Understanding Book Advances And Royalties


When a book publisher offers a book deal to a new author, the contract will talk about ‘book advances’ and ‘book royalties’.

These can be a little confusing to new authors, though a little bit of knowledge will go a long way to helping you fully understand how much does an author make?

By the end of this article, you will understand book royalties and book advances, you will discover what is usual for a publisher to offer, and you will find out how the publishing world is changing the way it provides book advances and royalties. It will also help you to understand the average book advance an author can expect.

This article has been written as a very basic guide and is designed to give new authors a feel for what they can expect. Royalties and advances are complex in nature and it is something that you should discuss with your agent or an independent publishing professional.

What are Book Royalties?

When working with big or independent publishers, the first step in the publishing journey will be for the publisher to offer you a contract. In this contract, they will stipulate the book royalty that you will be paid. This book royalty is the amount of money you will get per book you sell. The figure in your contract will be quoted as a percentage.

For example, your contract may say that you will get 10% of each book sale.

There are two types of royalty: published price and price received.

A book royalty that is linked to the published price will be based on the price that the book is sold to the final customer, the reader.

For example, if you are offered a 10% royalty and your book is sold in a bookshop for $10, then you get $1 per book sold.

A royalty that is linked to the price received will be based on the price that the book is sold to the retailer, the bookseller.

As a general rule, bookshops buy books at about 50% of the cover price.

For example, if you are offered a 10% royalty and your book is sold to the bookshop for $10, then you get $1 per book sold. If makes no difference what the price the book is sold to the reader, your royalty is based on the price to the bookseller.

The type of book royalty you will be offered will depend on the genre but as a very rough rule of thumb, academic books tend to use price received, whilst books sold to the general public mostly use published price.

The amount of book royalty you will be offered depends on many factors, such as genre, your position as a writer, the size of the advance, your agent’s ability to negotiate, to name just a few factors.

As a general rule, a 10% royalty would be a good deal.

The book royalty paid on hardback books tends to be a few percentage points higher than paperback books, and you may find you have a very low percentage for books that are sold at extremely discounted prices.

It is also not uncommon to see a sliding scale with your percentage cut increasing as the number of books sold increases, though this tends not to kick in until around the 10,000 book mark.

Book Advances

The book royalty will define how much cash you get per book. However, some publishers will give authors an ‘book advance’ on the amount of royalties they feel a book will sell. As a general rule of thumb, the bigger the book advance, the more confident the publisher will be of the book’s success.

A word of warning.

You have probably heard talk of six-figure (or more) deals being offered for books. These are very rare and tend to only be offered to authors that either have a huge track record (think Rowling) or massive public interest (think A-list celebrity). The reality for most authors is that advances are significantly less.

So what can you expect?

The answer is that it is hard to tell.

As with book royalties, many factors come into play. Your track record is important, as is your agent’s ability to negotiate, the genre also plays a part. However, advances between $5000 and $20,000 are not uncommon. An experience mid-list writer, with a track record of sales, may expect around the $50,000 book advance mark, though it may be much less. Over the past ten years, the book royalties paid to authors have reduced significantly. Authors that were seeing $50,000 advances ten years ago can now often expect much less.

It is also not uncommon to hear of deals with zero advances. These tend to be with independent publishers, rather than big publishers. If no book advance is offered, the royalty paid tends to be higher. It is also not uncommon for some writers to negotiate a deal with zero advance but an increased royalty rate.

Earning Out

One term you may come across in regards to an advance is ‘earning out’. This is a phrase the publishing industry use for a book that has sold enough copies to earn back the original advance for the author. For example, if an author receives a $10,000 advance they would need to earn $10,000 in royalties before they paid off their advance.

So what happens if a book fails to pay off its advance?

In this situation, it is the publisher that has to cope with the loss. The author would not be expected to repay any of the advance. However, there is a knock on effect. Authors that received notable advances and then fail to earn out, will be considered a ‘risk’ for future books.

A big advance might seem desirable for authors but this is not always the case. If an author is looking to make a career in writing, they are better to have advances that roughly equal the amount they will earn in the first year of sales from royalties.

Profit Share

One type of contract, which has become increasingly popular, is the profit share contract. These tend to differ from publisher-to-publisher, but they operate on the same basic principle. When a book is published, it will require a certain amount of initial investment: editorial, printing, marketing etc. In a profit share deal, royalties are paid until the book’s sales have covered the cost of production. However, after this point, the profits are then split 50/50 between the publisher and author.

For books that sell a lot of copies (have a few large print runs), these deals can be very profitable for the author. However, for books that sell fewer copies and have many smaller print runs, the publishing costs can spiral out of control and it can be the case that even though a book is selling, the profit is small once the costs have been deducted.

In summary, we have seen that there are two types of book royalties: Published Price or Price Received. Typically, an author will be getting about 10% of the price of the book sale. They may also get an advance on the royalties. These advances can be profitable for the author, but should reflect a realistic prediction of sales.

You can find out more about the traditional publishing world in this article.