Back in the Saddle Again & Writerly Economics

On Thursday, I finally sat down and started work on my new book. See the word counter over there on the right? Pretty, pretty orange! Look at the way it creeps up on that vast swath of unwritten white!

So, despite the fact that until Thursday, I hadn’t written anything for the better part of a month, I don’t feel too bad. Because I have written over 70,000 words already this year. (Cf. the top word counter over there on the right — the one labeled MG — which is ALL ORANGE, plus “Errant” which never did get a word counter, and I don’t feel so bad about that.) And I did two rounds of revisions on the aforementioned MG.

(BTW, MG in this case does NOT stand for middle grade. People keep asking me that. Carrie asked me that, which I thought was especially weird, since she actually knows what it stands for.)

I’m still busy, though. I expect I’ll be getting some revisions on “Errant” and possibly a bit more work to be done on MG, not to mention the 1st pass of Ascendant that showed up here yesterday morning and is due at the end of the week. Like, today, before I can do any work on this new project (codename: PAP) I need to look into these first page proofs, put together a quick project proposal, and finish up the Rampant paperback extra content (yes, owners of the Rampant paperback get fantastic and exclusive extra content, including, but not limited to, an excerpt from Ascendant. Not to mention take Rio for a walk. Rio has been sorely neglected recently.

But I’m glad to have started PAP, and I’m really, really excited about the direction I’ve decided to take it in.

In other “life of the freelance writer” news, I really love getting surprise royalties. I say “surprise” because at this point in my career, most of my projects are just starting to earn out, so it’s still a new thing for me for royalty statements to come with checks attached. When I talk to writers who have been around for a lot longer than me, they do count their royalties as a larger and larger percentage of their income, and I know more than a few writers whose living expenses are entirely paid for by “evergreen” items on their backlists, which… wow, that just sounds like a dream come true.

Right now, the way I get to keep this job is by getting new work. I got two new contracts in January that will keep me employed for a while. As I said before, I have four all-new projects (two books, two short stories) coming out in 2010 (plus the Rampant paperback). And those are all parts of contracts that I signed anywhere from 2007 to 2010. In some cases, I was paid for those projects back in 2007. In other cases, I haven’t been paid yet.

I share this because I know there are a lot of writers and aspiring writers who read this blog, and they are curious about how the money part works. I think, in the beginning of your career, it’s important not to depend on royalties, and to really figure out WHEN you are going to get the various portions of your advance when you are planning out your work and your ability to go freelance.

For instance, say you have decided that your budget is $30k per year, and you can net $10k (i.e., after agent commission, taxes, and business expenses — or, just to make the math easy, let’s say we live in a world where those things don’t exist) for a book you wrote. So you think to yourself, “Easy, I’ll write three books.”

Au contraire, my friend.

Because you usually only get half of that advance upon signing a contract for those books (and some houses are going to thirds “upon signing”). So let’s say you do get a three book deal (in this magical world where there’s no agents, taxes, or business expenses) at $10k per book. You get the contract (anywhere from a few days to a few months later — and if you think I’m joking about the few months part, I know people who have waited a year on their contracts), and sign it and send it in and get your “upon signing check” — for $15k. Because 1/2(10k per book) x three books = $15,000.

Then, if you’re lucky, the D&A (delivery and acceptance) date for the first book is that same year (again, I know writers who get their D&A at the same time as their on signing check, because of contract delays), for what is sneaking into a lot of contracts lately, which is 1/4 of the remaining advance (and then another fourth on actual publication). So there’s $2,500.

So your total for year one of selling a three book deal for $10k per book is: $17,500.

In year two, you turn in book two, and see the publication of book 1. Total payments: $5000.

In year three, the same, for publishing book 2 and writing book 3: $5,000

In year four, you get your last little “on publication” check: $2,500.

And if you’re lucky, you do earn out right away and get royalties. But you can’t really count on that. And you never know when the earn out’s going to happen. It might happen right away. It might take four years. It might never happen.* So your $30,000 book deal takes four years to pay out.

You can also be lucky and get a compressed publication schedule, where they put all your books out the same year. But that’s pretty much up to the publisher to decide. and if that happens, what will also likely happen is that the publication of your first book is pushed WAY back in the schedule to give you time to write book 2 and 3. Whereas usually you might only have 12 months between D&A and publication, it might be 18 or 24 for book 1, and then only 14 for book 2 and 8 for book 3.

Oh, and you can’t cheat the system and “write quick.” So if your publisher has said that the D&A date for Book 1 is January 1, 2011, and then 1/1/12 for book 2 and 1/1/13 for book three, you can’t turn them all in in 2011 and expect to get paid for all of them. That’s why it’s D *and* A — they have to accept it. And they usually won’t until they are contracted to.

And there are other ways to make up the difference, for instance:

  1. write and sell something else to make up the difference.
  2. make more money from the things you sell (getting higher advances, selling subsidary rights, charging speaker fees to talk about the work).
  3. have an alternate income from old projects (this is where those royalties come in handy, or putting your out of print backlist on kindle).
  4. have another job.
  5. be of independent means.

Some of these things are easier to control than others. Most writers I know manage by mixing up all of the above. And sometimes you don’t even know they are doing it. That writer you know who has two books out a year? You don’t know if she’s ghost writing on the side, or doing copywriting or other freelance work that her name isn’t attached to.

You don’t know if I’m doing that.

______________

* Please note: If it never happens, you do NOT have to pay the publisher back. That is a myth. Also, it does NOT mean that you will never again get another contract. Also a myth.

Posted in PAP, Uncategorized, words, writing advice, writing industry

10 Responses to Back in the Saddle Again & Writerly Economics

  1. Pingback: Diana Peterfreund Blog | Back in the Saddle Again & Writerly Economics Economic Finance news

  2. Jess says:

    I love practical posts that explain the money end of things. We hear so much about the huge six and seven-figure advances that it’s good to be reminded of the realities. Then I feel like I can form accordingly realistic goals.

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  4. Alethea says:

    I think I will work on points 4 & 5 first… *overwhelming*

  5. Diana says:

    Jess, I think it is something you hear about that more simply because it’s newsworthy (and definitely in the field of paranormal YA), and you have to remember, I’m talking about $10k AFTER all taxes and expenses.

    Let’s say the original deal is for $30k per book, which is a totally reasonable and very common deal in the field of YA fantasy hardcover.

    Agent commission = $4.5k per book = $13,500

    Business expenses (website, paper, any traveling you do to promote your book, mail outs, office supplies, research materials, professional organizations, promotional materials) = anywhere from $2k per year on up depending on what you want to do = $6,000 (but probably more like at least $10,000, if not more, and if you have to pay health insurance, you can tack on another 7-20k right there.)

    Taxes (let’s say this is your ONLY income, and you — though I know you don’t Jess, and I don’t either — live in a state with no state income tax)

    * Year 1 (signing, D&A of first book) = $45,000 + $7,500 = $52,500

    MINUS = $7875 (agency commission) + $2000 (biz exp.)

    = $42,625

    Taxes = $10,656 (fed) + $6,523 (SE) (NOTE: half of your SE tax is deductible, but I’m trying to make the math simple here)

    NET INCOME : $ 25,446

    And that is BARE BONES promotion, no health insurance, and living in a state with no income tax.

    *Year 2 (on pub of 1st, D&A of 2nd) = $15,000

    MINUS = $2250 (agency) + $2000 (biz exp.)

    = $10,750

    TAXES = $1,615 (fed) + $1,644 (SE)

    Net Income = $7491

    And so on….

    And if you just made four thousand more per book, Jess, you WOULD have a “six figure deal.” And yet that is the type of income you’re looking at.

  6. Diana, you are awesome :). Thank you for explaining this part of the business for us! I’ve definitely heard it’s not wise to quit your day job until you can be relatively comfortable on your royalties (or like you, other writing gigs). Great info and insight!

  7. Tawna Fenske says:

    Wow, thanks so much for this informative post! Though I’ve developed at least a shaky grasp on the economics of writing over the past few years, I have an impossible time explaining it to friends and family who aren’t in publishing. Will have to send them all a link to this post (particularly in light of my recent book deal which has everyone saying, “so you’ll never have to work again, right?” Uh, no. Not even close).

    Thanks!
    Tawna

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  9. Georgiana says:

    Fantastic post with really useful information. Thanks!

  10. alaska. says:

    that is fascinating.

    now i’m even more impressed by all the people i know who write full-time.

    i’m completely overwhelmed by this. how do you not stress about money all the time?!