A Is for Advance

Whenever I lecture at a writers conference about money, the room becomes unusually quiet. Instead of a common restlessness from listeners, there is a thrumming impatience to reveal the punch line. The punch line that declares every writer will be rich.

Now that I have your attention, let’s turn to the topic of the day. The Advance. This is defined as the money a publisher pays to the author in advance of the publication of the finished book. We read about the seven-figure advances in the news because they are unusual and quite substantial. The amount given to everyone else can be rather different. 

What Is the Typical Advance?

There isn’t a “typical” advance. It is always based on the risk the publisher is willing to make before publication. It can be informed by many different factors: sales projections, author’s past success or lack thereof, current economic pressures, projected retail price. The project itself can factor in. It may be this book is considerably more promising than anything that author had previously written. It might be that the book became embroiled in a bidding war between competing publishers, which can drive the advance higher as a means of acquisition.

Let me put it more succinctly: “Don’t quite your day job.” (See my smile as I say that in a humorous way.) Few authors garner an advance that allows them to write full-time unless there is another source of household income that covers their total expenses. Remember that each household defines the words “living wage” differently. You only read about the “big” deals because they are unusual. Of course, the famous person might garner an eight-figure advance. I doubt I would qualify for such consideration if I were to write a book! (But I can dream, can’t I?)

What Is the Payout Schedule?

The money is not given all at once. There is usually an amount given for signing the book contract, and the balance comes at various stages of the writing process. Some houses pay one-third on signing, one-third on acceptance, and one-third on publication. (This is becoming a common practice.) Some pay half on signing, half on acceptance of an acceptable manuscript. There can be other triggers to create payments like the acceptance of a proposed story line for subsequent books in a multibook deal. I’ve also seen advance payments tied to “release of paperback” if a hardcover released first.

Is Your Advance a Debt You Must Pay Back?

This is a good question. For example, if you are paid $6,000 as an advance and a royalty that is equivalent of $1.25 per book, you would have to sell 4,800 copies to earn out the advance (4800 x $1.25 = $6,000). After your advance is covered (earned out), you are then paid a royalty for every copy sold thereafter.

But what if your book only sells 4,000 copies? What happens to the unearned advance money? The answer is, “You keep it.” The publisher “loses” that money. But technically that money isn’t lost by the publisher. The advance is a ledger line item in the production costs for a specific book. Cover design, editorial, marketing, print costs, advances, etc. are each a fixed dollar amount that must be covered by sales. If the publisher gives a small advance but overspends on marketing, they lose money, even if the advance earns out.

But let’s be very careful with equating an unearned advance with an unsuccessful book. I wrote an article called “The Myth of the Unearned Advance.” If you have not read it yet, do so ASAP. It will help with your understanding of publishing economics.

The bottom line is that you do not have to write a check to the publisher for the unearned money. (Beware of contracts that do have a clause for returning unearned advance money. Those contracts do exist but are rare. It’s one reason to have a literary agent!)

Are Advances Getting Smaller?

The short answer is complex in its simplicity. Yes. In some ways advances are shrinking, or the payments are spread out over a longer period of time. It is a matter of cash flow for the publishers. If they have money tied up in an advance, they don’t have that cash for their operating expenses. Therefore, there is a constant tug-and-pull between agents and publishers over the size of the advance and the payout schedule.

At the same time, we have not seen a precipitous drop in advances offered. If the project is a good one and multiple publishers are interested, the up-front money becomes one measure by which a publisher can indicate the level of their desire to acquire a book. We’ve had a number of projects receive multiple offers. But we’ve also had cases where only one publisher made an offer.

How Do Publishers Calculate the Amount to Offer?

A rule of thumb used for many years had the publisher offering about $1 for every book they project to sell in the first year after publication. But that calculation is becoming antiquated. With retail prices going up, the earning power for the author on each book can go up as well. In addition, the higher royalty rate for ebook sales combined with the lower retail price for ebooks makes any sort of “rule of thumb” a rather difficult exercise. This is further complicated with some publishers whose books have a smaller retail price (like $7.99 for a mass-market paperback) and thus must calculate advances differently.

Is That All They Are Paying Me?

Sticker shock is usually expressed when the price is far too high. Writers experience reverse sticker shock. They look at the $6,000 being offered up front and calculate the number of months it will take to write the book and realize they can’t afford to be a writer! If you look at the “rule-of-thumb” above and the publisher offers you $6,000, it is likely they have modest sales expectations for your book. If they have offered you $75,000 in advance, you can assume they have greater sales expectations.

I’ve had many veteran authors treat their advances as the only money they will ever see for their book. Thus, if the advance does earn out, they receive new income for every copy sold. This can be a nice bonus.

One caution. If you are ever in the great position of receiving nice royalty checks on a regular basis, remember that books usually have a certain shelf life (even as the definition of “shelf” is changing). I know an author who received royalty checks for about $30,000 every six months for many years. Unfortunately, the author’s publisher went through some tough financial times and stopped aggressively selling the book when they downsized the sales department. The the publisher was sold. In short order the author’s check dropped to zero (as in zero sales for six months) and never recovered. Always treat your royalty payments as a bonus because you never know what might happen in our world which might affect the economy and suddenly affect your publisher. There can be world events that affect the buying public, 9/11 for example. Or the economic collapse of 2008-2009. The pandemic shutdown of 2020 was another, although that created a boost in sales for kids books because families were all stuck at home.

What if the Publisher Offers Zero Advance Dollars?

If the size of the advance is a way to measure the enthusiasm and commitment a publisher has for your book, then a zero advance isn’t too exciting. But in those situations it is likely a company policy regarding advances or a smaller publisher that simply does not have the cash to pay out advances. Instead, they treat the arrangement as a shared risk; and the royalty payments become the only way you get paid. In this scenario, the book begins earning money from the first day of sales since there isn’t an advance to cover.

Can an Agent Always Get a Bigger Advance for an Author?

“Always” is a loaded word. Doesn’t leave much wiggle room. I can confidently say that a good agent knows the approximate dollar value of a project based on experience and knowledge of how each publisher approaches their negotiations. Therefore, we are usually able to maximize the amount a publisher is willing to advance to an author. That’s not to say we have “won” every negotiation, but it shouldn’t be about winning or losing. It is about creating a win-win situation whereby the author, the publisher, and the agent are satisfied with the arrangement. If the author feels underpaid, this can affect performance. If the publisher has buyer’s remorse, they may reduce marketing efforts. If the agent feels sandbagged, the relationship with that publisher may be wounded, which will affect future negotiations. Thus it is best to find a level whereby everyone “wins.”

[A previous version of this post was published in 2013, but little has changed!]

13 Responses to A Is for Advance

  1. Andrea Cox May 27, 2013 at 8:16 am #

    Tricia, your comment added to the meaning of this article for me. It’s good to know at my pre-publised stage to think long term instead of focusing on one advance. Once I get to that stage, I’ll try to remember this nuggest of wisdom. Thanks!

    • Tricia Goyer May 27, 2013 at 8:22 am #

      Glad I could help! Yes … think long term!

  2. Andrew Budek-Schmeisser November 22, 2021 at 4:29 am #

    When Random Penguin sees my tome,
    they will exclaim, “Oh, zowie!”
    and I know that the advance alone
    will let me buy, say, Maui.
    The book’s so sure to be a hit,
    everyone will buy the thing,
    and celebs ‘gainst their fans will pit
    for the chance to kiss my ring,
    but I will stay a modest man
    without airs (though living large),
    and’ll gladly for my readers stand
    while they’re frisked by my entourage,
    and with a smile fulfill their dream,
    signing with the autograph machine.

  3. Dan Story November 22, 2021 at 7:47 am #

    When I wrote my first books, the publisher did virtually all the promotion: set up radio interviews, ads, sent my copies of newspaper reviews, and so on. I have two books in the making, and I’m curious what kind of promotion do publishers do these days? I know they depend on the author’s platform, but other than that.

    Dan Story

    • Steve Laube November 24, 2021 at 11:06 am #

      Publishers continue to maximize whatever budgets they have.

      The challenge is figuring out where to place those designated funds. Especially whether a particular expense moves the needle in any way. The things that worked two years ago may not work today.

  4. Kristen Joy Wilks November 22, 2021 at 9:05 am #

    Thanks so much, Steve. This is great info to keep in mind!

  5. Elliott Slaughter November 22, 2021 at 9:44 am #

    Is there ever a situation where you would negotiate down an advance, e.g., in order to negotiate for more dollars in the book’s marketing budget? Or is it the opposite, where you want the publisher to advance more so they feel more committed?

    • Elliott Slaughter November 22, 2021 at 10:05 am #

      Also, do you ever negotiate for the marketing budget by itself? E.g., for the publisher to invest a certain minimum dollar amount into marketing, independent of whatever the advance is.

      • Steve Laube November 24, 2021 at 11:10 am #

        Anything is negotiable. But putting a specific dollar expenditure in a book contract is rare. Why? Because what happens if the publisher spends $1,498 instead of the contracted $1,500? Is that a breach of contract? Yes, it is. And how does one verify expenditures? Will they submit copies of invoices? Unlikely since an ad for your book may also advertise three others.

        A good publisher has ongoing conversations with their author about marketing and publicity. Remember that publicity is a subset of marketing. So if you get 50 radio interviews…is that a good thing? What if that interview only broadcasts at 3:30 am in a desolate region of Australia? And how would you know?

  6. red November 22, 2021 at 10:34 am #

    Alas, the good old days. Prior to the disaster of the 70s, it was still possible to find a publishing house that did all editing needed and paid a nice advance. But, as well, please remember most writers either worked hard at other jobs or starved.
    Though considered a pretty good writer, I don’t publish a lot. Yes, everything ‘donated’ is snapped up, but I cannot get out and promote books. I will not be a drag on a publisher. It’s too hard to succeed without the artist as a driving force. Publishers work on a shoestring budget; they cannot afford to try out new people.
    Best bet, donate work or go to ezines that can publish without it costing anything. That drives up your portfolio and makes you look better, more a person of interest to we-pay-you publishing houses. Viva Arizona!

    • Steve Laube November 24, 2021 at 11:15 am #

      Red, granted, it is hard to launch a first time author for a major publisher. But it is done all the time. Our agency landed contracts for over a half dozen first-time authors – in 2021. But one must also note that the agency, as a whole, received over 3,000 new unsolicited proposals – in 2021.

  7. Jeanne Gehret December 2, 2021 at 2:02 pm #

    Steve, I would be interested in a comment from you on Red’s idea of “donating.” I have a magazine that takes anything I send them, but they don’t pay. Does that enhance my portfolio or not? And does the published piece have to be close to the proposed book’s topic and genre?

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