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How do Authors get paid?
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You're working on your craft, learning how to create a strong novel or intriguing non-fiction book. Great. But as much as you enjoy the writing itself, you'd really love to get paid for it.

 
So what can you expect once you land that first book contract or magazine article?

* How Authors Get Paid

Authors are paid in one of two ways: in a percentage of the price of each book sold (called a royalty), or with a onetime lump sum (flat fee). Here's how each one works:

The royalty is specified in your contract and varies by publisher, but a common royalty rate is 10% for hardcover sales and 6%-8% for paperback. Traditionally, publishers paid the royalty on the actual retail price, but more publishers are moving to paying royalties on the net price, or the amount they actually receive from bookstores (stores purchase books from publishers at a 30%-50% discount). Though getting paid on retail versus net price is generally not negotiable, you can sometimes get a slightly higher royalty if you ask.

Most publishers pay the author an advance against future royalties. The author receives half the advance on signing of the contract, and half when the final manuscript is delivered. If you're getting a 10% royalty on the retail price of a $10 book, and your advance is $3000, then once your book is published it needs to sell 3000 copies before you'll start receiving additional royalty checks. If the book never "earns back" the advance (selling less than 3000 copies), it's the publisher's loss. Of course, the publisher is hoping that your book will earn much more.

The amount of the advance is generally determined by estimating how much royalty the author would get on the book's first printing. For a first-time author, the advance may be lower (because the author doesn't have a track record and so the publisher can't be guaranteed a certain number of sales). Authors with an established following may command a larger advance because they have a built-in audience.

New authors always want to know the numbers: Just how much of an advance can they expect for a picture book or a middle grade novel? Unfortunately, there's no easy answer. A small publisher may not have the resources to lay out more than a few hundred dollars up front, but might be willing to give a higher royalty. A first-time author is always a risk for any publisher, and so the advance paid will be lower than for a second or third book. But remember that the advance is really just a payment on future royalties; if your book sells well, you'll get the money in the long run.

You also need to realize that for a picture book, the advance and royalty are split between the author and illustrator. So if you write the text but don't supply the pictures, you'll get one-half the royalty (5%) and one-half the advance. For books with only a few black-and-white illustrations, the author gets most if not all of the royalty, and the illustrator is paid separately.

A flat fee means you'll be paid one lump sum for your book, and you won't receive any royalties. If you're one of several authors writing a book for an established series, if you're creating material for a book packager who does mass market series titles produced under one pseudonym, or if you're hired to write a television tie-in novel or work with licensed characters, you'll probably be paid in a flat fee. The copyright may be in your name or that of the publisher's. While it's always nice to get royalties, flat fees may provide you with more money in one lump sum, and many authors take these kinds of jobs when they're establishing a name for themselves. Magazines always pay in flat fees.

* If My Books Sells for $16, Why Do I Only Get $1.60?

Believe it or not, the publisher doesn't walk away with $14.40 profit on a $16 book. A little bit of the publisher's overhead is paid by each book sold. A large group of people will work on your book: the editor, copyeditor, proof-reader, managing editor, art director, production manager, marketing department, sales staff and subsidiary rights (not to mention all their assistants), and everyone gets a salary. Your book needs to be printed (probably overseas, especially if it's a picture book) and shipped to stores. Publicity efforts may include sending out review copies (which come out of the publisher's pocket), printing up posters or bookmarks, taking out ads in review journals, and sending the sales staff to book conventions. Your book has to justify all these expenses, and still have something left over for the publisher.
 

 
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