What an Advance is and How Royalties are paid

An advance is an advance against royalties. This means that your publisher makes a giant guess about how many copies of the book will sell and then pays you that money up-front (though to be fair, sometimes they’re making less of a guess and they’re just paying you what they think they had to to keep you from publishing with someone else).

In order to figure out how many copies of the book you have to sell to “earn out” (which means getting money later, after the advance check when the publisher has actual book sales data to tabulate), you have to do some quick calculations. Let’s say your book sells at $20 and you get 10% of the hardcover sale price. That means you get about $2 per book. If you got a $10,000 advance, you’d need to sell 5,000 copies. But beware that not all sales will give you this “regular” royalty. Some sales are to book clubs which pay a flat fee which you split with your publishers. Promotional copies given away for free don’t count. And some retailers (like Amazon or Walmart) won’t pay full royalties to you, the author.

You will be sent a twice a year royalty statement from your publisher and it will tabulate each kind of sales. These can be tedious to read, but I recommend them anyway. You can see whether your book is selling more as an ebook or a hardcover, as an audio book, in the US or in other countries (like Canada). You can see book club sales. You also get to see what your publisher holds back as “reserve against returns.” The reserve is often higher in the first months after the sale of the book, since people tend to return more often in the first flood. After that, the reserve will usually go down.

It takes about 5-6 months for the publisher to get the royalty statement to you after their internal departments have calculated how many copies of the book you have sold. That means it may be almost a full year after people have purchased your book that you get paid for them. Which is why an “advance” seems only fair, since it’s often not that far in advance. Advances often get split between an amount paid at the signing of the contract, an amount paid on acceptance on the manuscript by your editor, and a final amount paid on the date of publication.

You can ask to audit the publisher, though this happens rarely. If you really think something fishy is going on, talk to your agent about a problem. And yes, this is another reason that you want to have an agent before you get into the publishing biz.