advance against royalties
the money your publisher gives you before your book even goes on sale
How much is a typical advance?
It varies. Some advances for debut authors are a few thousand dollars. Some are five figures. Some are six figures, especially if the advance is for, say, an entire trilogy. Not that all trilogies get six figures–it’s actually uncommon to get this much money for an advance. If you have an agent, s/he will negotiate to get you the best advance possible, while also considering other terms of your contract.
When do I get my advance?
Your contract will tell you. Usually, you get something like one-third upon signing the contract with your publisher, one-third upon finishing your revisions and turning in your final manuscript, and one-third on the publication date of your book. But some advances are split into two payments instead of three; some advances are paid out in unequal payments, with more money coming in the earlier payments. As of 2021, some publishers have started paying advances in fourths, with the fourth payment coming after publication (which makes one wonder why it’s then called an advance).
Considering that it can take several months to get your contract after you agree to a publishing deal, don’t expect to get the first payment of your advance for several months, and don’t expect your next payment for several more months or even over a year.
How much of my advance do I get to keep?
If you have an agent, your agent will take 15% of your advance (and 15% of any other money your book earns), usually before passing on to you the 85% you are owed. Uncle Sam will want his cut too, so make sure to set aside about one-third of your advance for taxes–and pay it to the IRS quarterly (in order to avoid paying fees) as opposed to waiting until April. Check with an accountant on this and don’t take my word for it.
Do I have to pay back my advance if my book doesn’t sell well?
No. But if you break off your contract, you will likely have to pay back any advance money you have received.
Do I earn royalties from book sales after I get my advance?
Only if you “earn out” your advance. Your contract tells you how much money is owed you for each copy of your book sold (your royalty rate). Once the royalties earned matches the advance you received, you have “earned out” your advance against royalties. Your publisher will pay you royalties on any books that sell from that point on. Most debut authors don’t earn out their advance.
Helpful link:
The Index for Debut Authors 