We like royalty

This week, we’re talking about something a little bit closer to home. All month, we’ve been talking about the publishing industry, focusing on the good stuff between traditional publishing and self-publishing, and by now, it’s time that we took a week to talk about the nittiest and grittiest of topics.

How do sales and royalties work, with traditional publishers?

This is where a ton of authors get really confused, which is why I wanted to talk about it this week. Thursday, we’ll look at the same thing from the point of view of self-published authors, but for today, let’s look at the confusion that can be getting paid through traditional publishing.

See, when you sign a contract with a traditional publisher, they will never ask you to pay them anything. Ever. If a so-called traditional publishing house is asking you to pay them a retainer, that’s not a traditional publishing house. That’s vanity press. Get out. Get out now. 

I’ve digressed.

When you sign a contract with a traditional publisher, most of the time they’ll pay you what’s called an advance. And most of the time, that advance cuts into the amount you’ll earn once your book hits shelves.

Let’s do a little example, on the super simple side of things.

Say you signed a contract with Traditional Publishers, LLC (that’s not a real company, if you couldn’t tell ;-)), and that in the contract, you have a $100 advance (that's fairly low, but this is just an example). Okay, so they’ll pay you part of that advance upon signing, and the other part upon publication (or they’ll pay you all at once at one of those two times—it just depends). The contract will also specify the amount you’ll make off every book they sell. Let’s say it’s 5% of the sale price on every copy (hardcover, paperback, and digital—though you’ll usually end up with different royalty rates for each).

Okay, so, now you’ve signed your contract, your book is on the shelves, and you’ve received your advance. But you haven’t been paid anything by the publisher, except for that advance.

Well, that’s sort of the point. The advance is (usually) an advance sum of what you will make off every sold copy of your book. So, the publisher won’t pay you royalties until your advance has been exceeded (i.e. they won’t pay you until you’ve sold enough to have earned at least $101 in your agreed 5% royalty rate).

The publisher will, of course, be the one who handles most of the sales. They’ll figure out stores in which to stock your book, determine where to send copies at a wholesale rate, and generally sell copies from their own stores as well. They’ll keep an account of how many copies they sell, to whom they were sold, and how much they were sold for, and they’ll send you a report of these sales.

Most of the time, publishers aren’t required to pay you until the amount you’ve earned reaches $20+, by the terms of the contract. So, if you don’t sell much in one quarter, the amount you did earn will rollover into the next quarter, and so on and so forth, until you eventually get paid.

Sounds a bit grim? Maybe still confusing?

Well, remember, your advance is usually going to be a lot better than $100. If you sign with a big enough company, you might even end up with thousands or millions in your advance, and if your publisher is smart in selling the book, you’ll be making money off your work for years to come. It might not look like much in royalty rates, but it adds up quickly. You’ll usually be making money within the first few years, at the very least. And many publishers may actually want to sign you for more than one book at a time. If that’s the case, you’ll get an even bigger advance.

The key is this: if you’re getting confused about how royalties work with any given traditional publishing house, it never hurts to ask. Most companies are more than happy to talk their authors through it, and explain exactly how everything works. After all, once you sign that contract, you’re basically married to them for the rest of your life. Divorce isn’t a common thing, between publishers and authors. In fact, it’s harder than you might think, if you decide that you want out of your contract.

But that’s not a bad thing, either. It’s designed to make sure that if you start freaking out for no apparent reason (it happens to all of us, at one point or another), the publisher won’t have to worry about you trying to pull your book from the shelves. And trust me, you want your book on as many shelves as possible.

[love]

{Rani Divine}