What is an Author’s Advance? What is a Royalty? How is a Book Deal Structured?

I had a call from a new client today who seemed very embarrassed to ask me these questions. She apologized for her ignorance, but did not “know how the publishing industry works.”

These are not “dumb questions” at all. Many people don’t know what an author’s advance or royalty is or how it works.

What’s an Author’s Advance?: The publisher provides an advance payment in anticipation of royalties. This is money that needs to be paid back once your book is selling, but generally it’s paid back by the royalties you earn so you don’t have to give it back to the publisher. Once you have earned enough royalties to have paid back the advance, you begin to get checks quarterly or twice  a year for your royalties earned.

What are Royalties?: That’s the percentage you earn on book sales. Usually, it’s a percentage of the sale price minus transportation costs, but different publishers may factor in additional costs. Be careful if your publishing contract has a percentage of profit or net sales! I have heard from one colleague who got paid nothing on her book since her royalties were a percentage of profit and the publisher had ways to make sure it looked like there was no profit (by including administrative fees). This author did not have an agent for her first book. You can bet she got an agent after that!

How is a Book Deal Structured?: If you are receiving a small author advance, it is usually paid upon signing the contract. However, larger advances are structured differently. You may receive one quarter or less upon signing a book deal, one quarter or less upon delivering the complete manuscript and then the rest are bonuses that you receive as you hit sales targets such as 50,000 copies sold or 100,000 copies sold.

What Can I Expect for an Author’s Advance on my First Book?: Advances vary widely. I have clients who received six figure deals with major publishers for a first book and others who received $1,500–and many amounts in between. In general, advances have gotten smaller. So lately, we see many advances at the $10,000 – $15,000 level and others at six figures and not as much in between. However, there are exceptions. The two $1,500 advances were in situations where the author only had one offer so they had no leverage to negotiate.

How Can I Get a Larger Author Advance for My Book?: Here are three tips to get a larger advance for a book:

1. Get Thee a Literary Agent: Those authors who are represented by a literary agent are more likely to get several offers at once. This can help your agent negotiate a bigger author’s  advance.

2. Grow Your Platform: The more extensive your platform or reach or following, the more likely you are to sell books, so publishers are more willing to take  a risk for a book that seems highly marketable with an author who has that following. Therefore, if you want a bigger book deal, grow your “platform.”  This blog features several articles on how to grow your author platform through blogging, grow your author platform through teleseminars, free pr tips, and you can search the blog (see box to the right) for other related posts).

3. Write a Bestselling Book Proposal: How do you write a book proposal and make the best case you can for your book? I recommend Mike Larsen’s How to Write a Book Proposal. I also have several articles on how to write a book proposal on this site:

* How to Write the Competing Books Section of a Book Proposal

* How to Write Chapter Outlines in a Book Proposal

* How to Write a Book Proposal: An Interview with Literary Agent Miriam Altshuler

* How to Write a Book Proposal: An Interview with Literary Agent Deirdre Mullane

* When to Send a Query Letter

* Perfectionism and Book Proposals

* How to Choose Sample Chapters for a Book Proposal

* Writing the Resources Needed Section of a Book Proposal

Good luck with your book proposal, book and book deal! And feel free to ask related questions as a comment below.