Show Me the Money! The Financial Realities of Traditional Publishing

During a recent discussion with an aspiring author, who’d met with repeated rejection from publishers and agents, I suggested that he explore the self-publishing route. I told him how well it’s worked for me and for many of the authors I know — the majority of the writers I’m friendly with are self-published — but the idea was firmly rejected because he believed that independent authorship wasn’t where “the real money” was.

It would have been easy to name several indie authors who are making an enviable living off their book sales, but I decided to dive down the rabbit hole of trad-pub author finances instead. Not like I had anything better to do that day…

What follows is the result of some quick-and-dirty research and number crunching, so take what you’re about to read with a generous grain of salt. I checked multiple sources, which of course all had slightly different data to report, and went with what seemed to be the most common figures or, failing that, an average of the averages, so I wouldn’t regard any of these numbers as authoritative.

Also, I’m not great at math. I became a writer to avoid math.

However, in my defense, the numbers support something career authors and all-around good guys James A. Moore and Christopher Golden said once during one of their roaming author coffeehouses: a tiny, tiny percentage of trad-pubbed authors make a living solely off their book sales — maybe three percent of such authors, with an emphasis on the “maybe.”

Suffice it to say, traditional publishing is not necessarily where the “real money” is.

One important caveat before I get into it: the overall point of this analysis is not to deter anyone from pursuing traditional publishing. This is strictly an examination of the earnings potential, so aspiring authors can pursue that path with their eyes open and expectations reasonable.

First, let’s start with the advance, which is typical when selling a novel to a major publisher. The average advance from a big publishing house is $10,000, which is a nice chunk of change, right?

Except that chunk is going to get smaller if you have an agent — which, if you’re getting a five-figure advance, is likely. An agent’s cut is typically 15 percent, so right off the bat your advance just shrank to $8,500.

After Uncle Sam takes his cut, which would be 10 percent on $10,000, your advance is now down to $7,650 — and I say that assuming the taxes are collected on the advance alone. If that amount pushes your overall income into a higher bracket, say goodbye to a larger piece of the advance.

But hey, $7,650 is still a pretty sweet payday — and the good news is, that money is all yours to keep. The advance is essentially the publisher paying you in anticipation of recouping that money through future book sales (more on that later), and if your book happens to tank? Not your problem anymore; the publisher took a chance on you and it didn’t pay off for them, but they’re not going to ask you for their money back.

Of course, the chances of the publisher asking you to write another book for them would be slim to none, but one hurdle at a time, yes?

The bad news (part one) is that you’re not necessarily getting that entire advance in one payment. Many publishers dole it out in phases as you meet certain milestones, like signing your contract and turning in your finished manuscript, so dismiss the idea that you can give up your day job and live off your advance while you finish your book.

The bad news (part two): the advance will be the only money you see for a while. Royalties — your cut of the book sales — don’t kick in until the advance has been “earned out,” meaning that the advance has been recouped by the publisher through sales.

(Told you I’d get back to that.)

How long does it take a book to earn its advance back? Nine months on average — less if your book really takes off, but if you’re not a runaway success right out of the gate, it might take a year or more before you start seeing royalties.

Now let’s talk about royalties, shall we? This is when you start making the big bucks, right?

Short answer: probably not.

Royalties are a percentage of the sales as determined by three main factors: the book’s retail price, how many copies have been sold, and format. Here’s the basic breakdown:

  • Hardcover books: 10 percent of the retail price for the first 5,000 copies sold, 12.5 percent of the retail price for the next 5,000 copies sold, 15 percent of the retail price for every copy sold after the first 10,000
  • Paperback (trade or mass market) books: 8 percent of the retail price for the first 150,000 copies sold, 10 percent of the retail price for every copy sold after the first 150,000
  • Ebooks: 25 percent of the retail price

Quick aside: in the above examples, “retail price” assumes that the books are being sold at full cover price. Publishers are increasingly basing royalties not on the full listed retail price (“list royalties”) but on how much the book actually sold for (“net royalties”), so if your book goes on sale or ends up in the bargain bin, your royalties adjust accordingly.

The average retail prices for hardcover, trade paperback, mass market paperback, and ebook formats are, respectively, $25.99, $15.99, $8.99, and $12.99. Using those figures, the first tier of royalty payments for each format you’d receive, again respectively, are $2.59, $1.28, $.72, and $3.25.

That sounds like it could add up — and it could, if you happen to be wildly successful. To be fair, you could indeed be that one in a million author who hits it big, but you’re more likely to be an average author, so we’re going to base your income off your averageness.

And how many books does an average author sell? The range is 3,000 on the low end to 10,000 on the high end, and it’s important to note that that is over the course of the book’s lifetime — not weekly, not monthly, not annually, but from the day it drops to the day its publisher decides it’s not worth printing anymore.

For argument’s sake, let’s assume you’re on the high end of that scale, which means 10,000 hardcover copies sold will earn you $29,200, 10,000 paperbacks will earn you $20,000, and 10,000 ebooks will earn you $32,500.

Reminder: these figures do not factor in your advance, your agent’s fee, or taxes. A $10,000 advance alone chops these numbers down by one-third to one-half.

In any event, don’t count on this money as steady income like a weekly paycheck. Depending on the publisher and the contract you’ve signed, you would get your money at best on a quarterly basis, at worst annually.

Of course, an author’s book sales are a mix of hardcovers, paperbacks, and ebooks. It was tough to pin down solid figures, but as best as I could determine, 81 percent of all book sales are print and 19 percent are ebooks — and I know this seems counterintuitive to many indie authors who derive most of their income through ebooks sales (I know I do), but print still dominates the marketplace overall.

So, if we apply those numbers to an individual author and their 10,000 copies, a single novel would earn over its lifetime $46,027 — which is the gross income. That drops to $36,027 after the advance is taken out, $30,623 after the agent’s commission is taken out, and $27,561 once taxes are taken out.

I couldn’t find hard data on what an average book’s “lifetime” is, but I found several sources that indicated a typical novel sells 250 copies in its first year — and that average apparently factors in authors ranging from self-published nobodies up to mega-bestselling authors like Stephen King and J.K. Rowling.

That means if you want to reach that 10,000-book benchmark, your book would have to consistently sell at least 250 copies a year for 40 years — and for the sake of this example, we’ll assume that your book doesn’t see a drop-off in sales after its first year (which, in real life, it would).

And so, after your advance pays out in the months after the novel’s release, your annual royalty earnings come out to — drumroll please…


“Real money.”

As I said earlier, I’m not looking to dissuade anyone from traditional publishing, but if that’s your goal, money probably shouldn’t be your primary motivation. The trad-pub route comes with its own benefits, including the possibility of becoming the Next Big Thing, but getting picked up by one of the Big Five publishers is by no means a guarantee of mega-success, or even a reliable revenue stream that would allow you to ditch your day job and become a full-time author.


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