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Author Advances: Is There Such Thing as Too Much?

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Rachel Dearth
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« on: August 07, 2012, 01:27:38 am »

 Author Advances: Is There Such Thing as Too Much?
home title Posted on Aug 22nd, 2011 | 102 comments home title

moneyWhen an author gets a contract offer from a publisher, the first thing they want to know is, “How much?” And by that they mean, “What is the dollar amount of the advance they’re offering?”

Obviously, the standard way to view advances is, the more the better. Right?

Well, maybe… maybe not.

A large advance is a good thing because it means that no matter how many copies your book sells, you’ll receive at least that much money (minus your agent commission).

If we’re taking the short view—the “take the money and run” view—then this is a very good thing. If you’re an author who may not have books beyond this first contract, then getting as much money as possible up front is a great idea (from the author’s perspective).

However…

If you’re taking the long view—the “I hope to make a career out of this” view—then whoa, doggie, not so fast. Let’s not be shooting for the biggest advance possible. Let’s shoot for a good advance—one that you can reasonably expect to earn out.
If you earn out your advance, and then sell far more copies above what’s needed to earn out, then some really great things happen:

    You’re a star in the eyes of your publisher, and they can’t wait to give you another contract.
    You get checks in the mail regularly—beyond the advance—that could turn into quite a nice little twice-annual revenue stream. At that point, trust me, you’ll be very happy you didn’t take it all up front.
    Not to put too fine a point on things, but come tax time, you’re going to be very happy as well. Paying taxes on a little income at a time (like with a smaller advance and then ongoing royalties) is MUCH easier than trying to pay taxes on a sudden six-figure windfall.

On the other hand, if you get a HUGE advance, with no evidence to show that your book will sell enough copies to merit it (save for the instincts of the publisher), you risk some unpleasant consequences:

    If you don’t earn out, your publisher is extremely reticent to contract you again. If they love you despite sales numbers that fell below expectations, they’ll contract you but with a significantly lower advance.
    You won’t see any checks along with those twice-yearly royalty statements. Depressing!
    You end up paying taxes on a huge amount of money up front. Ouch, painful!

It can be a better idea to negotiate for higher royalty rates when possible, because a higher royalty means you have the chance to make more money in the long run. You earn back your advance faster, and then the checks start coming sooner if you’ve earned out. Your royalty rate can make the difference between you earning, say, 80˘ per book sold or $1.00 per book or $1.20 per book. That makes a big difference in the long run. In my mind, it’s more important to make more per book than to worry excessively about how much of that you get “up front.”

So, my point is this. Trust your agent when they’re negotiating the advance. A good agent will try to get you the best advance possible while balancing it with a reasonable expectation of what you can earn out, so that you can become a star and build a successful long-term career as a writer.

Any thoughts on advances? Any questions for future posts?

Update: Based on the comments, I just want to clarify. I’m not talking about asking for a smaller advance up front. I’m talking about two things: (1) Accepting an advance that’s smaller than you’d hoped, and looking at the upsides of keeping it small as I’ve outlined here; and (2) Choosing to accept the advance the publisher offers (even if it’s smaller than hoped) rather than trying to negotiate it higher, and instead negotiating on other points that are more important to the author.
© 2012 Rachelle Gardner, Literary Agent


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