Finances of Publishing:
Answering Questions from Last Week
I’m glad my two posts last week, How Do Book Royalties Work? and Is Your Book Worth It? seemed to be helpful. There were quite a few questions, a few of which I’ll try to answer here.
Sara asked: If an author wants to help sell their own books (lectures, readings, etc), how does that work? Is there a price break for authors who want to sell directly (say for 100 books)? Is that considered helpful or what do publishers think of authors pushing their own books?
A: Yes, it’s definitely a huge plus if an author is going to sell their own book! Many non-fiction authors are the driving force behind their own book sales because of their speaking engagements and back-of-room sales. The author’s contract with the publisher specifies the discount at which they can buy their own book for resale, and this is something the agent usually tries to negotiate to make it a win-win if the author has the potential to sell a lot of books on their own.
Lisa Jordan asked: I’ve heard many people say most first-time authors don’t earn out their first novels. Is this a red flag to future publishers?
A: First, I know the scuttlebutt is always that new authors don’t earn out their advances, but I’m not sure if this is true and I’m not aware of any research that categorically proves it. Since publishers don’t typically report this information anywhere, it’s all anecdotal. But yes, it’s true, some authors don’t earn out their advances.
As you learned last week, the earn-out figure is just one of a multitude of factors a publisher uses to determine whether a book is a success. There is also the break-even, or the number of units they must sell to recoup their total investment (not just the advance). Additionally, there is a threshold number of copies a publisher hopes to sell of any book, which is probably around 15,000 for the lower-expectation books. The publisher puts this all together to decide if the book was a good gamble or not, and will use that to decide whether to sign future books from the author.
As far as whether it’s a red flag to other publishers: the red flag is the sales figure itself. Another publisher doesn’t really care (or know) whether an author earned out their advance, but they do care about how many units were sold. Low sales figures are very difficult to overcome. So if you have published three books, and they all sold fewer than 10,000 copies, yes that is a huge red flag and you will have difficulty finding a publisher.
Jody asked: I’d be curious to know how hard or easy it is to sell 6,000 books. And what is the biggest factor in helping debut authors reach their earn out level?
A: I’m afraid this is one of those questions that doesn’t have a specific answer. Hard? Easy? If it were that scientific and quantifiable, we wouldn’t have so much difficulty making it happen, would we? It depends on a complex interweaving of the book itself, the title, the cover, the publisher’s and author’s marketing efforts, whatever else is going on in the culture, the tilt of the moon, and the amount of fairy dust applied.
Besides, you don’t want to shoot for the earn-out figure. You really want to shoot for something like 15,000 copies. It’s a respectable number for a first-timer.
Richard said: Maybe it’s time to talk about the range of copies sold for first-time authors in CBA.
A: I do not know. It varies so widely, but I imagine the range is something like 5,000 to 20,000. Don’t quote me on that.
Robin asked: How many publishers expect you to use your advance to pay for your own marketing, PR and/or book tours?
A: Publishers don’t expect it, exactly, but more and more, they’re hoping you will consider putting at least a portion of your advance back into marketing. Obviously this helps you, not just them. And by the way, you probably won’t be spending money on book tours, but other marketing and PR activities.
Finally, Tamara Hart Heiner said: What I don’t get is why publishers pay advances. It doesn’t make sense to me. No where else do you get paid up front (unless you’re a classy lawyer).
A: In my mind, your statement doesn’t make sense on any level. There are all kinds of compensation models. With a regular job, you work for two weeks and then you get paid for those two weeks; your employer doesn’t make you wait until you’ve worked, say, a whole year and then pay you for the year. They pay you as you go. In many fields, a service provider gets paid at least a portion of their fee prior to doing the work; in other fields it’s standard to charge a monthly retainer fee. So getting paid a portion of your fee “up front” when you sell your book makes total sense.
Also, consider that when you sell your novel to the publisher, you’ve already put in a year or more of work. If the publisher pays you an advance, that could hardly be considered getting paid “up front” since you’ve already completed the work. You’re simply getting paid prior to the publisher making money from your book.
That’s all I have for today. Let me know if you have further questions along these lines.
>Many institutions limit access to their online information. Making this information available will be an asset to all.
>I've always believed that the best investment anyone could make is in themselves! So when I get my first advance I'll invest some of that into conferences, books and maybe a class or two.
>I really appreciate this information. It's helpful to know the nuts and bolts. Thanks.
>Finances . . . ?
Can I be like Scarlet and say, "I'll think about it tomorrow"?
It's hard enough to balance my own checkbook 🙁
>Fascinating stuff, Rachelle. Thanks for sharing your wisdom with us!
You might be interested to know that I've posted a review of Athol Dickson's Lost Mission on my blog today. (URL above.) Thanks for the opportunity.
>I just found this blog today, and I think I'm in love.
1) At this point I'd settle for even a standard rejection letter instead of no response at all. The advance issue can come later.
2) As for this last question/issue, we hire contractors who are paid much the same way, expect it's usually half now, half upon completion of the project. Almost like hitmen, only maybe slightly less bloody.
>If the publisher doesn't offer an advance, what guarantee do you have that the book will ever get published? Like the writer, the pub needs to have a vested interest in the book. Writing a book is hard work, not a charity!
>Good morning, Rachelle.
I see the relationship between the author and the publisher as two parties in a commercial transaction for a component of a product. The author is selling a manuscript to a publisher who will turn it into an end product – a book. The publisher doesn't know how many books he can sell, so he doesn't know the value of the component. The author doesn't know what the component is worth either, but he wants it turned into a book, so the publisher pays the author part of the price of the component – aka the advance – and the author extends the publisher credit for the rest of the price of the manuscript. After the book is on the market, the value of the manuscript becomes clear by the number of books that are sold. The publisher pays off the credit line he has with the author by paying royalities.
When viewed this way, the lack of an advance implies that the author gives the publisher 100% credit for the full value of the manuscript. When an author gets an umpteen million dollar advance, you can be sure both parties agree that the manuscript is very valuable.
As always, thanks, Rachelle, for more food for thought.
>Great questions and great answers. Thank you.
About advances — I'm a graphic designer and it's quite common to get paid half in advance, especially if it's a big project. It acts as a guarantee that the client won't bolt with your work (since there's a lot of back and forth before final approval). It also keeps the designer motivated. 😉
Here in Mexico it's very common to pay upfront for most services.
>Sara/Anon and EVERYONE PLEASE NOTE: The query is not the place to go into any of these marketing details. Fiction: If you want to include ONE sentence in a query that conveys you're aware of marketing realities, that's great. Non-fiction, include a paragraph or two that explains your platform since it's crucial for non-fiction books.
>Thank you very much for posting this information. The financial side of publishing seems a lot clearer and maybe a little less scary. I'm looking forward to reading about the different ways to market a book!
>Rachelee, I'm "Sara" (Anon) who asked the questions about buying in bulk. How do you tell that to an agent in a QUERY that you *want* to do marketing/PR for your book if/when it's published? Also when agents ask for a ms., I don't want to seem too pushy or overeager, spewing out marketing ideas. What do you suggest?
Frankly, I'd love to market my own book–what a dream come true!
>Katie 8:33am: It could go either way, but most likely you will be looked at as a brand new unpublished author, since you haven't published fiction.
>I have a question. I have written a non-fiction book that did okay. It earned out. It wasn't a breakout best-seller, but it's still in print, still chugging along. I hope to write fiction someday. Will publishers be hesitant to take my novel because my non-fic sales were mediocre?
>Rachelle, I just want to comment on the last one. I agree with you. Advances make absolute sense! The only way they wouldn't is if you don't truly take your writing seriously, if you only see it as a hobby and unworthy of "real job" status. I'm actually amazed how much of our writing we're willing to do without compensation, or how much we must do in order to be paid for our hard work. If time is money, we're not even garnering minimum wage. Of course, most of us feel it's worth it or we wouldn't be doing it, but I've always seen advances as absolutely fair, and like you, payment for work that already has taken place. In that way, they are not "advances" so much as a delayed payment for work already accomplished. Glad you see it this way as well.
>"and if you choose to invest financially in marketing, your dollars will likely be spent on hiring professionals to help you with things like . . ."
Rachelle – I'll be looking forward to those insights. Over the past year, I have come to face the fact that we (writers) Must or Bust. And you've done a great job of explaining Why we Must. And I know we ask a lot when we ask How. (Thanks, Katie G, and thanks, Rachelle for proposing to address How!)
I've read a lot of stuff from Nathan, Chip Mac., Karen Ball and others. I still feel like I'm staring at one of those wierd mid 90's hidden computer image things at the mall. Everybody else in my family saw the spaceship or the waterfall or even Jesus. I just saw a confused matrix of shades and shapes.
The 'hiring a professional' for some aspect and supplementing with personal elbow grease is starting to make more sense.
Thanks for the patience.
>Thanks for taking the time to answer my question! I am learning a lot on your blog!
>Fairy dust. Now THERE'S an idea!
>CKHB: At some point, I just shake my head, roll my eyes, and say "What EVER." There's going to be a different opinion on everything.
>Thanks for saying that low sales figures are "very difficult" to overcome instead of "impossible" to overcome. Believing BIG!
>I'm so thrilled you're going to expand on Katie's question. I've got several idea's percolating myself. I think as much as I want to get my work in print, I want the opportunity to market it.
>I've heard advice that conflicts with some of the advice you just gave, Rachelle! I've been told that authors DO NOT want to buy discounted books under their publishing contract, because such books are NOT INCLUDED in any BookScan numbers, and therefore don't make it into the official record for number of books sold.
>Thanks for clearing up these questions for us. I'm bookmarking this one!
I hope I don't sound ignorant on this, but I'm curious as to how many new authors get published annually. Is there a site that breaks down this figure? And if there is, do they also break it down according to genre?
>Katie: Your question "What kind of marketing stuff would you do?" is worth a few posts of its own. I'll get crackin' on that. But briefly: Your marketing campaign will have to be tailored specifically to you and your book, and if you choose to invest financially in marketing, your dollars will likely be spent on hiring professionals to help you with things like website design and PR. A book publicist can do press releases, contact online and print publications to solicit advance reviews, and try and get you media appearances. There's a lot more to this, and for fiction authors it often comes down to more time than money. But I'll talk more about this later.
Steadymom: You can usually assume the figure we quote for the number of copies we expect to sell is in the first year; there's an additional hope that the book will keep selling year after year.
Timothy: Thanks for the additional clarification on the idea of companies paying advances.
>Great answers! Thanks!!
>When you refer to number of copies you should sell or try to sell in these examples, is that the total number of copies over the life of the book, or the number sold in the first year, two years, etc?
>Thanks Rachelle. Since most writers are introverts this marketing stuff is overwhelming. It's good to keep warning us ahead of time. =)
>Thanks for answering my question. 🙂 Even though it's not the most riveting stuff, I'm enjoying this series you're doing on the business side of writing. Another reason why I want a solid agent–to partner with me so I can understand the contracts and such.
>Advances in other industries? Sure. When I hired on with my current company, they paid me a sign-on bonas of a few thousand dollars. Officially, it was called a salary advance. Had I left the company prior to giving them two years, they would have taken that money out of any money they owed me and I would have had to pay back the rest. After two years, they wiped it off the books.
>So, I'll shoot for selling 15,000 copies, but that just absolutely blows me away to think that many people might potentially buy my book! I think I'd like to invest some of my advance in fairy dust. Where can I get it? 🙂
>I was just thinking about marketing and PR stuff last night. I was telling Hubby how it's smart to use a portion of an advance to put back into your writing career. Hubby asked, "So what does that mean? What kind of marketing stuff would you do?" To which I responded, "Uhhhhh…not exactly sure."
Just curious. What would you say is the best use of money when it comes to marketing your book?