Advances
“So if a writer gets an advance and the book does not sell well do they have to repay part of the advance? Or does it affect future contracts – no contract / no advance etc.? Or it varies per the contract in place?”
Short answer is no, advance doesn’t need to be paid back. Unless weirdness happens.
Let’s say Writer A sells a two-book series to the publisher. Let’s give them a generous advance of $20,000 per book, $40,000 total. That advance will be broken into chunks. At this level, typically into 3 and the payment schedule will look something like this:
- $14,000 on signing the contract: 1/3 from Book 1 + 1/3 from Book 2, rounding off.
- $6,500 on acceptance of Book 1: when the manuscript is written, turned in to the editor, and the writer has made the requested changes.
- $6,500 on publication of Book 1.
- $6,500 on acceptance of Book 2: when the manuscript is written, turned in to the editor, and the writer has made the requested changes.
- $6,500 on publication of Book 2.
So you can see that 40K is spread roughly over a 2 year period. Doesn’t seem like a big advance now. 🙂 That money stays with the author no matter how the book sells.
The publisher now prices that book at $6.99. Let’s say for the sake of convenience that it’s an ebook only release, because I don’t want to calculate royalty rates for all of the different editions. We are going to round up numbers as well. From a $6.99 book, the publisher receives $4.89, and the author gets 25% of that, so $1.22. The publisher keeps $3.67.
Let’s say the book sells well. The thing to remember is that publisher also has production costs when it comes to the book: they have to the editorial team, they pay for the art, etc. But for this case, we are just going to look at advance.
At the core, advance acts as a grant against future royalties. You don’t have to ever pay it back, but the royalties the book earns count against it.
From the accounting standpoint, both the publisher and the author start with a deficit. In the publisher’s case it’s investment into the book and in author’s case, it’s the advance. As the book sells, the publisher share and the author share accumulates. The publisher starts making money around 5.454 copies sold. At this point, the author is still in the hole. Once the book sells 16,360 units, the author “earns out” and his next royalty statement will reflect a credit and a payment.
As you can see, the publisher starts making money way sooner, because their royalty share is three times the size of the author’s. In some cases, even if the author doesn’t earn out, the publisher is still in the black. And in our digital age, books rarely go out of print, which means taken out of circulation due to low sales, and the publisher will be collecting that money for decades to come.
Joint Accounting
And now we come to the publishing’s not so ethical dirty secret. Sometimes there is joint accounting. Meaning, Writer A sells a two-book series to the publisher at $20,000 per book, $40,000 total, but the accounting is done against the entire advance in the contract, not a per book advance. The two books are treated as one, meaning, the author doesn’t start receiving royalties until the whole $40,000 is earned out.
Remember how we broke the advance up above over the course of about 2 years? This method means that unless the book is a runaway success, the author isn’t going to see a cent in royalties until after Book 2 is out.
You can see the numbers not exactly twice of the previous table, because remember, we are rounding off a bit since you can’t sell .25 of a book. 🙂
Fun thing, accounting.
How this affects future contracts depends on each individual case. Most of the time, the advance is meant to be earned out within the first year, but at the higher level of contracts, at around a $1,000,00,000 or so, it’s more like 3-5 years. Some people never earn out and still make the publisher a ton of money.
Is there a time when advance is paid back? Yes. This happens when the writer gives up on the project and wants to purchase the rights back. Most publishers really don’t like giving the book back. We’ve tried.
Take your time and heal – burn out is serious no matter what it is in. Also – Coming from a family that produced very different children (my sister and I) I love that you took the time to emphasize the difference between the sisters and show the growth in both and other characters. We can wait for the third book – I waited for the rerelease of burn for me and it’s companion books. My fav authors – pointing at both of you- are worth the wait.
Thank you so much for this information. No wonder Authors are self publishing! Although that can’t be much fun at times either.
Not going to rehash all the comments but wanted to add my support too. You guys are awesome, your books are the best out there BECAUSE your characters are different. We waited for Nevada’s 2nd book, we waited for Julie, we can and will wait for Catalina’s conclusion. People need to stop ruining it for the rest of us.
That said, please give it to us sometime because I love HL and really need to hear the rest of the Baylors’ story ;).
I hope you get a nice loooong break so when you go back to Ruby Fever (if you do) you will feel rejuvenated and into it. I think Arabella is the most fun and hilarious and awesome of the three sisters and I will be so happy if we get books about her. Or Leon!!!! You guys always have the most awesome and hilarious dialog and it makes sense that you would have to be in a good place to produce that. Not from the perspective of approaching drudgery!
Is the a way to negotiate book contacts with an author’s health and well being in mind? Like can people specify they want two years between books or something like that?
Take as long of a break you need❤️
Seems like the publishers get the best bite, especially for a new author but I’m not a math whiz so could be completely wrong. Just please don’t stop writing!!!!!
I have three daughters ages 27, 25, and 21. Who would EVER expect the Baylor sisters to be clones??? Geez louise. Two of my daughters are super organized; one is a creative loving wonder but is unfamiliar with the concept of a deadline. Two love frogs, snakes, and all sorts of crawly things, and one refuses to get near them. Two love to cook and one bakes. One is cisgender, one is pan sexual, and one is queer. In each of these scenarios, the two represents daughters 1 and 3 or daughters 2 and 3 or daughters 1 and 2.
please take your time in writing Ruby Fever. From experience, I get burn out when I am focused on one thing without a break for a long time. I work on other projects and the next time I pick the previous one, I am amazed at how everything seems fresh again and I have better ideas.
Personally, i dont think you could really write a bad book. I remember when you opened your book ideas chest and said those stories didnt pass muster and you consider them bad. I read them all and I didnt find anything sloppy or bad at all.
I will always read your books and will always pre order.
Ive never read an author who made me love a character that I hated all this time. The way you guys show us a different perspective is amazing. Such empathy which is what this world needs a lot. I wish everyone read you.
I had no idea how little an author receives per copies sold. Writing must truly be a vocation and that’s so clear with IA. It’s a challenge to make a living doing it full time.
I echo others comments about RF and am happy to wait until you are feeling it and the juices are flowing again. Such a great series.
Sorry to hear about the burnout and it must be even more difficult dealing with publishing houses in these times.
One of the reasons I love your writing is that you write such diverse characters. It’s in no way formulaic such as other authors telling the same story with different character names.
Big virtual hug winging it’s way.
Thank you for being amazing.
Thank you, Ilona Andrews for the interesting post.
My two cents is I would rather a good story/ book rather than publishing dictated palp. I enjoyed David Weber’s Honor H. Series and then they became blah/ same old same old./ excessively wordy…. Then I stopped recommending to library and buying. But I still go back a reread first few books. And I have bought first book 3 times because I read so many times in barn the pages fell out.
So put Ruby Fever aside for awhile and work on something else for awhile. I do agree with my fellowBDH that In HL series Nevada is unique individual as are her sisters and cousins. That means given same situation they are going to react differently because they are different people not identical robotic clones. Maybe pandemic stress or something in the water or air or…..
Wow–the math to this is brutal! I acknowledge there could have been some justification for the large non-author’s share ‘once upon a time’, at least for the providers of capital, but the electronic age has changed many things, and ought to alter this, as well.
Meanwhile, I will always read anything y’all write, in any format, and honestly, at any price. I only feel that way about three authors. And in between new books, I will happily reread earlier books, so I will be thrilled when a new book comes out, but never upset about the interval–it’s a creative process, not subject to a schedule. As so many others have said, I’m just grateful you share your worlds with us!
Ugh what a headache. You just got to love what you’re doing I guess. Thank you.