Bragging rights for writers often flow not just from who’s publishing them but also how much they’re being paid upfront. The “advance”, as it’s called, is the subject of competition, gossip and heartburn.
Many writers have misconceptions about this advance, unaware that it isn’t a one-off payment from a grateful publisher for the sheer labour that went into the book, but simply a certain amount of royalty paid in advance. Most important, this is adjusted against future royalties.
In other words, if an advance against royalties of, say, Rs 50,000 is made to a writer, the next time a payment will be made is when the writer’s royalty earnings actually cross Rs 50,000. However – and there’s a however – this advance is not expected to be returned if the royalties do not even add up to the advance. So this advance payment is guaranteed payment.
How is the advance payment calculated?
But why does one writer get an advance of Rs 50,000 while another one might get Rs 5 lakh? The advance is usually calculated as the likely royalties due to the author if the first print run is sold out. Thus, if the author’s royalty for every copy sold of a book is, say, Rs 25, and the publisher is expecting to sell 2,000 copies in the first run, the author is given an advance of Rs 25 multiplied by 2,000 – or, Rs 50,000.
Now, for another writer – someone with a reputation for producing bestsellers, say – the publishers might be expecting to sell 20,000 copies instead in the first run. Accordingly, this writer will command an advance of Rs 25 multiplied by 20,000, which amounts to Rs 5 lakh.
However, a word of warning for today’s writers: publishers are beginning to play it safer these days, and sometimes offer advances amounting to the royalties from the sales of only part of, rather than the entire, print-run. That’s because they prefer to factor in overhead costs – salaries, office space, etc., – allocated to each book.
As a literary agent, I have been involved in book deals where an author received an advance based on sales of 3,000 copies or even less, even though the print-run mentioned in the offer letter was double that or more.
What is the first print-run?
Put simply, it is the number of copies of a book that a publisher will print in the first round. Only when – or if – it appears that there is a demand for more copies will there be a second print-run. Publishers keep their first runs conservative – except in the case of bestsellers – because the production costs of a book are very high, and the money spent on printing cannot be recovered if sales are low. Nor do publishers want to have masses of unsold copies of a book, storing which is expensive. Naturally, this lowers the likely advance payment.
The first print run is almost always decided by the sales team of a publishing house, based on the potential of a book. This in turn usually factors in the profile of the author, the genre of the book, sales of the author’s earlier book, sales achieved by similar books, the topicality of the book, and the confidence and enthusiasm of the editorial and marketing teams and even the CEO of the firm.
At what price will the book be sold?
First, why is this germane to the advance? Because the royalty that the author earns from a book is usually fixed as a percentage of the cover price – literally, the price marked on the cover of the book, no matter what the discounted price might be. This is normally fixed at 7.5% or 8% (for most authors, though marquee names and bestseller writers get higher royalties) for paperbacks and 10% for hardcover editions. So the higher the price, the more the royalty due per book sold.
The price is decided by the number of pages and the format of the book – for instance, hardback or paperback? Also, the size – B-format, demy or royal? Obviously, all these factors will determine the production cost and, therefore, the price.
There is also the question of how much readers are willing to pay for a book, irrespective of its thickness and format. This is where writers of literary fiction and non-fiction have an advantage over their counterparts in the area of commercial books. That’s because most titles in the first category are priced at Rs 450 or more without affecting sales, whereas commercial titles can seldom be priced higher than Rs 200.
This in turn means that a commercial fiction or non-fiction title must sell more than twice as much as a literary one for the writer to earn the same royalties. This is why literary fiction, for instance, can still command a sizeable advance payment despite a very conservative first print runs. Coffee-table books and graphic novels belong to the same category, for such books are priced even higher.
What kind of royalties can a writer expect?
The figures of 7.5%-8% for paperbacks and 10% for hardbacks are par for the course. Bestseller writers, however, do negotiate their way to royalties between 15% and 20%, but that obviously doesn’t materialise overnight. It needs a track record of huge sales, which prompts publishers to share a higher percentage of their sales proceeds, since revenues are much higher.
There is also the incentive of escalating royalties that many publishers have started offering. This amounts to the writer’s earning a higher royalty once a certain threshold of sales is crossed. For instance, the figure of 7.5% may work up to 5,000 copies sold, but once that level is crossed, the royalty increases to 10% for every additional copy. This may even go up to 15% after the sale of 10,000 copies.
The objective is to rope the writer in to the task of marketing the book, for it will be worth the writer’s while for more copies to be sold. Interestingly, this offer is also being rolled put to new and untested writers.
How much in advance is the advance payment made?
The advance is never paid fully on signing the contract. It is usually split into two or three instalments. Authors signing with a completed manuscripts usually get 50% of the advance on signing and the remaining on publication of the book. Those signing with a proposal or an unfinished manuscript get one-third on signing, one-third on delivery, and one-third on publication.
I have seen contracts in which a writer was offered just 10% and sometimes even zero advance on signing. On the other hand, some publishers make an exception and pay as much as 60%-70% on signing, and, on rare occasions, even the full amount. But in general, a writer must be prepared to wait till the book is published before getting the entire amount.
While most standard contract state that each instalment will be paid within 30-60 days from signing, delivery or publication, as the case may be, some publishers do make the payment in less than 15 days if there is a request by the author or their agent.
Will the publisher pay for a writer’s costs?
Some publishers have a provision for a travel allowance, usually for non-fiction books that require the author to travel. Such allowances usually range from Rs 50,000 to Rs 1 lakh, and is usually based on actual expenditure – which means the author has to present all travel, accommodation and food bills.
What costs do publishers consider for a book, besides production?
In addition to overhead costs, publishers sometimes allot augmented marketing budgets to particular books. Unfortunately, this often means a proportional reduction in the author’s advance. The marketing expenses sometimes go towards book launches, which are not very useful as either marketing benefits or sales boosters – so the author and their agent must decide whether it’s worth it. Publishers also allocate budgets for illustrations and photographs needed in a book, which in turn might mean reducing the advance payment correspondingly.
While most standard publishing contracts specify that the cost of a legal opinion, if required, will be split in half between the author and the publisher, I have never come across a situation where the former had to actually pay for legal vetting. At times, due to the nature of the book and the risk involved in publishing it, a publisher may decide to have it vetted by more than one lawyer. A prominent multinational publisher consulted more than three lawyers for a provocative satire whose author I represented. The authors were not asked to contribute to the legal cost.
Do writers ever earn fees or bonuses?
Some publishers make up for moderate advance payments by offering a sales bonus to authors – a small, one-off payment to the author once the book achieves a certain sales threshold. Recently, a publisher offered a small sales bonus on the sale of 4,000 copies of a work of fiction whose author I had represented. Far more rarely, a publisher might offer an author a bonus if their work wins a prize.
In every, very rare instances, a celebrity author might be offered a signing-fee instead of an advance against royalties. This payment comes in addition to the regular royalties paid subsequently, with no adjustment.
Despite increased transparency and the provision for auditing publishers’ accounts, there is a widespread belief among both new and established authors that one rarely gets to see any money after a book is published. This makes them push for as high an advance as possible.
The truth, however, is that only a fraction of published books are able to earn out their advance for the publisher. These books are, so to speak, subsidised by those that sell very well.
What can a writer do if they don’t care for the amount offered as an advance? One option is to offer restricted rights for the book. Thus, a writer may choose to sell only the rights for publishing in India to the author, keeping world rights for themselves. Another might define a specific term for the agreement, so that the publisher cannot keep producing the book till eternity.
Kanishka Gupta is the CEO of the South Asia’s largest literary agency, Writer’s Side.