Saturday, February 28, 2015

REAL TALK: $ix Figure Book Deal$

PS on top: I found some posts by other smart folk like agent Mandy Hubbard and author Jim C. Hines - if you want to like, double or triple-reinforce the point I'm making. But I'd already started typing by the time I saw those soooo... here you go. And this post started life as a comment on an SCBWI message board thread, if it looks familiar to you, that's why. Thanks, SCBWI, for so often giving me blog post ideas! ;-)

One of the questions I dread most at conferences is, "how much money do books make?" I have a sort of pat answer I usually give, whilst eye-rolling. Something along the lines of "somewhere between $1 and $1,000,000." or "I dunno, how long is a piece of string?"

But let's get real. Many new authors will probably be offered $4-8,000 on a debut picture book text-only to a normal mid-sized traditional publisher. $5-12,000 on a chapter book. $8-20,000 on a middle grade novel. $12-30,000 on a YA.  I'm talking average - yes, some will be higher, some lower, and no I haven't done an official poll, but I bet I'm right.

These numbers will be much lower for small presses (and probably much MUCH lower for digital publishers or startups). The numbers will be higher for extremely commercial books with great crossover potential, or for an author who is well-known, or if there is lots of competition for a title or it is "hot" in some way. (The numbers may also be different depending on what rights you sell.) Still, these would be what I'd consider to be unexceptional starting offers. Nothing to get mad about, just, you know. Normal.

Yet we all know of people who got paid a lot more than that.... so what about THEM? Well, first of all, I'd say they are outliers. Yes, I have certainly had awesome six-figure debut sales. But they consist of maybe -- 10% of deals. Most are Normal. On the high side of what I quoted above, perhaps, when all the negotiating is done, but still, not megabucks.

SHUT UP JENNIFER! SHUT UP! THIS IS DAYDREAM TIME!

 OK fine. Cue the mystical bossa nova music and IMAGINE IF YOU WILL:

You're a new author - maybe you don't even have an agent yet, but you are actively querying, reading all kinds of Publishers Weekly deal announcements, and dreaming of the day your very own manuscript will go on submission and sell, too.

These magic words echo in your daydreams.... six-figure deal. SIX-FIGURE DEAL! With that kind of money, you could quit your day job, pay for your kid's college tuition in cash AND afford to supersize them fries, possibly from the comfort of your Mercedes-Benz. CHA-CHING, AM I RIGHT? Soon you'll be in a beach house, smiling gently whilst typing away on your latest brilliant novel. Everything is clean and inexplicably made of white linen or similar and somebody has brought you a cup of tea and there's a cool ocean breeze that also somehow smells of chocolate chip cookies and all the cares of your old life behind you--

Not so fast, Hoss.  Here comes the dream-shatterer. *music screeches off*

COMMISSION: If you got a six-figure deal, you probably have an agent, too. Your agent will take 15% of your income (possibly 20-25% in the case of foreign income or film deals). This is money worth spending, because without your agent, you would have probably had a lot less dough in the first place, or nothing at all. And your agent is protecting your interests and guiding you in the long-term. OK, fine. But don't forget about --

TAXES:  Even if you have a day-job, when you get paid for writing, you are also self-employed. A freelancer. As a writer and US Citizen, you have to pay both Income Tax AND Self-Employment Tax on everything you make writing. Does that suck? Hell yes it does. Sorry. You can expect to pay about 30% of your writing income in taxes. Possibly more.

ETA while we're on this topic - As a freelancer, you will also be expected to pay taxes 4x a year rather than just in April. (This is good in a way - less painful to write four medium-sized checks than one huge one... but bad in another way - like, you have to have enough money 4x per year. And remember. UGH) (One day I'll do a blog post just about this, aren't you lucky!)

Also: I might sound like a broken record on this one, but seriously, if you are going to be a career writer, TREAT YO' SELF to a good accountant who knows a lot about artists and freelancers. They will save you much money and angst in the long run, and, your accountant's fee is tax-deductible.

EXPENSES: As I said, you're self-employed. All the fun stuff like office supplies, a new laptop, travel to some conference or bookstore, HEALTH INSURANCE, etc? Probably coming straight out of your pocket. The good news is, anything related to your writing job, including said office supplies, your office space, travel for research or promo, and other self-promotional stuff, is tax deductible, at least in part, so keep good records. The bad news is, well, you have to pay for it in the first place, "tax deductible" doesn't mean free. (As far as insurance, unless you're lucky enough to have a great day job or a spouse who can provide, well... thanks, Obama. Seriously... thanks, and God bless you, Sir.)

PAYOUTS:  Most book deals in the US kids book world are structured so the payments are split into 2 or 3 parts. (Many huge deals and books in the grownup world are divided even more than that!) So you get one part on signing, one part on delivery and acceptance (D+A) of the final manuscript, and sometimes one (often smaller) part on publication.

SO LET'S CRUNCH THE NUMBERS. If you luck out and get a "six figure deal" from a good American publisher today, assuming all works according to schedule in a perfect world, and your agent doesn't have to chase down any money for you, and your publisher doesn't go under, and your editor gets notes to you in time, and you have no crises ... your deal (including taxes but not including expenses) might look something like this:

March 2015: Make the deal! Yay!  It's a nice one. 2 books for $100,000 total! Welcome to the six-figure club! :D

April/May 2015: Your agent gets contracts and negotiates!

June 2015: PAYMENT - on-signing, 20k each book, 40k total - minus 15% for agent, and let's be generous and say 25% for taxes because of that great accountant: $24,000 total

November/December 2015: Book 1 Due (for publication Winter 2017)

January 2016: PAYMENT - D+A book 1, 20k - minus 15% for agent, 25% for taxes: $12,000 total

November/December 2016: Book 2 Due (for publication Winter 2018)

January 2017: PAYMENT -  - D+A book 2, 20k - minus 15% for agent, 25% for taxes: $12,000 total

February 2017: Book 1 Publication

March 2017: PAYMENT - On-Pub Book 1, 10k - minus 15% and 25%, $6,000 total

February 2018: Book 2 Publication

March 2018: PAYMENT - On-Pub Book 2, 10k - minus 15% and 25%, $6,000 total

So you didn't make 100k, actually, you made 60k (or less), spread out over the course of four years, and probably at least one of those years you get... not much. In this example, $24k in 2015, $12k in 2016, $18k in 2017, $6k in 2018.

I mean, you know, that's not NOTHING, it's a great deal for most kids books... but it's not exactly "bathe in champagne" time. You'd make as much or more working minimum wage at the Gap for four years.

SO, what to do?

The single best thing you can do for your career is KEEP WRITING GREAT BOOKS.  Seriously. Keep writing. Success builds. Books in print, books that continue selling, may make you money for years to come. A nice fat ADVANCE is great, but ideally you'll earn out your advance and collect royalty checks for the rest of your life.

But earning out and seeing more $ probably won't happen until after the book has been released, and sometimes it doesn't happen till LONG after... and can never be counted on to happen at all. So that means that you probably won't see a non-Advance check on these particular books until late 2017 at the very earliest - probably, in reality, not until sometime in 2018. Meantime, you'll be dead of starvation. So yes. Don't quit your dayjob. Or do, and WRITE MORE BOOKS!


I could go on and on but I think that's enough out of me - maybe "how to quit your day job" can be another blog post for another day. What about you, any thoughts on this or further questions?

35 comments:

  1. Feel the cold hard reality, like winter in Boston? Good. Go inside, light the fire in your head and write. And if you don't? Maybe, for you, writing is more love than profession. Not a bad thing. But, facing the reality will keep that love from becoming a crushed spirit. Thank you, yet again, Miss Jennifer!

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  2. As I said on FB, love this. I laughed aloud at CHA-CHING!

    Fwiw, half of every royalty or advance check I get is put into a special savings account called "TAXES." You should add that bit about having to pay taxes four times a year, not just in April.

    (n.b. I have no problem at all with the fact that I have to pay taxes on my writing income)

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  3. Great post! I write in the grownup world, but I think this is something all authors should see. I have no great dreams of making a ton of money being a writer. Lucky for me, I have a day job I love, so that's okay. If I make enough to keep up with my credit card or maybe start paying down some student loans, I'll be happy.

    Hell, if I can just afford extra groceries every month, I'll be happy =).

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  4. Yes Sarah, good point - one of my "someday" posts is in conjunction with a tax adviser, I think this whole part is SUCH a mystery to so many writers.

    (And ftr, I am happy to pay taxes, too - I do love streetlights and public schools! However I do think it's a BIT hard that we are taxed more heavily than, say, MITT ROMNEY or something).

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    1. You are so on the money! Love your posts. Thank you.

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    2. For realz! I had taxable income of less than 6 grand in 2013 and paid $2360 in self-employment tax. Oh and 400 bucks to get my taxes done at H&R Block :P

      I have only just found this post and think I might schedule a tweet about it like once a day for the rest of forever ;-)

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    3. Paula - you got ripped off... self employment taxes are 15.3% of income. Flat rate, same for everybody, no additions, no deductions. On $5999 that comes out to $917.85, and you get to deduct half of it as the "employer portion." (These figures don't include income tax... and yes, I do taxes as part of my day job.)

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  5. Anonymous1:29 PM

    I figure the best part about making almost no money at my day job is that it would not take much writing income at all to make me feel rich.

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    1. Anonymous10:37 PM

      Hahaha! Same here. I made 9K last year. If I made ANYTHING on my books I'd feel rich.

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  6. Anonymous2:05 PM

    If you're looking for extra income while you write: Depending on where you live (and if you've published professionally before), you can apply for writer's grants through the government. I've won one grant ($9000) to write my novel, which was much more than I'd made from all my other writing sales combined (I'm a short story author). The grants are NOT tax-exempt, but they can supplement your income and buy you time to write. I dropped down to part-time work when I got the grant and focused on finishing my novel (which I did).

    There is one thing I've wondered about and I've never seen it addressed on any agent blogs. I've never had an agent, but if I did get one, is it normal for the agent to expect to take 15% of any grant money I win? There is no contract negotiation involved with a grant and the author writes all of the application material herself, with no input from an agent or anyone else. To me, it wouldn't make sense to pay an agent 15% of it, but would an agent *expect* to get 15% of it?

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    1. Absolutely not - you should ask your own agent when you get one of course, but unless there is some bizarre special circumstance you agree to, we get commission on books we sell only. Freelance work that you get yourself, magazine articles, textbook writing, or grants... that's all you.

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    2. I am interested in where you look for that information. I have done a little research about the govt grants but never can 100% figure out where to look/what to do.

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  7. Brilliant post! Thanks for the cold, hard facts. Even after publication, the truth is, most of us *still* have to write for the pure love of it, because - as a career - the numbers don't make a lot of sense. I worked toward publication for over twelve years before my debut novel was released, so per hour, I could've likely made more money collecting aluminum cans. But my debut was only the *launch* of my career, so my I consider the years leading up to it as merely my education to prepare for it. Again, great stuff!

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  8. Great post, eye-opening. Thanks for the numbers and showing us the reality of what 6 figure deals actually turn out to be!

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  9. Thanks Jennifer, great REAL talk, had to tweet

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  10. Love the way you put real numbers on this. Luckily, I didn't start writing thinking about any money. Just doing something I love #priceless.

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  11. Anonymous8:56 AM

    One other thing to keep in mind is that these announcements are meant to have promotional impact. That's why they are announced! To draw attention to the book and the author and the publisher and the agent. In this way they can be very misleading. I was lucky enough to be part of recent of a six-figure debut picture book announcement and it has been rather amusing how excited and blown away people get. Meanwhile I know the truth of the numbers and how they are divvied up. But it is still awesome and exciting news! Just not as exciting and awesome as everyone assumes.

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  12. I am glad I stumbled upon your post. I have been trying to find the information you presented-real numbers on what authors earn. I recently self-published my first picture book, and I am glad I chose to go indie. I enjoy the flexibility self-publishing affords. Thankfully, I was able to recoup my investment from book sales. Thanks for the information on traditional publishing.

    Michelle

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  13. Great points that many don't think about when they hear of these mega-deals. Thank you for providing this much needed information!

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  14. Hello, Jennifer. I'm new here. Thank you for providing this information to your readers. I'm always learning something new. Unfortunately, I think I'm the type of writer who will always need to keep my day job. I like your blog and will try to follow it and link with you on twitter. ~ http://victoriamarielees.blogspot.com

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  15. Anonymous11:09 AM

    'Soon you'll be in a beach house... Everything is clean and inexplicably made of white linen' oh god i laughed so hard at this bit because i have had this exact daydream :D and this despite already getting a very non-6-figure advance for my debut. i still have these dreams, you know, maybe next time...

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    1. I wonder how many of us have this same daydream. Did we get it from the movie "Something's Gotta Give"? Love that beach house....But she got it from writing plays.

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  16. I have a question. Say you get this awesome $100K 2-book deal that's gradually paying itself out over a few years. In the meantime, you're writing other books. Can you still be getting other advance for other book deals while that $100K is paying out for those other two books? At what point after your agent sells a book can you say, "Okay, I have a brand new thing."

    In other words, is it possible, provided you're prolific enough, to have advance money coming in relatively frequently?

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    1. Depends on you, your agent, your contract... but basically, yeah, as I say above, you can (AND SHOULD!) be continuing to write and hopefully sell brand-new stuff. That's the way to make this more than a hobby.

      Particularly since most people don't GET 100k 2-book deals.

      The goal is, in my opinion, to get to a point where you aren't just relying on advances, but you have sufficient backlist that it is consistently making an income for you in royalties. But this is not an easy or fast place to get to. In the meantime, most authors have to either have a second income (whether that means day job or spouse, or both) -- or else be very frugal.

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    2. And I should add - the MAJORITY of my authors are full-time authors with no day job.

      Some are able to quit their day job because they have sold a few big books and continue to write big books but not so often. Some because they sell a ton of "small" books and just constantly constantly have new stuff going. Some because they are frugal and/or have spousal support.

      Many have also created careers as freelance writers to supplement their traditional book deals - doing textbooks, or work-for-hire children's books, or journalism, or similar -- so it's WORK, but at least you can still do it at home in your jammies if you want.

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  17. Thanks for sharing the numbers. It is possible to make a living as a writer, but most of the people I know doing so aren't depending exclusively on fiction advances. I did a post on "Can You Make a Living from Writing?" sharing all my sources of income – http://project-middle-grade-mayhem.blogspot.com/2013/03/can-you-make-living-from-writing.html

    That's two years old now. Guess I need to do another one now that I've turned in my taxes!

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  18. I have a question about this: "But earning out and seeing more $ probably won't happen until after the book has been released." Why do you say "probably"? How could a book earn out before it's been released? Pre-orders?

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    1. Sub rights is the biggest way - let's say your publisher has paid 50k for WORLD rights. They then sell the book translation in Germany, France, Brazil etc (because it is a "hot" book, obviously) -- well, you get usually 70-75% of whatever they make on those deals and it goes to earn out your advance. So it CAN earn out prior to pub. (that isn't USUAL, but it CAN happen)

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  19. I gave myself a headache at the IRS webpage before asking this question here, so sorry if it's not in your jurisdiction. I figured it wouldn't hurt to ask.

    Most agents say that they would represent a non-American writer not living in the US as long as the book was in English. If, say, this author got the deal you used as an example... is she/he required to pay US taxes? Of course the agent's fee would be applicable, but taxes? I always wondered about that.

    Thanks:)

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  20. If you were not a US resident and had 'alien' status, such as being a UK citizen and writing in the UK then your deal is effectively a commission in advance of book sales, US and worldwide. You are not employed by the publisher but providing a creative service for which you get paid. The agent is an intermediary. Most countries like the UK have joint tax exempt status with the US on federal and state taxes on income and depending whether your employment status as a writer is self employed or a limited company you would need to obtain the correct type of IRS tax exemption number, from the IRS itself and present this to the US publisher or agent offering the deal. You would then be paid gross, minus agent fees, and account for your taxable income in the UK, alongside everything else you earned there. That's a simple version and individual tax affairs may be more complicated. Always use a good independent accountant and solicitor if the mega advance becomes a reality!

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  21. I very much appreciate your honesty. And as a picture book author with small presses, I'm making pretty much nothing at this point! You must be committed and determined to be in this profession.

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  22. Thank you for giving me motivation to get a day job, however menial it is. Maybe I can get story ideas from that, yeah?

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