Book advances and royalties, explained

Standard royalty rates

The best public benchmark is the Authors Guild Model Trade Book Contract, which the Guild publishes with commentary on what is standard and what is fair. Its rates:

The Guild is open that it considers some of these standards unfair. It calls the 25%-of-net ebook rate "grossly unfair to authors" and has argued since at least 2015 that a 50/50 split of ebook net would be fair (Authors Guild). Established authors with agents negotiate better terms; first-time authors usually get something close to the table above.

If you have an agent, remember their commission comes off the top: conventionally 15% of your advance and royalties (Nathan Bransford).

List price versus net: the clause that halves your pay

"10%" means very different money depending on what it is 10% of. List price is the price printed on the book. Net receipts are what the publisher actually collects after it sells the book to a retailer or wholesaler at a discount. The Authors Guild says royalties based on net pay roughly 40% to 50% less than royalties based on list at the same percentage, so an author on net terms needs a much higher rate to earn the same (Authors Guild).

The Guild says plainly that it does not approve of contracts paying only 10% to 12% of net, because that "does not fairly compensate an author for the years of work put into the book." Before you compare two offers, convert both to the same basis.

How an advance works

An advance is a payment against future royalties. Three things about it matter:

• It is paid in installments. The model contract pays one part on signing, one on acceptance of the complete manuscript, and one on publication or within a set number of months after acceptance, whichever comes first. The Guild recommends two equal installments for advances of $40,000 or less, and no more than three for advances of $40,000 to $75,000. Large advances are sometimes split into four or five, with the last paid at paperback publication (Authors Guild, section 4).
• It is non-refundable against sales. The model clause describes "a non-refundable advance". If the book sells poorly, you keep the advance; you simply never receive royalties beyond it.
• Its size is a forecast. A publisher's offer reflects how many copies it expects to sell. That is why platform matters so much for nonfiction (see how traditional publishing works).

How big are advances? There is no reliable public average for nonfiction, and figures you see online are mostly anecdotes. What is published: agents generally need a project worth at least a five-figure advance (Jane Friedman), small presses pay small advances, and some traditional publishers pay none at all (Friedman's publishing paths chart).

Earning out, with a worked example

Every royalty you earn is first credited against your advance. When the credits equal the advance, the book has "earned out" and further royalties are paid to you. Friedman's chart states it simply: "Most advances do not earn out."

Here is an illustrative example using the model contract's rates. The book and the advance are invented; the rates are not.

Two points the example shows. First, at standard rates a modest advance needs thousands of copies to earn out, which is why most do not. Second, not earning out is not a disaster for you: the advance was yours either way. It can matter later, though, because publishers look at an author's past sales when deciding on the next book.

Statements arrive twice a year at large trade publishers, within three months of the end of each six-month period, and they show the "reserves against returns" the publisher is holding back in case bookstores send copies back (Authors Guild, section 13). The Guild recommends reading every statement and asking for the numbers you need to check it.

Subsidiary rights

A traditional contract usually covers more than the book itself. Subsidiary rights are the rights to license the work in other forms, and income from them is split. The model contract's splits (Authors Guild, section 6):

• First serial (excerpts before publication): 90% to you, 10% to the publisher.
• Audio, book club, permissions, paperback reprint and most domestic licenses: 50/50.
• Foreign and translation rights: 75% to 80% to you.

The Guild advises authors never to grant film, TV and merchandising rights to the publisher absent very special circumstances, and, if you have an agent and a smaller publisher, to try to keep foreign and non-print rights too. All of this income is credited against your advance before you see it.

How self-publishing compares

Self-publishing has no advance and no one paying your costs, but a far larger share of each sale. On Amazon KDP:

• Ebooks: a 70% or 35% royalty option (KDP). Friedman notes the 70% rate applies inside Amazon's price window of $2.99 to $12.99.
• Paperbacks: 60% of list minus printing for books priced $9.99 or more on Amazon.com, and 40% minus printing through Expanded Distribution. KDP's own example: a $15 book that costs $5.00 to print earns $4.00 on Amazon and $1.00 through Expanded Distribution (KDP).

Compare that $4.00 to the $2.80 in the hardcover example above, on a book priced nearly twice as high. One Scribe author, Shaan Patel, published both ways; his story on scribemedia.com reports "$13/Copy vs $0.30-0.50 on His McGraw Hill Bestseller". That is one author's experience, not a typical result, and it leaves out what he paid up front.

Income surveys show how modest book income usually is on any path. In the Authors Guild's 2023 survey, the median book income for full-time authors in 2022 was $10,000; for all authors, including part-time, it was $2,000. Full-time self-published authors had a median of $12,800 from books, and those publishing since at least 2018 reached $24,000 (Authors Guild). Those figures are self-reported and include fiction.

What most people get wrong

• Comparing percentages without the basis. 15% of net can be less than 10% of list. Convert before you compare.
• Treating the advance as the payday. For most authors it is the only payment. Plan as if no royalties will follow.
• Forgetting the agent and the installments. A $30,000 advance arrives as about $25,500 after commission, spread over two or three years.
• Judging a self-published book by royalty rate alone. A high rate on few sales is still little money, and you paid the costs.
• Expecting royalties to repay a nonfiction book. For many nonfiction authors the book pays back through clients, speaking or career, not copies sold.