How Much Money Can I Make

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How Much Money Can I Make?

Boy, talk about a loaded question, and impossible to answer. How much money you make depends on too many variables such as the market, genre, publisher, economic state of the country, what you wore last Wednesday and so on. Essentially, books make money on sales. You may receive an advance for a book, but that advance is against future sales, not in addition to royalties on sales.

Let me be clear in saying that writing is no get rich scheme, at least not for most of us. It takes years to build a career that even gains positive cash flow, much less a career that can afford you the ability to write full time (assuming you need to replace day job income). That’s the reason one of the main rules of writing is “don’t quit your day job.”

Take a for instance. Let’s just assume that you sold a book January 2010. Your agent negotiated a $5k advance. You receive the first half of the advance for contract signing (and this depends on publisher) so you get the money in April 2010 after everything has been legalized. You turn in the revised or completed copy of the book in June 2010, go through a round of edits/revisions with your editor and the book goes to copy edit in July 2010. The publisher processes the second half of your advance (for delivery and acceptance) and you receive it in August 2010.

Your book releases June 2011. You receive your first royalty statement July 2012 and are thrilled to see that the book shipped out 50k copies and sold 25k copies. Your royalty share is 8% of a $6.99 cover price, so you make .5592 per book. That equates to revenue of $13,980, right? Not a bad paycheck. Well, not exactly.

The publisher utilizes a concept called “reserves” which means they hold back paying you for some of the shipped books in case they are returned in the future. So let’s say your publisher holds back 20% for reserves on your first royalty statement – that’s 5k copies, right? (25k times 5%) No. It’s not. The reserve for royalties is calculated on what SHIPPED, not what is remaining as sales. So, the reserve is 10k.

So 25k sold less 10k in reserves is 15k sold, so that means a check for $8,388, right? No. Wrong again. Remember your advance? Your advance is AGAINST sales, not in addition to sales. So $8,388 less your $5k advance is $3,388 in royalty payment.

Your next royalty statements, usually received in six month increments, will withhold less in reserves as time progresses until you are finally paid out. Complete payout may be as long as 24 to 48 months after release. If we take the conservative route and assume that your payout is complete 24 months after release, then it only took you 3.5 years to make $13,980. 

© Jana DeLeon. All rights reserved.