What to Know About Book Advances Before Signing Your Contract

Whether you’re going the traditional route or self-publishing, you’re probably going to run into book advances and advanced terms, either on your book contract or on third party contracts.

So it’s always good to know what it means when you have a book advance, what it means to earn out, sign up for joint or separate accounting, and how that all connects to self-publishing.

You’ll most likely have a great agent to walk you through this process, but it’s never a bad idea to already have a familiarity with the process and terms as you dive in.  So here’s a bare bones outline of book advances and what is all involved in that as you make these decisions.

What is a Book Advance?

A book advance is exactly what it sounds like, an advance of money that the publisher or company expects you to earn. They are giving you a chunk of money on certain terms that you will pay back as you sell books and earn royalties.

And usually this contract is set in certain terms of when you will get this money and how it will be paid back. In traditional publishing, it’s generally in thirds–so you’ll get a third of that money on the signing of the contract, another third when you deliver the books, and the last third on publication. And all of that is negotiable. 

Is an Advance Right for You?

In the publishing world, advances can be a bit glamorous. A really big advance is a huge deal, and it’s a show of faith from the publisher saying they are confident that they want to sign you and that your book is going to do well. 

Advances can be really helpful because they can help you maintain your bills as you work towards making writing a full- or part-time job. You can also reinvest that money into your writing business, BUT remember that you will have to pay it back at a certain time. 

This also means that you won’t be making money on your royalties until you’ve “earned out” and paid back that advance.

So while an advance, especially a larger advance, might sound great, it isn’t always the best option

Royalties

You will also agree to royalty terms in your contract, which is the percentage of money you make on each sale of a book. As you sell books, the money you earn will start going towards paying back that advance before you see a return on those royalties.

I feel like that’s a common misconception. People look at an advance as extra money, but it’s really just the same money that you are getting in advance rather than earning as you go. Once the advance is paid off, then you’ll start receiving your royalties.

Earning Out and Royalty Timelines

It may take some time to “earn out” that advance, to pay it all back with your royalties, and the more the advance is the longer it will take.

But there’s always the risk that you may not earn out depending on how your book performs. So if you don’t earn out, if you don’t ever pay the publisher back, they may not sign you again. Obviously the goal is to earn out and make tons of money on your book for both the author and the publisher.

Joint Accounting and Separate Accounting

This is a term in how your advance is set up. Joint accounting means if you sign a book contract for a certain amount of money, for however many books you sign, they are jointly accounted and put together.

So if you sign a two-book contract for $20,000 that means that between the two books you need to earn out $20,000 total. So you could earn all of that on the first book if it really explodes and you sell tons of copies, meaning you’ve earned out on book one and now you’re making royalties on the entirety of book two. But it can also take a lot longer if your books are jointly accounted, meaning you may not see royalties at all on book one.

The other option is to have your books separately accounted. What this means is that while your books are signed on the same contract, they are on separate accounts.

So, again, a two-book contract at $20,000 would most likely mean there’s $10,000 on the accounting for book one and $10,000 for book two. It’s not always necessarily divided evenly, but we’re going to say that for the example.

You can earn out faster on book one because you only need to make that $10,000 before you’ll start seeing royalties, so agreeing to separate accounting can be beneficial to the author in that sense. But on the publisher’s side, even if book one does well and you’re earning royalties, you still owe that $10,000 for book two. BUT if you do this and never earn out on book two, this could also have ramifications, such as the publisher not wanting to continue the series, even if book one does phenomenally well. 

So definitely take a look at those terms in your contract and what they all mean. A book advance could be really beneficial and great for your career and exactly what you need for where you’re at in your publishing journey, or it might be better to prioritize negotiating other terms like your royalty percentage and audio rights, etc.

So make sure you have a conversation with your agent, think about what you want to meet your future publishing goals, and go into these discussions knowing what all the terms mean so you can make the best decision possible for your career!

If you have any questions or want a deeper dive into any of these things, comment below! And until next week, keep writing!