Advance vs. Royalties

I would probably take the larger advance and invest the difference between the two in a mutual fund.

Then again, if the book is a runaway bestseller, the 2-3% difference would add up.

Hmmm...that's why I have an agent. (Scratching head)

It would have to be a fair mix of both. Also, it would depend on what kind of bonus clauses are included in the royalty mix.

Good question though.

Unless I desperately needed the money, or it’s a huge discrepancy, I’d take the smaller advance and better royalties. If it’s a success, you do great. If not, you may not make quite as much, but at least there’s a better chance your book will have “earned out,” making your next project more attractive to publishers.

Still, there’s that old bird in the hand adage...

I would take the advance, buy a new house, pay off family debts, and save the rest. I'm confident that my book will sell, but money has been tight for a few years and it would be a relief to get the pressure off.

Yeah, I'm still dreaming of a seven-figure 3 book advance. Wishful thinking rules!

Is that a situation that happens though? I mean does one tend to trade up higher royalties for a big advance? I've never heard of such a thing.

I'd go for the royalties. An advance is all nice and stuff, but I'd rather have a steady income from my books.

I'd probably do a bit of each. But if the choice was one over the other, I'd have to think about the marketability of the book...whether it would get lost in the shuffle of all the other books out there that are similar or whether it can stand on it's own...

I've got one WIP that I'd completely do royalties because I believe that much in it that there's nothing like it out there. Another one I'm just starting, I'd probably do advance or half and half because it stands out less. Then again...if the first WIP gets my name out there, then I'd do royalties in a heartbeat because readers would buy it just because my name's attached to it.

There's a lot of "ifs" that need to be figured out for me to decide.

Royalties. If you don't earn out, there's no chance to make bigger money on the next contract.

May I suggest that a larger advance represents a greater committment on your publisher's behalf. The more they put on the line for the book, the harder they are going to work to make it a winner.

Remember that most books do not earn out their advances.

So, for most writers and most books, the advance will be the total payment for the work. Everyone hopes their book will perform otherwise, of course, but you never know. Will my book earn its advance back? I sure hope so.

You may end up investing money to promote and market your book, and a larger advance will make that easier. People say that you'll have a harder time selling book #2 if #1 does not earn its advance, but, really, what matters is copies sold (within reason) If you book sold 12,000 copies that's what your next book will be judged on. It won't matter if you got a $5,000 advance or a $20,000 advance. The deal for the second book will reflect the perceived potential and the actual units sold on the first work.

johnrobison said:

You may end up investing money to promote and market your book, and a larger advance will make that easier. People say that you'll have a harder time selling book #2 if #1 does not earn its advance, but, really, what matters is copies sold (within reason) If you book sold 12,000 copies that's what your next book will be judged on. It won't matter if you got a $5,000 advance or a $20,000 advance. The deal for the second book will reflect the perceived potential and the actual units sold on the first work.

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I agree with this. There are a lot of authors that make it big with their third or fourth book published. The others obviously sold some copies, but nothing amazing. But copies sold and good reviews would probably get you another contract faster than a great selling first book. Look at the woman who wrote The Devil Wears Prada. She got a million dollar advance for her second book and it hasn't sold. She has a third book in her contract, but is apparently having problems coming up with ideas. Not a great moment...

Anyway, I'd probably go for a half-half. That way you can (hopefully) earn our an advance and be excited about royalty checks! It's the best of both worlds...

I have some specifics here and I am prepared to give some numbers.

Two publishers gave me big advances for my books: the British and the Germans. The amount was in the region of £50000.

None of these books earned out, unfortunately. I will certainly have a hard time getting published by the same British publisher, in fact, I won't even try; there's bad blood there. I just am not happy with the way things worked out.

All my other publishers gave me small advances. All of these books earned out. I had a lovely surprise just last month when out of the blue I got a royalty payment for over £900 from my Spanish publisher. I wasn't expecting this at all!

My French publisher paid me an advance of £5000 for my first two books and then spent about €100000 on promotion. Both of these books ended up on the French Top Ten bestseller lists for several weeks and I earned five figure royalties on them for two or three years. The royalties get less and less each year and this year it was only about £5000, but I was very happy with that. In the end I earned far more with French royalties than I did with British and German advances.

I am on excellent terms with my French editor/publisher and they with me, and I can't wait to have a book available to deal to them again! (I have to find a US or UK publisher first, which is a bit of a headache.)

Need I say which alternative I prefer?

I think if I had a choice and didn't need the advance badly (unfortunately, at this time I would need a large advance badly), I would suggest a small advance and the rest to be spent on a big promotion - unless of course you can gave both, a big advance AND a big promotion!

The big advance for my UK novels came with only a so-so promotion; they kind of threw all their new books at the wall at that time to see which would stick.

For two years running, my novels came out on exactly the same day as Tony Parson's first and second novels. Tony Parsons was a well known Daily Mail columnist at the time. He is now a huge best selling novelist.

The best thing, I would say, is to feel the whole publisher behind your book and pushing it - never mind the money!

PS - wanted to add that my first book sold AT LEAST 30000 copies - which is not at all bad. But still not enough!

My advance has been a godsend.

That's about all I have to add.

If I have a choice, I'd prefer a large advance if it means the publisher is pulling behind the book. There is definitely a psychological difference between getting $2,500 and $500,000. The reality is that it alone doesn't necessarily mean how much marketing and promotion the publisher is going to do. Also, expectations will be high -- commercial fiction has a short window to "make it." Still, if you get $500,000, that means your publisher expects to sell at least 100,000 and that can be good to your career depending on how you look at that number.

That said, there's also a psychological boost when you finally "earn out." I remember the joy of getting my first royalty check. I'm in a weird position that I don't need the upfront money to survive, so to me the advance really doesn't make any difference. I enjoy getting the periodic or unexpected royalty checks. I remember getting only $5000 for the movie I did -- it was a paltry sum. But I've been getting royalty checks for years now, and I've been getting royalty checks for the national commercial I did earlier this year -- $1000 here and $1000 there add up pretty quickly. Let me tell you, it's a GREAT feeling to receive checks often. Not only is the money a nice present, but it also reminds you that the book/movie/commercial/whatever is doing well in the market.

So, I think it really depends. I think I would be sad if I get $50,000 up front (it's not bad and I can sure invest that money) and then nothing. The best of both worlds, of course, is that I get a six-figure advance and then the book sells through the roof, with movie deals and everything.

We can dream, right?

Good stuff

I am thankful to all of you for this. I need some help for the agent side of things. I want the agent to be honest and perform and to tell me where they are taking the book and how long it will take them to act. Is this appropriate? Any suggestions. I am not writing crafty just being blunt so I understand a little tact is needed much more than what I am posting now!

If you are doing a strictly financial calculation, you have to consider what you would do with the advance. If it goes toward paying off high interest rate credit cards or loans, then you have to consider what you save in interest as "earned" money too. If you are going to invest it, then you have to consider how much the investment will earn while you are waiting for the royalties to come in. If you are going to stick it under a mattress or spend it right away then it is worth only its face value. I'm not sure what choice is best because too much depends on your other financial circumstances. You have to do a personal cost-benefit analysis.

popmuze said:

Let's get out our calculators.

If you had the choice, would you take a bigger advance and less of a royalty or more of a royalty and less of an advance.

One, you're betting on yourself (actually, you're betting on the publisher), the other you're taking the money off the top. I'm talking 2 or 3 points on the royalties.

Let's say you went for the lower royalty, how much money do you think that would be worth to add to the advance.

I hope this is clear, since I am actually in this situation.

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Taking a lower royalty isn't usually an option, and shouldn't be. Just give me as much money as possible, and we'll work on enough sales to cover it.

popmuze said:

Let's get out our calculators.

If you had the choice, would you take a bigger advance and less of a royalty or more of a royalty and less of an advance.

One, you're betting on yourself (actually, you're betting on the publisher), the other you're taking the money off the top. I'm talking 2 or 3 points on the royalties.

Let's say you went for the lower royalty, how much money do you think that would be worth to add to the advance.

I hope this is clear, since I am actually in this situation.

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I'd be surprised if any major publisher would make such an offer, firstly. Royalty rates are pretty standard across the industry. And offering to take a lower royalty for a higher advance isn't, IMO, smart because it'll take longer to earn out whatever advance you do get.

Your agent should negotiate the best deal possible, and that means a standard-or-better royalty rate and a good advance.

Barbarique said:

Although the almighty dollar sign is King of all Temptation, I would probably take the higher royalties. But then, I strongly believe in my book, and I'd rather bet on myself than some outside entity.

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Well, that sounds good in theory, but what someone else here said is very true in that the initial investment by the publisher may well determine how much muscle they put behind your book. And since you are, in fact, betting on the publisher to publish your book well, you want to give them every incentive to do so.

In my experience, negotiating a higher-than-standard royalty rate is next to impossible until you have a track record, and a strong one.

popmuze said:

I was thinking of offering this trade to the publisher, a straight royalty rather than an escalating royalty, in return for a few thousand dollars more up front. We're not talking major bucks here either way.

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I wouldn't. By accepting a lower royalty rate, you are, in effect, putting a cap on how much you can earn.

So if you, say, accepted a flat 10% rate on hardcover publication, rather than the more standard 10% (first 5,000 copies), 12 1/2% (for the second 5,000 copies) and 15% (for every copy over the first 10,000 copies) escalating royalty, and your book sells 50,000 copies in hardcover ...

Well, say it's a $25 hardcover. If you take the standard deal, the first 5,000 copies sold earn you $2.50 per copy, or $12,500. The second 5,000 copies sold earn you approx. $3.12 per copy, or $15,600. And you sell an additional 40,000 copies at the 15% rate of $3.75, or $150,000.

So with a standard contract, your earnings are: $178,100.

If you took a straight 12 1/2% rate: $156,000.

If you take the far more likely straight 10%: $125,000.

Big difference between $125,000 and $178,000. With a standard deal, you could get a $150K advance and still earn royalties.

Theoretically.

FYI, not many first novels are going to sell 50,000 copies in hardcover. Period. Most hardcover printings for first novels probably come in at less than 20,000 copies. And not every copy will sell. But say you manage to sell 15,000 copies.

Flat 10% rate: $37,500.
Escalating rates: $46,850.

Sure, it's "only" a difference of around ten grand if you get fewer numbers in print, and maybe you think you can get an advance that much higher. But you're actually gambling that your book won't sell in good numbers.

Why would you want to do that?




PS -- Feel free to double-check my math. It isn't my strong suit, but I tend to be very accurate with numbers involving my livelihood.

Royalty

A lower royalty rate means any advance is going to be even harder to pay off. A big advance had better mean a high royalty rate, or you're in deep, deep trouble.