How Book Advances and Royalties Works

Article from Proof Read My Document.com.au by Valerie Peterson 

Understanding how publishers pay authors for their work

A woman writing in her journal

Book royalties and book advances are the means by which publishers pay authors for their work. Following is a brief overview of what the terms mean and how book royalties and advances work.

When a book publisher contracts with an author to publish a book, in essence, the author (who is the copyright holder) grants the publisher the right to publish the work for an agreed-upon amount of money. This money is called a royalty and is expressed as a percentage of sales. (The convention at most trade book publishers is to pay a royalty on the list price of a book.)

What Is a Book Royalty?

Like points related to the book delivery and rights assignments, the royalty rates are outlined in the book contract. Book publishers have standardized rates for royalties for various editions of the work (ex. hardcover, paperback, etc.)

How a Book Royalty Is Calculated

Here’s an example: If the book Brutus, My Beloved Schnauzer has a list price of $10 and the royalty rate for bookstore sales is 10 percent, then the author earns $1 for every book sold in a bookstore.

Note that this is a greatly simplified example. Any traditionally-published author will be earning different royalty rates for different types of book sales and subsidiary rights sales so the numbers won’t be nearly as tidy as the ones above.

Advance Against Royalties

What publishers and authors typically refer to as a “book advance” is an “advance against royalties.”

Most traditional publishers will give the author an advance against royalties. That is, they “advance” the author an amount of money based on what they think the book will earn.

The amount of the advance against royalties is based on many factors: the size of the publisher, the historical performance of similar books in the marketplace; the author’s track record and author platform or both; and the topicality of the book.
The amount of a book advance can range from a thousand dollars for a new author at a small publisher to a tens of millions of dollars for a blockbuster New York Times best-selling author with a huge fan base.

The advance is usually paid in installments at certain points in the book development process — for example “on [contract] signing,” “on manuscript delivery,” “on manuscript acceptance” — again; this is outlined in the various clauses of the book contract.

“Earning out” a Book Advance

A book is said to have “earned out” its advance when the author royalties from its sales surpass the advance that the publisher paid the author.

For example, of the author Brutus, My Beloved Schnauzer gets an advance of $5,000, and he is earning royalties at a rate of $1 per book, he needs to sell 5,000 copies of the book before the book is said to have “earned out.”

Note that, since publishing industry convention dictates that books are returnable (unless the type of sale deems them otherwise), publishers take a small “reserve” percentage; that is, allowances for returned books. (The risk of a large number of book returns is more common when the book is new — most of what doesn’t get sold within a short amount of time goes back to the publisher.)

Royalty Payments and Checks

After a book earns out, the author receives royalty checks on a regular basis as long as the book is in print and still selling. Royalty checks are sent by the publisher on a regular, periodic schedule (usually twice a year). For authors who have literary agents representing them, the checks go through the agents, who send their checks to the author—royalties minus the agent’s percentage. The day the royalty check comes is a happy, happy day in an author’s life.

Whether directly from the publisher or through the literary agent, royalty checks should always be accompanied by a royalty statement, which outlines exactly the amount of books that were sold in each category.
Industry convention also dictates that, if a book under-performs, the author does not have to pay back the unearned portion of the royalty.

Disclaimer: The purpose of this article is to give lay out some very general book advance and royalty basics but please note that the author of this article is a writer — not a literary agent or a lawyer — and you should not consider the contents of this article a substitute for authoritative legal advice. If you are negotiating advances and royalties, you should seek the counsel of a literary agent and an attorney or both. The Author’s Guild has a contract review service for members.

HarperCollins Publishers

HarperCollins Publishers – Escape Publishing Submissions:

Submission Guidelines

We’re interested in stories in the following sub-categories.

All submissions must include a central romance or romantic elements focused on lead characters and an uplifting ending.

Contemporary:

The characters in our contemporary romances have today’s issues and speak today’s language. They’re us, but at our best and worst. They’re your friends, family, colleagues, neighbours, and idols.

Comedy:

Make us laugh. Your comedy can come in any flavour, but its first and last impression is fun.

Rural:

The Outback, small country towns, or on the coast, rural romance is from all corners of Australia – with love.

Historical:

Penniless or powerful, breeches or corset, we’d like to be formally introduced to your dukes and duchesses, scullery maids and pirates, convicts and bushrangers, the ladies and gentlemen of yesteryear.

Paranormal:

If it’s got bite, we’re interested. Anything with fangs, fur or fae.

Fantasy:

If it’s magical or features an alternative reality: high fantasy, urban fantasy dystopian, or new spins on fairy tales, put a spell on us.

Magic Realism:

Not quite paranormal, only elements of fantasy, this genre takes a contemporary romance with the belief that there’s magic in the everyday.

Thriller:

Think intrepid investigators, unusual circumstances, and romance on the run. Romances with more than just love on the line – this is where the mysteries of the world and the mysteries of the heart combine.

Sci-Fi:

Interplanetary life and space pirates from other worlds or our own in a distant age.

Saga:

A longer read with multiple characters and plotlines over an extended time period. Includes a central romance.

Erotic Romance:

It’s so hot, it scorches. It comes in all genders, shapes, sizes and combinations including M/F, M/M, F/F, and ménage.

Gay:

Featuring the best in LGBT and queer romance, we take submissions from sweet to scorching.

Length

We accept short, mid-length and long novels.

  • 40,000 – 80,000 (short novel)
  • 81,000 – 100,000 (novel)
  • 100,000+ (long novel)

Why submit to Escape?

We’re a specialist romance publisher. It’s all we do and it’s what we love. What we don’t know about publishing romance probably isn’t worth knowing. We’re a small, innovative publisher working within Harlequin Enterprises, a larger, long established company with a rich tradition as a leader in the industry. We are innovative and quick to respond to changes in the industry, plus we have the backing of the global organisation.

You can expect us to be responsive, professional, knowledgeable, supportive, and forward thinking. We’ll also be honest and tell you how we see things.

Escape Artists have formed a vibrant and engaged community supporting each other as independent authors. If you become an Escape author, you’ll be welcomed in that community.

Submission Process

Before submitting you must:

  1. Have written a full manuscript.
  2. Own the rights to your manuscript, whether it is unpublished or self-published.
  3. Format your manuscript to our specifications.
  4. Extract the first three chapters of the manuscript for submission. Do not submit the entire manuscript.
  5. Have written a compelling synopsis of the story. See tips on synopsis writing.

Formatting specifications

Format your manuscript with the following elements:

  • 12pt Times New Roman font (or similar)
  • Chapter headings centred
  • 1.5cm indents
  • double-spaced
  • .doc .docx .rtf .pdf, and .txt files are accepted
  • Save the first three chapters as a new document under the title: MANUSCRIPT.

Synopsis specifications

Your synopsis provides a snapshot of the whole story. That means no surprises. We want all the main plot points on the page. Keep it simple and tell us briefly how the story goes. Focus on the main characters and what happens to them and what they do.

After you’ve read the guidelines above, complete the form below to submit your manuscript.