Along with, “Where do you get your ideas?”, “What are you working on these days?”, and “How do you get published?” the question I seem to get asked the most often when someone discovers I am a published author is, “Do you write fulltime?”
Those of you that have followed my blog for a while or who have studied up on the subject probably know how difficult it is to make a living writing novels. I have done it off and on. Sometime by choice, sometimes not. (Actually, it’s always by choice. Sometimes it’s mine, sometimes it’s my ex-boss’s.)
I’m not sure most people realize exactly how hard it is, though, and why. So today, boys and girls, break out your calculators, it’s math time!
Let’s start with the basics. Since not everyone knows how an author gets paid, we’ll do a couple of definitions.
Royalties—This is basically a fancy word for the money the publisher pays you. It is typically a percentage of sales. It can be based on retail (the price listed on the book) or net (what the publisher actually charges the bookstore.) Hardback rates are higher than trade paperback which are higher than mass market paperbacks. You can also get royalties from movie rights, foreign rights, etc. (See below)
Advance—This is what the publisher pays the author up front. The idea behind advances used to be that you would get about one year’s royalties (based on what the publisher thinks they can sell.) Some publishers have been lowering advances, and lots of smaller publishers don’t pay any advance at all. As an author, you don’t start getting royalties until you’ve “earned out” your advance. More on this later.
Foreign rights: When your publisher buys your books, they are actually buying rights to your work. This means they have the right to publish in certain formats and certain places. If you sell world rights, they have the right to sell and publish your book anywhere. If your sell US rights only, your agent can then sell additional foreign rights to publishers in different countries.
Movie rights: Same as above except instead of the rights to a certain country, this is the right to make a movie based on your book. Typically these are broken into options and actual rights. An option (often about 10% of the rights, but can be much more or less) gives the buyer the option to try and get the movie green lit. The option is usually for 12 or 18 months. If a company options your book and gets the funding to make the movie, then they exercise the option and pay you the rest of the money.
Agent Commission: This is the fee you pay your agent for selling various rights. usually it is 15% for US rights and 20% for foreign rights (split between the US agent and whoever they use for foreign rights.)
Taxes: I’ll bet you already know all about these. And if you are too young to have paid taxes yet, just wait!
Okay, with all the legal mumbo jumbo out of the way. let’s talk numbers. Let’s imagine you’ve just written a great vampire robot urban dystopian fantasy romance. You sent it out to only the very best agents, and, of course, all of them beg you for it. You sign with the top agent and twenty-four hours later, she sells a three book deal for six figures per book. (The aforementioned example may be a slight exaggeration, but we’re thinking big right?)
You call your father-in-law and tell him, “In your face, Pops! I DO deserve your daughter!” Then you tweet, blog, facebook, and e-mail everyone you know with the message, “That’s right homey. I’m the real deal now,” and immediately begin pricing boats and lakefront cabins.
But hold the phone. Before you get ahead of yourself, maybe you should do just a little bit of math, to figure exactly how much money you are really making here.
Let’s start with the basic deal. Three books with a $100,000 advance each. Now, not to bring you down or anything. But this size of advance for a new author who isn’t already a household name is ultra rare. Not that it can’t happen because it does. But most advances look a lot more like this. The average advance, when there is an advance at all, is closer to $5,000 than $100,000. But again, let’s go with the big advance, because that’s what most authors dream about.
So great, 300k. That’s a lot of money. Before you get to spend it, though, we need to deduct a few things. Right off the top, your agent gets 15%. No problemo. She deserves it. She got you this great deal. And hey, what’s $45,000 between friends?
So we’re now down to $255k. Still a lot of money. But don’t forget Uncle Sam (If you don’t live in the US, it might be Aunt Coroline or whatever, but taxes are still taxes.) Ballpark of what you will pay in taxes is 30% of the $255,000 or $76,500. Ouch! That’s a pretty big bite.
But, hey, you still have $178,500, right? Maybe you get a slightly smaller boat and the cabin will have to be a trailer for now. But still, you can tell your family of Doubting Thomases that you are a full time writer.
Except the thing is that you don’t exactly get all that money up front. Best case, your contract looks something like this:
1/3 of your money on signing.
1/3 of your money on acceptance.
1/3 of your money on publication.
Because you are signing a contract for all three books, you get 1/3rd of all books right away (in publisher speaking this is probably 3 months.) So your first check will be for about $60,000 after agent commission and taxes. That’s going to have to last you until your book one manuscript is edited and officially accepted. Then you get the 1/3rd of book one only. That’s another $20,000.
So, yeah. This year, you are probably good to go, with $80,000 in your pocket after taxes.
How does next year look?
Part of that depends on when your book comes out. There’s a pretty good chance your book will be released more than a year after you sign your contract. So let’s say you sign your contract in November and your release date is a year from the following spring. That means you won’t get any more book one money for 18 months or so. The good news is that between now and then you will turn in book two. The bad news is you already got 1/3rd of your book 2 money.
So year two revenue looks something like this:
1/3 of book two money, or $19,833 after taxes.
Wait, really? Is that all? How am I supposed to live on less than $20,000? have you seen my boat payment? What if my father-in-law finds out?
Hopefully there is some foreign rights money coming in. But those often tend to look like $1,233.00 foreign rights Poland. And they take a long time to get. UK and Germany can be pretty big.And there is the possibility of movie rights. But it’s entirely possible that your first two years of income after taxes will be well under $130,000. And to make things even nastier, many book contracts are now spread over over four payments that can take as long as five years to pay out, with things like 25% on hardback release and 25% on paperback.
And that’s on a BIG deal. Let’s say you only sign a one book deal. Now your first two years look like this:
Year 1: $39, 600
Year 2: $19, 800
And if your advance is $20,000 instead of $100,000 . . . well you get the picture. And then there’s insurance, marketing, travel . . .
Is there any shred of good news here? Well yes there is. Remember that advance thing? Once you earn enough royalties to earn that out, you start getting more money. Let’s say your advance on book one is $25,000. And let’s further say that you earn about $2 per hardback. If your books takes off and you sell 50,000 books, you actually earn $75,000 (before taxes and commissions <grin>)
If you continue to write books and if those books keep selling well, eventually you can get a nice little income stream flowing in. Add movie rights, foreign rights, audio books, e-books, and it gets even better.
The fact of the matter is that most writers have a day job. There are a few fortunate authors who can make a full time living writing novels, but it’s not easy and it almost never happens overnight. Those rare instances you hear about where the author gets a seven figure advance do happen, but they are so rare as to fall into the winning the lottery type of odds.
So what do you do? Well first, write because you love to write not because you need to make a quick buck, lost your job, or dream of a cabin on a lake. Second, set your goals and work toward them. It may be true that only a few authors can write fulltime, but the very fact that some do means you have a chance. If that’s what you want, go for it.
And if your father-in-law gives you any crap about how little your writing pays, ask him how much he makes from his hobbies. “How’s that whole golf pro thing working out for you Dad?”
Writing may not be the best paying gig in the world. But the very fact that someone is willing to pay you is pretty dang cool. Though not quite as cool as a huge advance (in case any editors are out there reading this.)