Heffalumps and Royalties

A minor bit of news for this week, but it made me happy, so I’m sharing it.  While I was in the USA, I got my first royalty check in the mail.

Some background for those not familiar with the book-writing business:  novelists in the US and UK typically do not get directly paid for selling books.  Instead they sign a contract with publishers in which they get paid an advance against royalties, ie a non-refundable loan against the publisher’s estimate of their future earnings.  What this means is that when you sign a contract with a publisher, you get a lump sum of money for each book you’ve contracted to write.  Each time one of your books is sold, the publisher deducts a certain percentage of the sale price (the royalty) from the advance.  If the advance ever gets reduced down to zero this way, then future royalties get paid to the author.

Example:  You sign a contract with a publisher to write a field guide to crumple-horned heffalumps.  They pay you an advance of £5,000, and put the book on sale for £10 with a royalty rate of 10%.  Each time a book is sold, they deduct £1 from the advance (10% of £10).  Once the book has sold 5,000 copies, it’s said to have ‘earned out’ its advance, and all future royalties are paid directly to you.  So if the book sells 5,346 copies, you’ll get a royalty cheque for £346.  If the book gets rave reviews in Crumple-Horned Heffalump Monthly and sells 15,000 copies, you’ll get a royalty cheque for £10,000.  On the other hand, it might turn out that the publisher has greatly overestimated the level of demand in the crumple-horned heffalump market (maybe a few other guidebooks came out this year already) and you only sell 37 copies.  In this case you don’t get any royalty cheques, but you still keep the £5,000 advance – they don’t get to send you an invoice for the £4,963 in royalties you haven’t made.

Looked at in this way, an advance is a good deal for an author, because you get paid no matter how bad your sales are.  There is, however, a catch.  The advances publishers pay are based (amongst other things) on how much money they’re expecting the book to earn them.  If a debut novel has miserable sales then the publishers will make a loss on the thing, which means they will at best offer a much lower advance for the author’s next book, and (more likely) won’t buy said next book at all.

(For those interested, this is what happened to my old Ninja books.  The contract was for two books, but sales didn’t come anywhere near to earning the advance out and so the publisher wrote the series off as a loss.  This is why there was never a third.  It probably also had something to do with why Simon & Schuster rejected the next few novels my agent sent them.)

So getting royalty cheques for the Alex Verus series is good news, and not just for the obvious reasons.  It means the publishers are probably showing a profit on the books that have earned out, which means they’re more likely to see the series as a good investment.  Which means they’re that much more motivated to buy more books in the series, which means I’m that much more likely to be able to continue writing Alex Verus novels while getting paid enough money to live on.

Which is nice.

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7 Responses to Heffalumps and Royalties

  1. Dawid says:

    Congrulations Jacka for your Royality cheque.

    Just a quick question, if hypothetical wanted to continue your Ninja series with a thrid novel would you be able to got to another publisher or do the publisher own the rights to the books?

    As a university student learning to become a novelist I’m curious.

    Anyway, well done. I’ll be picking up your new book soon (don’t look at me like that, Uni been keeping me busy).

  2. Benedict says:

    Dawid: publishers typically put a clause in book contracts giving them first option on the next in the series (ie you have to send it to them before anyone else) but there’s nothing stopping you from sending it to them, waiting a reasonable amount of time, then sending it somewhere else.

  3. Pingback: Sleepy Book Dragon | Book Contracts and Getting Paid

  4. Jael says:

    That explains it about the ninja series. After getting my 30 year old sister hooked on the Verus series, she got your ninja series and absolutely loved them. She had been curious why there wasn’t anymore.

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