In summary, the author earns 8.52% for hardcovers and 14.9% for an ebook.
The best way to think of advances is that it is a loan against future earnings. That's not entirely accurate, since an author doesn't pay back the advance if the books don't sell well, but it's a close analogy. When an author's royalties exceed their advance, a book has reached the earned out status. In that case, the author will get a payment twice a year for the sales above the advance that sold in the previous six-month period. Yes, successful books result in two paychecks a year, and that's part of the reason it's had for authors to manage cash flow. I should note that most books never earn out (only about 20% do), so in most cases, the advance will be the only money an author receives.
The other thing to mention about advances is that not all publishers are offering them these days, or if they do, the amounts are significantly less than they have historically been. For those that do, the author doesn't receive all their money at once. Depending on the contract the advance is divided into three, four, or five payments (larger advances are spread out more than small ones). Here are some typical divisions:
- $0 - $2,999 = "a shitty deal"
- $3,000 - $4,999 = "a contemptible deal"
- $5,000 - $9,999 = "a "meh" deal"
- $10,000 - $19,999 = "a not bad deal"
- $20,000 - $99,999 = "a "shut up!" deal" (said in an envious tone by fellow admiring authors)
- $100,000+ = "I'm getting the next round deal" because you can buy and sell all other authors at your drinking table.
Self-publishing: cutting out some middle men
One of the reasons why self-publishing has become so popular is because more of the reader's money is kept in the author's pocket. The important thing to note, however, is that in this case the author is doing multiple jobs and act as both the author AND the publisher. Generally, self-publishers utilize POD (print on demand) which has a higher per book price but eliminates the need for warehousing, shipping, and book returns as printing only happens once orders are placed. Also, because no agent is involved, the author gets to keep that money as well. Let's look at the breakdown in self-publishing.
For the following calculations, let's assume a 350 page novel that is sold on Amazon for $14.95 (trade paperback) and $4.95 (ebook). Using print on demand, the paperback distribution of money would breakdown as follows:
- Amazon $5.98
- Printer: $5.05 (assuming CreateSpace - slightly higher for Ingram Spark)
- Author: $3.92
For ebooks the breakdown would be:
- Amazon: $1.49
- Author: $3.46
So the author/publisher earns 26.2% on print and 70% on ebooks. That's a 300% increase on print books and and 470% increase on ebooks over traditional publishing. But again, keep in mind the author has now assumed all the costs of producing the book including editing, cover design, and layout.
Self-publishing & self-selling: highest income potential
Robin has come up with a crazy idea. It's not her first, and it won't be her last. It's because of her crazy ideas that (a) I've signed 12 books with two of the big-five publishers (b) I've self-published 7 books (c) neither of us have needed day jobs to pay the bills since 2011 and (d) we have a future that is more secure than when we worked for others. For these reasons, and many more, I'm willing to go along with it. What's the idea? Well, she cut out publishers and agents through self-publishing, and she now wants to remove even more middle men by removing the retailer. The goal is to eliminate everyone except the reader and the author. Okay, we can't actually trim back that far. We're not going to be laser printing books and binding them in our basement, but we can get the process down to just the printer, writer, and credit card processor.
As some may know, I'm currently writing my fourth Riyria Chronicle, and we've already sold the audio rights to that book to Audible Studios (it's how we maximize audio income in that venue). They've already done an amazing job with the release of The Death of Dulgath (more than 20,000 copies sold in it's first year) and their production quality is top notch -- oh, and, of course, Tim Gerard Reynolds will be the narrator - we've made sure of that!
Anyway, the advance for that audio book is enough to allow for a safety net of sorts, so we're going to release the 4th book in a really unusual way...it won't be in stores. Yes, you heard right...you won't be able to get it online or in brick-and-mortar stores-- well at least not initially.
You see, books (especially when in a series), have a huge sales spike when they are first released. After a few months, sales fall off considerably. For some authors, they earn 90% of the lifetime income of a book in the first 4 weeks! Given that, it makes sense to maximize the income as much as possible on the early sales. People will still be able to get all formats of the book: audio, hardcover, trade paperback, ebook, even limited edition versions, but they'll get them directly from us. We've already done something similar in the past (both by using Kickstarter and selling books directly from my website), but those were always supplemental sales and the bulk was purchased through the retail chain, and they took their massive bites from the overall pie.
To do this will mean a lot of up-front investment for editors, cover designer, layout, formatting, and a good-sized print run. To help with that, we'll run another Kickstarter, which is a great way for people to pre-order copies while helping to to cover these up-front costs. If the Kickstarter doesn't fund, we'll still go ahead with our plans to sell direct, the only difference is there won't be hardcovers and we'll have higher per book costs due to the use of print on demand. Let's look at some of the possibilities:
- $9.99 ebook - $0.59 credit card processing fee = $9.40.
- $14.95 paperback with print run ($2.00), warehousing/fulfillment ($1.50), and credit card processing fees $0.43 = $11.02
- $24.95 hardcover with print run ($3.00), warehousing/fulfillment ($1.50) and credit card processing fees ($1.02) = $19.43
- $14.95 paperback using print-on-demand ($5.05) and credit card processing fee ($0.43) = $9.47
So the % going to the us increases to 94% for ebooks, 73.7% for trade paperbacks, 77.9% for hardcovers, and 63.3% if we use print on demand. If we can manage it, that'd be an amazing case study and could blaze a trail to convince other authors to do likewise. If others are able to make more than a few percentage points, maybe many of them won't need their day jobs.
Now, the buy-direct model will be temporary, and eventually the books will be offered through the retail chain. I'm not 100% sure when we'll cut over. I've committed to at least a six-month period of "no retail ebook and print" with Audible (to reward them for providing the seed money to try this experiment). Also, not having a new Riyria boos in the retail chain helps with the non-compete clause in my current Del Rey contract. A lot will depend on the sales numbers for both the Riyria books and the Legends novels, but they will eventually be for sale (at least online). Until then, readers can get any format they want, and since they'll be coming straight from me, they can get them signed!
If you are interested in supporting this experiment, please
sign-up using this link. That way you'll be notified when the Kickstarter goes live, and if Kickstarter isn't your thing, then you'll get an email for when and how you can buy the book direct. It'll be an interesting experiment. I'm cautiously optimistic about it's possibilities. I hope you are as well.
