Authors don’t earn a salary for a book, be it one book or several. Book authors are self-employed contractors who receive payments in the form of advances based on anticipated sales, and royalties from percentage of actual sales. In some cases, writers are hired under contract to assist or ghost write for a lead author. Even in that event, however, the payment is considered an advance.
Publishers pay authors advances that range from as little as $1,000 to amounts in the high six figures for fiction and non-fiction. But a drop in overall book sales and the impact of lower priced e-books has reduced the amounts of advances publishers pay out. "The Wall Street Journal," in a September 2010 article, noted that major publishers are publishing debut novels of literary fiction less frequently, making authors turn to small independent publishers. The independents are paying an average of $1,000 to $5,000 for advances compared to the $50,000 to $100,000 advances that major publishes had typically paid for debut literary fiction. Author and Agent Mandy Hubbard writes on her blog that, for popular fiction, major publishers generally pay advances of $7,500 to $10,000, or as high as $15,000 if a novel has a good marketing hook. Authors with a solid track record can earn much more.
Payment in Installments:
Instead of paying an advance all at once, publishers are now paying the advance in installments. A typical installment structure would have three payments: one-third when the author signs a contract; a third when the author completes revisions, known in the business as delivery and acceptance; and the final third on publication. Other publishers pay in two installments, half on signing, the remainder on delivery and acceptance. Author Constance Hale on her blog site "Sin and Syntax" quotes literary agent Andy Ross as decrying the practice. While an advance had originally been intended to give an author enough money to complete the book, “Now, essentially you’re getting an advance after the book is written,” Ross said. “That’s not even an advance. That’s a behind.”
Since an advance is based on anticipated royalties, an author doesn’t receive any royalty payments until the royalties reach the amount of the advance. As a result, experienced authors say the advance payments are often the biggest checks they receive, and in some cases, the only checks. The typical royalty an author receives, according to the Wall Street Journal, is 15 percent of the retail price for a hardcover, and 25 percent for an e-book. But the prices for e-books are less than half the retail price for a hardcover, reducing the cash payment to the author.
E-books and Self-Publishing:
The rise of the e-book market and the relative ease for authors to self-publish these days has dampened retail prices and reduced the viability of brick and mortar bookstores. Self-published authors on average, however, are hardly reaping a fortune. "The Guardian" newspaper in London conducted a survey that found the average amount earned by self-published authors in 2011 was $10,000. And while there are some superstars like Amanda Hocking with sales of $2.5 million, the survey found that half of self-published authors made $500 or less. Authors have criticized the survey for its bias and small sampling -- only 1,007 authors -- suggesting that much more than half of self-published authors are not exceeding $500 on their books.