Something that trips up many authors just getting into publishing are the numbers behind book royalties and revenues. Thank goodness one of the smart guys in book marketing has come to the rescue. I’ve been a longtime fan of Thomas Umstattd, Jr., the brains behind Author Media and one of my go-to podcasts, Novel Marketing Podcast (not to mention he’s a fellow Austinite!)
Anyway, Thomas put it all together in a must-read post at Author Media. Here’s the short version for traditional publishing and indie publishing:
Traditionally Published Authors
First some terms to understand:
- Royalty: What an author earns from each copy of a book.
- Advance: An upfront cash payment that traditional publishers give authors upon signing a contract.
For traditionally published books, the typical royalty is $0.85 per copy for a paperback, which is around That sounds great, right? But can you make a living as an author purely off of an advance and royalties? Check out Thomas’s answer:
“The typical advance is $5,000, but that’s a bit misleading. If you have a literary agent, the average advance rises to $6,000. If you don’t have an agent, it drops to $3,500. Typically, only three out of ten books earn out their advance. For most traditionally published authors, the money they receive as an advance on their royalties is the only money they ever see. You can’t make a living off a $5,000 advance.”
Aha! Therein lies the rub.
- Remember, if you accept an advance of any kind, that’s not free money. The publisher expects you to pay it back through royalties (in this example, $0.85 per book sold).
- And if you have an agent, the agent earns 15% of your advance and royalties. But go easy on them – they basically work on commission, and it can take a lot of work for the agent to snag you a publishing deal. Plus, they do a lot for you along the way.
So for a $5,000 advance against royalties at $0.85 per copy, you’ll actually get $4,250 and your agent would get $750 (yowza! not much for their hard work). Then instead of getting the full $.85 per copy as your book starts selling, you and your agent won’t start seeing royalties until your book has earned out the $5,000 advance. And in this example, you’d need to sell 5,822 books before royalties kick in. And that can take months and even years to get to that point.
(Thomas has more on how advances work in another post — see Step 5.)
That’s the author's side of things. What does the publisher earn and why? Say it’s a paperback book that retails for $14.99. With your share being $0.85 per book, the publisher would get $12.74 per book. Are your eyes popping out?
Back to Thomas to explain why: “A major publisher may spend as much as $50,000 bringing your book into existence.”
Here’s his sample breakdown:
Indie Authors
Here’s Thomas’s take on that: “Indie publishers can bring their books into existence for much less money. … Here’s a sample breakdown of expenditures for an indie-published authors:
“The major difference is that the indie author pays $5,000 out of pocket, up front, whereas the traditionally published author receives $5,000 in their pocket. But indies make a lot more money per book.
“The money isn’t in the paper [book], especially for fiction. The money is in the ebook sales. And this is where being an indie gets good. Indies can make a 70% royalty on ebook sales, assuming that they’re not priced in a crazy way. For example, when you price your ebook at $4.99, you can expect a $3.49 royalty, which adds up fast. Top-selling indies are making $10,000 a month. Some are making even $100,000 a month. While it’s not typical to make a fortune with indie publishing, you can certainly make a living.”
But that’s just the start. Thomas has a whole lot more in this one post –and the good news is YES! You CAN make a living as an author!
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