How Much Money You Can Expect to Make from Your First Book Contract

Demystifying Book-Based Income

Books require a lot of time and energy to write. It is natural, not greedy, to wonder whether it’s all going to be worth it in the end.

Good work is its own reward, yes, and it’s hard to put a price tag on the feeling of getting your book into the world, knowing it will be part of your legacy for a long time. But you have every right to wonder how much money you’ll make from your first book.

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Calculating book-based income can feel very mysterious and secretive. In this article I want to give you a straightforward explanation of how authors are paid and therefore how much money you can expect to make from your first book.

How Authors Are Paid

Publishers pay royalties to authors based on how many copies of their book sell. Sometimes royalties are based on the retail price; sometimes royalties are based on the publisher’s “net receipts,” which is just a fancy term for how much revenue a publisher receives from sales.

Let’s say you’re getting a 14 percent royalty based on net receipts. Let’s also say your book retails for $15 and sells 5,000 copies in the first twelve months of being available in the marketplace. Keeping in mind the publisher sells at a 50 percent discount (or higher) to retail outlets, here’s the math:

14 percent royalty x $15 retail price x 5000 copies sold x 50 percent discount = $5,250.

That amount ($5,250) is how much royalty your book would have earned over its first 12 months of publication.

How Advance and Royalties Work

Publishers pay an advance against royalties based on how many copies they think a book will sell over some period of time, often a year. So, using the above example, if a publisher projected that scenario, they might offer an advance of $5,000.

But let’s say your book went on to sell 5,000 more copies for a total of 10,000. Just to make things interesting, let’s say your agreement with your publisher is that after the first 5000 copies sell, your royalty increases to 16 percent. Here’s the math:

14 percent royalty x $15 retail price x 5000 copies sold x 50 percent discount = $5,250.

+

16 percent royalty x $15 retail price x another 5000 copies sold x 50 percent discount = $6,000.

Total: $11,250

Very often publishers hold some number of copies sold in reserve to allow for returns, but assuming all 10,000 copies sold and did not come back to the publisher, you’d be at a total royalty income of $11,250.

If your initial advance was $5,250, the publisher would now pay you an additional $6000. Different publishers have different cycles for paying royalties, but a fairly common payout is semiannually (half-yearly). This is also when you would receive a royalty report—essentially a spreadsheet showing how many copies have sold and the resulting amount due to you.

Influencing Factors

All the variables in this equation have a significant impact on the total at the end of the equation:

  • Your royalty rate could be higher or lower.
  • Your book’s retail price could be more or less than $14.99.
  • The average discount at which a publisher sells your book could be more or less than 50 percent.
  • And of course the number of copies will likely be lower or higher than a round 5,000 or 10,000 copies.

You can manipulate any one of these factors to see how it will change the total. I created a tool called the Author’s Income Calculator which allows you to see how changing any of these factors affects the bottom line. To use the calculator, click here.

Another Way to Make Income from a Book

Another very important opportunity for authors to keep in mind is how much money they can make from selling copies of their own book. Publishers often sell copies of an author’s book back to the author at a discount that is higher than they offer through regular trade channels, as long as the author is buying a significant number of copies. This is referred to as an author’s “buyback discount.”

These copies are typically royalty free, but let me show you why that’s nothing to be concerned about as long as you have a way of selling the copies you purchase. Let’s say you bought 1000 copies of your own book at 65 percent off the retail price. (Your publisher may not want to offer that high of a discount, but it’s not outlandish.)

Here’s the math on your cost:

1000 copies x $15 retail x 35 percent (the percentage you pay after a 65 percent discount) = $5,250

Now let’s say over the course of a year you are able to sell those copies at the standard retail price of $15. A thousand copies multiplied by $15 is $15,000. Subtract your cost, and you’re at $9,750.

So in this scenario you made almost $10,000 from 1000 books sold, and this does not include whatever your advance was.

It’s important to your relationship with your publisher and to the overall success of your book to promote your book widely. You don’t want to promote the copies you’re selling to the exclusion of all the other copies in the market. You definitely want to take a multipronged approach, but hopefully you see how you can make a significant amount of money from a traditionally published book.

The Common Denominator

Whether you’re calculating your advance, your total royalties, or the amount you can make from copies you sell, the common denominator is sales. The amount of money an author can make is not really mysterious. It comes down to math. (To calculate how much money you can make using your own figures, click here.)

If the common denominator is sales, what’s the secret to selling as many copies as possible? Well, again, it’s not really a secret. Selling books is a result of cultivating an audience over a period of time and writing a great book that offers a lot of value.

Next Steps

Here are some questions to ask as you think about writing and publishing your book:

  • Who is your audience?
  • What problem do they have that you can solve in a practical, meaningful way? I recently heard Pamela Slim say, “Define your audience by their problems, not their demographics.” That’s good advice.
  • Are you willing to spend a year or longer helping your readers solve that problem?
  • Where is your audience already gathering?
  • How can you begin attracting them to you and building an email list of potential readers?

Like most things worth doing, building an audience and writing a book take time. But getting your book into the world can be one of the most rewarding things you’ll ever do.

Question: Who do you want to serve, and what sort of book would you like to get into the world? You can leave a comment by clicking here.

Please note: I reserve the right to delete comments that are offensive or off-topic.

  • Randy Greenwald

    You do the math assuming that the book sells 5000 copies. Is that itself realistic? What is the minimum that a publisher has to anticipate selling before they are willing to take the risk?

    • Chad R. Allen

      Randy, it depends on the publisher, but among major trade publishers, 5000 copies in 12 months would definitely be toward the lower end of what they’d be willing to accept as a projection for a book they contract.

      • Randy Greenwald

        Thanks. I assumed it was something like that. As someone new to this world I don’t have a firm grasp on what constitutes a ‘major trade publisher.’ Sorry to be a pest, but I’m curious how one might define that.

        • Chad R. Allen

          No problem. I’m thinking of what we sometimes refer to as the Big 5 in New York (Hachette, HarperCollins, Macmillan, Penguin, Simon & Schuster) and publishers that regularly compete with them for projects.

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  • Sharon Lawlor

    My first bulk purchase from the publisher was 250 + my 50 free copies. Obviously my discount was not as high as you describe. The dilemma is where to invest what little I have to work with. Clearly advertising is necessary to get the word out and build interest.

    This article was helpful in that it confirms the necessity of direct sales. Which means building a base, networking and prayer! There is a scripture that says God will not bring to term and not bring forth. This book is one of evangelism:,leading people out of the bondage of false teaching into the light and freedom of a relationship with Jesus Christ. God will provide a way and the means. But like Peter, I have to go fishing to get it!

    • Chad R. Allen

      Sharon, glad it was helpful to you, and thanks for taking the time to comment!

  • Really helpful, thank you! Trying not to gulp when I realize how many need to sell to get into a royalty situation…but working hard, trusting God, and hopeful. 🙂

    • Chad R. Allen

      Katie, thank you. You can do it, just keep serving your audience.

  • LindaMKWriter

    Great topic. I laugh when people assume I must be doing well financially because I’m a WRITER. And like most writing professional, I would like to be able to be paid a decent amount for my work, even though I know it’s likely to happen only in my dreams.

    You asked what problem our readers have that our writing addresses. My memoir shows how God has a plan and a purpose for each one of us, and that plan can be redeemed even when we believe all is lost. This story has been told over and over through the ages, and I am gratified to be able to add mine, praying to give hope and a sense of sisterhood to those who are going, or who have gone, through divorce and recovery.

    Within that context is a more specific issue though. One that I believe has not yet been significantly addressed. That is, how divorced people are too often shunned by the church when they desperately need healing and grace instead.

    As I verbally share my story, I’ve been surprised at how many people have their own version of this issue. Even some of my friends have been greatly damaged by their churches, some turning their back, not only on their church, but on God. They have suffered “spiritual abuse” by their churches in Jesus name! I want to bring their pain to light and reveal the Pharisaical attitude of these churches so that reform, healing, and grace can prevail.

    I confess I often ask myself who am I to have such a lofty goal, but I’m dedicated to just keep doing the best I know how. If the Lord wants His light to shine in this area, he will accomplish it.

    I think I’ve gotten off-topic. Sorry about that.

    • Chad R. Allen

      Not at all, thanks, Linda. And may you persevere!

  • Taylor Kidd

    I have to say, God has been using your emails in a pretty divine way lately. My friend and I know that God wants us to write a book. We have a passion for spreading His Word and we know it’s our purpose to share His truth. We’ve been working on the book, and life has caused a few bumps which, of course, led us to slow down a bit. But every so often I wonder about something, and the next day you address my very specific question in an email. I just wanted you to know you’re truly helping, and you’re propelling me into the task that God has laid out for me to accomplish. I hope you buy and enjoy our book someday soon. And know that you played a part.

    • Chad R. Allen

      Taylor, I would welcome that! Keep moving forward! And thanks for this lovely comment; it made my day! 🙂

  • Melissa Henderson

    Very helpful information. Thank you.

    • Chad R. Allen

      You’re welcome, Melissa, and thanks for taking the time to comment!

  • Gary Hansen

    Chad this is a really helpful post. Thanks for the clarity — and the calculator!

    • Chad R. Allen

      You’re welcome, Gary! Glad it was helpful to you.