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Advances & Royalties

Writers are generally paid a royalty based on their book sales. The way it works is fairly complicated, so if you have an agent to represent you, you should take their advice on any offer you receive from a publisher. But if you don't have an agent, then make sure you check any contract carefully. You're still faced with the problem of knowing what to expect and what it all means.

Publishers usually offer to pay authors advances against royalties. How do you work out how much money you might earn from your book? You need to understand for yourself how advances and royalties work and what they mean for you.

What Kind of Publishing?

There isn't any overall publishing norm. It really does depend on what kind of publishing you are talking about.

  • In academic publishing, relatively little money changes hands, particularly in terms of advances.
  • In educational and professional publishing, good royalty rates may be the key thing to go for, if you expect your book to sell on.
  • It is only in what is called 'trade', i.e. general, publishing that you will encounter the huge advances which attract the headlines, but you should remember that these big figures are the exception, rather than the rule. It's quite difficult to earn your living from writing, so it's better not to assume that once a publisher offers to publish your book, you've hit the jackpot.

Advance or Payment?

You should distinguish between advances against royalties and payments, which do not earn royalties.

  • It is usually better to have royalties, however low they may be, as then you can benefit from the ongoing sales of your book.
  • In certain cases though, you may have a fight on your hands, if the publisher has approached you to write a particular book or part of the text. You will simply have to make up your own mind whether to accept the commission on a payment-only basis or not, but authors' associations are strongly against this practice. The general advice is to insist on an advance if at all possible.

Advance Payments

An advance is literally an advance payment and royalties on sales of the book are set against it. It is not normally refundable, provided that the author fulfils their part of the contract.

It is often split into three parts, payable one-third on signature of the contract, one-third on delivery and acceptance of the manuscript and one-third on publication.

If the book is written and doesn't need more work, then the advance might be paid in two parts, on signature and publication. In some cases the publisher will want to pay part of the advance on paperback publication (often but not necessarily a year or several months after hardback publication), but obviously it is in your interest to get the money paid to you as soon as possible. Don't forget to take into account the tax implications of what you agree!

Published Price or Price Received?

The royalties can be based either on a percentage of the published price of the book or on what is called the 'price received', i.e. a percentage of the publisher's receipts from the booksellers, which is a much lower figure.

Educational publishers (who focus on books for schools) and academic publishers (books for students and academics' own work) generally work on price received, trade publishers on published price royalties. Export sales are usually on the price received because of the greater selling and distribution costs for the publisher. There's also a tendency in trade publishing to move towards price received, because of the high discounts publishers give booksellers and because publishers would prefer to pay a royalty based on a lower figure.

Publishers' Discounts

Discounts need some explaining, although they are a bit of a minefield. Publishers sell books to booksellers at a discount off the published price, which can vary from 35% for small independent bookshops to 60%, 70% or even higher, for the chains, the supermarkets and online booksellers, which buy in bulk. So with a typical 50% discount on a book retailing through the bookshop chains at £20 or $20, the publisher would get £10 or $10 from the bookseller to cover all their costs, including the author's royalties, their overheads and distribution, and the production cost of the book. Their margins really are quite tight.

In the USA, where there is no retail price maintenance on books, discounts have been subject to negotiation for many years (although American publishers are supposed to give the same discount to all booksellers). In the UK, the abolition of the Net Book Agreement has meant more pressure on discounts, since the booksellers want publishers to improve their terms to help them to price promote the books. Many publishers believe that the UK has the highest discounts in the world, but discounts are under pressure in all the major English-speaking countries, as publishers and booksellers try to maintain their margins.

Royalties

Having said all this, hardback royalties on the published price of trade books usually range from 10% to 12.5%, with 15% for big authors. On paperback it is usually 7.5% to 10%, going up to 12.5% only in exceptional cases. Other kinds of publishers will offer lower royalties, often based on the price received.

Royalties are often on a sliding scale, which is to say that you might be offered 7.5% to 10,000 and 10% thereafter on a paperback edition.

High discounts paid to supermarkets, chains or online booksellers will invoke the 'high discount' clause, meaning that the author will get a considerably lower royalty on copies sold this way.

Chris HolifieldChris HolifieldManaging director of WritersServices; spent working life in publishing,employed by everything from global corporations to start-ups; track record includes: editorial director of Sphere Books, publishing director of The Bodley Head, publishing director for start-up of upmarket book club, The Softback Preview, editorial director of Britain’s biggest book club group, BCA, and, most recently, deputy MD and publisher of Cassell & Co. She is also currently the Director of the Poetry Book Society; During all of this time aware of problems faced by writers, as publishing changed from idiosyncratic cottage industry, 'occupation for gentlemen', into corporate business of today. Writers encountered increasing difficulty in getting books edited or published. Authors create the books which are the raw material for the whole business. She believes it is time to bring them back to centre stage.

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