Monday, January 28, 2013

Pub Talk: Of Money & Book Deals


This may be my favorite origami ever.
Let's talk about money.

And book deals.

Because as writers, we LOVE to talk about those two things together.

Someone emailed me a little bit ago, asking about this, and I realized it was a great topic for a Pub Talk post. Also because even though I had read a few posts about how money works with book deals before I got mine, there were still things I learned along the way.

Okay, let's say you get a book deal for a single book, and to make the math easy, let's say you get an advance of $15,000. (An advance is just what it sounds like-- an advance on future royalties. Once your book goes up for sale and you start earning royalties, you have to "earn out your advance" before you start getting royalty checks.)

So does that mean that as soon as you get the call that your book sold that you can go out and spend that $15,000? Not quite. It doesn't come in one chunk. Sometimes it comes in two payments, sometimes in four, but most often in three. (At least that's what's most common with mid- to large- sized publishers.)

1/3 Comes within 30 days of signing your contract,
1/3 Comes within 30 days of your book being "accepted," and
1/3 Comes within 30 days of publication (although occasionally that date is bumped up, but not usually).

Let's talk about a few things.  

First: contracts. Smaller presses usually have a boiler-plate contract that they send out pretty much the day they offer. Most mid and large publishers will work with the agent on the contract, so it takes longer to get it finalized. I got mine from Random House two months after they offered, and apparently that's insanely fast. Some publishers take 6 months. I've even heard of some taking 8-9 months. Then you sign it, send it back, then wait 30 days for the check. (It goes to the agent first, they take their cut, then send you a check for the rest.) So sometimes, it can take A LONG TIME to get that first check. You might even be close to your book going to copy edits by the time you get it.

Second: if you have an agent, the publisher will send the check directly to your agent, (s)he will take his/her 15%, then a check for the remainder will come to you from the agency. No taxes are taken out, so you have to plan for that part on your own. So in our example, you'd get three payments of $4,250. Make sense?

Third: "Acceptance" doesn't mean that you've just emailed your book to your editor. It means that you have gone through however many rounds of edits with your editor that it took to make it shine. It means that it's essentially ready for publication. You'll still have to go through one or more rounds of copy edits, and first pass pages (and maybe second pass pages), of course, but those are just minor things. The bulk of it is done.

Now, just for fun, let's say that you get the coveted six-figure, three book deal from one of the Big Six. We'll say $35,000 a book, for a total of $105,000. These numbers work out awesome, because on a $35K book, the agent cut is roughly $5K, leaving an easily divisible by three $30K. Nice, huh? Let's get some timing in the mix, too. Let's say you got your book deal this month (January 2013), with your books slated to come out December 2014, December 2015, and December 2016. This is how it would break down with a totally made up but realistic time table.

On signing, you'd get 1/3 of the $35,000 for each book (or 3/9 of the $105,000). So your first payment would be $35,000. (Or, once your agent takes his / her cut (and honestly, you aren't going to get this deal without an agent and yes, they are totally worth the 15%), you'd get around $30,000.) Let's say they're pretty fast, and get you your contract in April. So you'd get your first check in May 2013.

May 2013: $30,000  (Signing for all three)
Jan 2014: $10,000 (acceptance of book 1)
Dec 2014: $10,000 (publication of book 1)
Jan 2015: $10,000 (acceptance of book 2)
Dec 2015: $10,000 (publication of book 2)
Jan 2016: $10,000 (acceptance of book 3)
Dec 2016: $10,000 (publication of book 3)

So, as you can see, those advance payments can be spread out quite a bit. A very important thing to think about before you quit that day job.

Any questions? I know I left about a million things unanswered. If this brings up any questions for you, ask in the comments and I'll do my best to answer them. And if you have an experience that's different than this, tell us! I think it really helps everyone to not walk into this industry blind, so we would all love if you shared.

photo credit: Jon_Tucker via photopin cc

38 comments:

JeffO said...

A nice, illustrative post, Peggy, thanks for sharing. I think it's always good to be reminded that we're not likely to get rich off of this, and that even what sounds like big money in a lump sum doesn't work out quite so well when it's spread out like that (not that there's anything at all wrong with an extra few grand a year).

ilima said...

So interesting...and back-down-to-earth bringing. Ha! I keep telling my husband I'm not gonna make much with this writing gig, and this is a great resource I can use to explain it. Thanks!

Caryn Caldwell said...

Thank you for this, Peggy! It's the clearest, most concise description I've seen! The monthly breakdown was especially helpful. I just bookmarked it for, well, someday.

Patti said...

Great break down and a reality check that you don't become rich writing, at least not right away.

S.P. Bowers said...

I knew most of this already but seeing it laid out like that is so very helpful. Ah, now to indulge in a little daydream of the three book deal....

Jessie Humphries said...

You are so practical Peggy! I love gleaning all my knowledge from you. :)

J. A. Bennett said...

It really awesome to know this. thanks for taking the time to educate us all. Really, really, helpful!

J. A. Bennett said...

It really awesome to know this. thanks for taking the time to educate us all. Really, really, helpful!

Rebecca Green Gasper said...

This is great information. I love when people share what they've learned along the way. It is such a great help to the rest of us! Thanks Peggy!!! Best :)

Nicole said...

Love this! I'm bookmarking it for the future...you know, in case I need the break-down for a six-figure deal. ;)

Mark Means said...

Awesome post, Peggy...and very educational. The whole 'advance' process make so much sense now.

Thanks for sharing!

Natalie Aguirre said...

Thanks Peggy for making this seem so clear. My biggest fear is not earning the advance. I want my agent to make money but I don't want anyone losing money.

And I look at the advance as something mainly to put toward good marketing. (I'm not hoping for a big one.)

Susan Kane said...

A great reality check. It makes me re-think my goals, and how much dedication I have left in me.

Richard Hughes said...

Hm. I guess I now know what to expect. It's not as thrilling as it seemed before you told me. But, hey, if that's the way it works, then that's the way it works.

Carrie Butler said...

Thank God I didn't get an advance. I'd never figure it out! LOL

You're so smart, Pegasus. :)

Jeff Hargett said...

This made next week's Sunday Surfing list of links. :-) Nice, informative post. Thanks!

Angela Cothran said...

So are you saying I can borrow 35K if I really need it :) JK. My sister-in-law thinks all writers are rich and if I ever get a book published she wants me to pay off her house. No joke. She actually said that!

Ruth Schiffmann said...

Informative post. No one ever talks about the money. Thanks so much for sharing this, Peggy =)

Martin Willoughby said...

Nice nutshell overview if what happens. Thank you.

Jenny S. Morris said...

Thanks Peggy! That really does lay it out there. Quitting day job not optional. Haha.

Kelley Lynn said...

Fantastic post Peggy! What a mathematician you are ;)

Lydia Kang said...

Great post, Peggy! Definitely have to think over quitting a day job since writing is not so lucrative as people think sometimes.

Shallee said...

You always give such detailed and informative posts, Peggy! Thanks so much, this is great info about book deals that's a little harder to find.

Jay Noel said...

That's why even established authors published by the Big 6 don't quit their day jobs. Yowza!

Anne said...

Very informative. I never really thought writing could ever make me rich. But this helps put me back to the real life I need to live with my dreams. Thanks a lot!

Colin Smith said...

Great article, Peggy! If your book earns out its advance and you start making a ton of money in royalties, I suppose that's when writing becomes a lucrative career. That's a really big IF, of course!

One question I have: if Book One of the three book deal becomes a runaway success, might the agent re-negotiate the contract for a better advance for Two and Three in anticipation of the droves of people clamoring for the next installment of the series? Or are the advance payments locked in to the contract and can't be changed? My guess is the latter, but the author could, perhaps, expect a much bigger advance for the next contracted book.

Donna K. Weaver said...

Very informative post, Peggy. Kind of intimidating in some ways. Nice to think of getting an advance like that but then your book(s) have to sell. No pressure there.

Peggy Eddleman said...

Colin-- Great question! Contracts almost never get re-negotiated. But if book 1 is a runaway success, then the author would get paid a lot more in royalties (versus getting it in the advance). So when all is said and done, they get the same amount of money in their pocket, regardless of the amount of the advance. But if an agent suspects that the book will do better than the top advance a publisher is offering, the agent might suggest that the author not sign for all three books at once (assuming it's a trilogy). They might accept a two-book deal instead, and negotiate the third after it's evident that the first book is going to do well. And yep! Sales on that first book definitely impact the amount of the advance on the next contract.

Rachelle said...

Great info. Thanks for sharing. It helps keep things in perspective!

Tracy Campbell said...

Thanks for your candid post, Peggy.
This is one I'm saving for future reference.
Tracy :-)

Leigh Covington said...

WOW! My brain is spinning! This is great though Peggy. So much I didn't fully understand. I'm definitely bookmarking this! You're amazing. :)

Katie Dodge said...

I love you and your math skills! :) Thanks for this awesome post!!

Cortney Pearson said...

I've always wondered how it all *works*! Thanks so much for spelling it out, so good to know!!!!

Cynthia said...

Money seems to be a touchy subject in the creative community because there seems to be this unspoken rule that we're not supposed to be doing this for the money. And while I'm certainly not pursuing my goal to be an author for the money, I'd still like to know what to expect down the line if I ever get that far. So your honest insights are very much appreciated. Thank you for this helpful post.

Aurora Smith said...

Wow, eye opener. Great post!

Daisy Carter said...

This is so interesting because I always thought advances were split into 2 payments (at signing and at release). I had no idea about the acceptance round of payment!

Great post!

Donna Hosie said...

The best post outlining this I have ever read.

I guess I will remain a penniless writer!

Michael Offutt, Speculative Fiction Author said...

Great post, Peggy. Thanks for the mathematical breakdown.