Royalties and Advances: How They Work

How do authors get paid? There are two basic ways: royalties and flat fees. A flat fee is paid to authors who work on a contract basis, usually called work for hire. This is when a publisher enters into an agreement with an author to create materials for a set fee. The author receives no other compensation for the work. In most cases, the material created in a work-for-hire situation becomes the sole property of the publisher. On the other hand, most book authors, whether the book is fiction or nonfiction, are paid royalties.

A royalty is a set amount paid to the author for each copy of the work sold. Usually this is a percentage of the gross sale price, but in some cases it may be a set dollar amount. In some rare cases, which authors should avoid, the percentage is based on the net sale price. This means the author will receive significantly less than if based on the gross sale price. So as an author, be sure to understand how the royalty is calculated before signing a contract. If an agent was used to place the work with a publisher, the agent will collect a percentage of the royalty with the remainder going to the author. Most publishers pay royalties either quarterly or biennially.

The publisher may offer an advance or the author may request one. The proper phrase is advance on royalty. In effect, an advance is a loan against future earnings. In most cases, the author will not see any money from the actual royalties until the advance is paid back. So, if the author receives an advance of $1000, then the first $1000 in royalty stays with the publisher. After that, all royalty goes to the author, minus, of course, an agent’s percentage if applicable.

The nature of advances has changed dramatically over the past few years. Historically, the vast majority of advances never “earn out.” This means the royalties generated by most books never cover the advance paid to the author. As such, most publishers have greatly decreased the amount of money offered as an advance. Some publishers, Tin Whiskers Publisher included, do not offer advances. To offset this, Tin Whiskers Publisher offers higher royalty percentages than are offered or than can be offered by the large conglomerate publishers.

Tin Whiskers Publisher is a member of the Independent Book Publishers Association (IBPA). IBPA’s mission is “to lead and serve the independent publishing community by providing advocacy, education, and tools for success.” IBPA is a not-for-profit membership organization serving and leading the independent publishing community. Founded in 1983, it is the largest publishing trade organization in the United States. IBPA members pledge to uphold the organization’s code of ethics.