How do royalties and advances work?
Royalties are expressed as a percentage of a book’s retail price or price received. The rate for royalties will be set out in the agreement between the author and the publisher (see the Publishing agreements article by Michael Legat in the Writers’ & Artists’ Yearbook). Royalty percentages vary according to what is agreed for book sales, serial deals, film rights, permissions, etc. The publisher’s finance department keeps accurate records of these so that the author and agent (if the author has one) may see when the book earns back its advance. An advance is calculated according to the expected initial print run and retail price. It is paid when the book is acquired by the publisher, and on delivery or publication of the book. When sufficient royalties have been earned to equal the advance the author (and agent) starts to earn additional income.
