ways a publisher determines “success” is if you earn out your advance in the first year, preferably in the first six months. This is why a smaller advance can work in your favor. It’s easier to earn it back quickly, thereby becoming a success story for the publisher, who may be more inclined to want to publish your next book.
So in answer to the questions about whether it can be a wise move to take a smaller advance or even no advance: yes, there are situations in which this is a smart business decision.
However, I have a few caveats about that. First, be aware that offering to forego an advance won’t make a publisher take on a book they don’t already like and want to publish. Second, if you are agented, the “no advance” strategy may not work very well. If you are going straight to the publisher unagented, it can be a smart option. Third, a smarter move than taking zero advance might be to take an advance and sink it into marketing your book. Remember, if you want to be a career author, you really need that first book to do well, and taking some active steps toward promoting it could really help you. So take all these things into consideration when you’re considering the idea of a small or zero advance.
Another question that’s been asked is about multiple book deals and how the advances get paid out. Here’s how it works. Let’s say you’re offered a 3-book contract with an advance of $5,000 per book, $15,000 total. The contract states you will get half of your advance upon signing, and the other half on delivery of an acceptable manuscript. So, after contract signing, you will get half of the advance for all three books. Half is $2,500, so you’ll get 2,500 x 3, which means you’ll get $7,500 upon contract signing.
Then, as you deliver each manuscript and each one is declared acceptable, you’ll receive the other half of the per-book advance. So, you’ll get three more checks for $2,500 as you turn in your manuscripts.
A question was also asked about whether you might negotiate for zero advance in exchange for a higher royalty. Yes, this is always a possibility. But again, keep in mind that if this is how all book contracts were done (and who knows, we may be headed that direction) then agents would have a really hard time making a living.
One more thing, and this is terminology. We talk about “earning out” your advance. There is another term that sometimes gets confused with “earning out” and that is “selling through.” It’s a completely different thing. Sell-through refers to the end-user (the consumer) buying your book off the bookstore shelf. Barnes & Noble may have bought 1,000 copies of your book, but how many did B&N sell to consumers? That’s the sell-through, and that’s what you get paid royalties on.
Okay, enough about that! It’s been a long week and I hope you all have a good weekend. See you on Monday!
Rachelle Gardner is a Christian literary agent affiliated with WordServe Literary Group in Colorado.