If you're hoping to make a new career out of writing, the different pay structures can be baffling, and you might be wondering, "how do authors get paid?"
Bloggers, copywriters, and freelance content writers typically quote a rate, complete the work and receive their fee. And they might charge per project, per word count, or the hours they've worked.
But it becomes even more complex if you're writing a book as an author or ghostwriter. Fee structures vary depending on the publisher you're working with.
And also how established you are as an author and even the genre you're writing in. So, how do authors get paid for their hard work?
This guide will tell you everything you need to know!
Why it is important to understand how authors get paid
Writing a book may have been your dream for some time. However, we all need money to put food on the table and pay the rent.
Whether you’re writing a book as a passion project or this is your career, authors need to know how profitable their book project might be. And, more importantly, how to survive financially while writing it.
After all, book-writing isn’t quick and can take many months (or longer!) to complete. So, how do authors get paid?
Some publishers pay authors upfront for their work, allowing them to spread their payment and cover their essentials while writing.
They might also offer royalties following publication, meaning that payments could still roll in years down the line.
Your specific publisher contract will outline all the details you need to understand about your author payment. That said, be sure to check out our tips on types of publishers to avoid.
So how do authors really make money?
The median annual payment for writers and authors is $69,510, according to the US Bureau of Labor Statistics. But how do authors make money to reach this total?
Most commonly, authors can earn a fixed fee for writing the book. Others also receive a percentage of the sales profits in the form of royalties.
This means if the book sells well now and in the future, authors could stand to build real wealth from their writing. For example, JK Rowling has made 1 billion dollars from her Harry Potter series of books.
With that said, there are several ways authors can make money:
- Fixed fees
- Royalties on retail sales
- Royalties on net receipts
- Income from literary awards
- Speaking Opportunities
We'll get into each one of these below!
How do authors get paid: Fixed fees, advances, royalties, or profit-sharing?
Before you consider earning money from side opportunities as a published author, let's break down the most traditional ways that authors receive money for writing their manuscripts.
How do authors get paid as a fixed fee?
An author fixed fee is where an author receives a one-off sum for their work. And regardless of how many books you sell, this won't change.
This could be a good option if you want the security of knowing how much money you'll receive for the work.
If you're a first-time author dipping your toe into the industry, you may be happy with this arrangement.
How do authors get paid in advance?
A book advance is where a publisher gives the author an upfront fee, often before they've completed the work.
The publisher then deducts this sum from any royalties (a percentage of each book sold). So, how much do authors get paid for their advance?
This depends on various circumstances, such as your agent's negotiating skills, the genre, the publisher's budget, and how confident they are in your book's sales potential.
However, some advances can be as high as seven figures.
For example, first-time children's author Annabel Steadman (writing as AF Steadman) received a "major" seven-figure sum by Simon & Schuster publishers.
This was the result of a multi-publisher auction where several publishing houses were eager to get their hands on Steadman's fantasy adventure series "Skandar and the Unicorn Thief."
How much in royalties are authors paid?
Publishers may offer royalty checks to authors instead of, or as well as, an advance. Let's talk about two of the most common types of royalties.
Royalties paid on retail sales
With retail royalties (or list royalties), publishers give authors a percentage of the retail price for each book sold.
So, how much royalty do authors get in this scenario? Well, if an author has a 10% royalty rate and their book sells for $10, the author will receive $1 per book.
This becomes more complicated if the author receives an advance upfront when signing the contract. So, they wouldn't see any royalties until they've paid back the advance.
If you received a $10,000 advance and your deal amounts to $1 royalty per book, you'll need to sell 10,000 copies to pay back your advance and start raking in extra pay.
Royalties paid on net receipts
Publishers typically offer bookstores or online platforms an attractive discount of up to 50% off the book's cover price.
And it's becoming more common for publishers to pay royalties on net receipts to authors. This means they calculate the royalty percentage only after accounting for the discounts they give to retail stores.
So, how much royalty do authors get based on net receipts? Publishers only pay a percentage of the amount received after deducting all discounts.
However, authors are usually offered a higher royalty fee under the net receipts model than the retail sales model.
For example, imagine your book sells for $10. If the publisher offers a 50% discount to the bookstore, they now have $5 left per book.
From here, if you receive a 20% royalty fee, you'll still receive your $1 royalty fee putting you in the exact same position as if you were receiving 10% on a retail sales basis.
The bottom line on royalties: each publisher has a different way of approaching royalties. And so the answer to "how do authors get paid in royalties?" depends on the publisher's discount, the royalty model, the bookstore, and other factors.
How do authors get paid with profit sharing?
Profit sharing is another avenue smaller publishers offer. The idea is simple; the publisher pays the author a high percentage of the book's profits after covering all their other costs. These include printing, marketing, and overheads.
This might be an excellent option if you're confident in your book's sales potential. It's worth noting that publishers don't usually offer author advances in this type of deal.
How do authors make money from literary awards?
You may also have heard that notable literary prizes can be profitable, too. So, how do authors get paid from these literary awards? If your book is on the shortlist for a prize, then it's possible to earn the big bucks.
For example, Margaret Atwood wrote the bestseller "The Handmaid's Tale," which won the Governor General's Award for English language fiction.
The cash prize for this accolade was $25,000 which isn't small change! If you're lucky enough to win the Nobel Prize for Literature, though, you're looking at a haul of over $1 million.
How do authors make money from speaking opportunities?
Writers can also make money from speaking opportunities as published authors. You'll present your experience as an author to other writers, literary agents, and publishers in the industry.
Along with the fee for taking part, this valuable exposure can be a real career booster, regardless of the size of the event.
A small niche seminar packed with your target audience could open more doors than a sell-out conference where you only get five minutes on stage.
Leverage what you now know about how authors get paid!
As you've seen, there's no simple answer to the question, "how much do authors get paid?" Publishers pay authors in various ways. These include one-off fees, advances, royalties, and profit sharing.
There isn't an overall right or wrong way to earn money for the work you produce; it all depends on your individual situation.
The best advice we can give to you is to always read the terms and conditions of your contract, so you know what you've agreed to before you sign up with a publisher.
To learn more about writing a book, check out our articles on outlining a book and questions to ask authors!