As we begin to wrap up our series of posts comparing traditional publishing to online self-publishing, today we tackle the meat and potatoes of the book publishing world–that is, getting paid. Regardless of the publishing route we take, as authors our hope is that we’ll eventually see some money come our way which will help justify the days, months, and sometimes years of blood, sweat and (sometimes) tears that went into our newly created work.

The author advance, i.e. Pay me now:

Although traditional publishing may no longer be what it once was, it still has a lot of perks. In fact, I think that all authors would agree that one of the best things about going the traditionally published route is the heralded “advance” that you’re paid upon signing your contract. It helps both your ego and your financial situation; it helps your ego because a “real” established publisher believes that your manuscript is good enough to sell books and is willing to bet some money on it.  It benefits you financially because you’ll be paid some real dollars (manna to a starving author) before your book sells its first copy. Wow, what a great deal!

From a publisher’s perspective it’s a little more cut and dry. If you are offered a contract with a traditional publisher, the contractual terms are written around their belief that they will earn a profit on your book after all expenses (including your advance) are deducted. How does this work? As explained by Wikipedia, the traditional publishing royalty structure is fairly predictable, although not necessarily foolproof:

“Having agreed on the scope of the publication and the formats, the parties in a book agreement must then agree on royalty rates, the percentage of the gross retail price that will be paid to the author, and the advance payment. This is difficult because the publisher must estimate the potential sales in each market and balance projected revenue against production costs. Royalties usually range between 10-12% of recommended retail price. An advance is usually 1/3 of first print run total royalties. For example, if a book has a print run of 5000 copies and will be sold at $14.95 and the author receives 10% royalties, the total sum payable to the author if all copies are sold is $7475 (10% x $14.95 x 5000). The advance in this instance would roughly be $2490. Advances vary greatly between books, with established authors commanding large advances.”

Although this arrangement appears simple enough,  it doesn’t necessarily represent a complete picture for a novice author that’s reviewing his or her first publishing contract. You may get your advance free and clear, but receiving additional royalties down the road can be problematic. First of all, marketing, remaindering, and inventory costs related to your book may need to be recouped by the publisher before you get a royalty check. Plus, you can’t leave out the hard-working agent, who typically gets 10-15% of an author’s earnings. Furthermore, if the publisher’s sales estimates are off target (especially on the downside) it’s quite possible that the author will never receive another dime from their published book. As a matter of fact, I’ve heard of situations where the author was asked to return a portion of their advance back to the publisher.

Pay me later–the world of self-publishing:

Getting paid from sales of your self-published book is quite different from the process described above, because a self-publishing house generally won’t pay you anything until your book starts selling. However, online publishing sites like Lulu.com, Createspace.com, Wordclay.com and Blurb.com do offer something literally unheard of ten years ago–you can start making money after the sale of your first book. Traditional publishers can’t touch that.

How can that be? Well, thanks to the latest in online publishing software and print-on-demand technologies, online publishing companies can publish your book for free and print your book–one book at a time–when it’s purchased by someone wanting to read your book. In fact, their online costs are so low that they can afford for you to use their publishing and marketplace services for free in the hope that you will actually sell some books. If and when you do sell a book they’ll deduct the printing costs and any other fees, and the rest goes to you, the author. Another thing that’s great about these sites is that they update your author account page in real-time (most do, anyway), so you can keep track of your sales and royalties on a minute by minute basis–which I’ve personally witnessed some authors do.

So, if you’re a self-published author that’s selling directly through one of these online marketplaces (and not through their extended retail distribution partners), you’ll start earning a profit on your book right from the start. When the money starts rolling in you’ll generally get paid via direct deposit, check, or Paypal, and depending on the online publishing site you’re using the royalty payment frequency can range from monthly to quarterly.  You should also keep in mind that some of these sites require that you earn a minimum royalty amount, say $20, before they’ll send out their first payment–so you may have to wait a couple pay periods as your royalties accumulate to meet that threshold. After that, however, you’re home free. You’re now making money from people buying your book–which is pretty much the sign of a real “published” author if you ask me.

Don’t forget, however, that authors that use these sites will have to pay for any editing, formatting, illustration, distribution, marketing or promotion activities that they can’t (or choose not to) do themselves. When putting your self-publishing business plan together, it’s important that you balance these costs against your expected book royalty earnings. When it comes to self-publishing, however, you’re the boss–so you control the purse-strings.

Never pay me at all:

Of course, there is some gray area between the “Pay me now” and “Pay me later” approaches. Some vanity publishers delicately tread the water between traditional and self-publishing approaches; that is, they won’t pay you an advance, but they will cover the costs of publishing, distributing and marketing your book (self-published authors usually pay up-front for all publishing services).  Like a traditional publisher, you’ll have a contract that lays out how and when you’ll get paid. In these cases it’s quite possible that you’ll never pay anything out of your pocket to self-publish and market your book, but it’s also possible you won’t sell enough books to ever get paid a royalty. Furthermore, you’ll sometimes give up publishing rights or other control when working with these entities. There are self-publishing forums filled with horror stories about these publishing houses, and my advice is to stay away from them. With a little time and effort you can publish your book for free, so try the online publishers first.

There you go. We’ve now covered the “show me the money” part of being an author. The bottom line is that you can make money through either the traditional or self-publishing routes. I’ve personally worked with authors that have made well over $75K from selling their books through Lulu.com, so contrary to popular thought you can be a self-published author that’s laughing all the way to the bank. However, I’ve also known authors that never sold a single book through online publishing–although in most cases my assessment was that their book wasn’t worth buying.

Nevertheless, the world of publishing is changing daily so as you consider your options don’t forget to think about money. You don’t want to spend so much on self-publishing that your future earnings won’t cover your costs, nor do you want to sign an agreement from a traditional publisher if you’re convinced that they’re under-estimating your sales. Do your research, and hire an expert if needed. It’ll pay off in the long run–pun intended.

In our next post we’ll talk about marketing and promotion, and will highlight what you can expect from a traditional publisher and self-publishing site. We’ll also briefly touch on what you, the published author, can do to supplement these services.

Thanks for reading, and don’t hesitate to email me at hhutton@publishandsell.com or call me at 919-247-1832 if you have any questions. Fortunately, in today’s world you always will have a publishing option–there are no more barriers to seeing your book in print and in front of a mass audience. That, I believe, is a pretty cool world to live in.

Till next time, keep publishing!

Henry Hutton
PublishandSell.com