A Writer's Tale

On Money

NO ASPIRING WRITER LIKES TO HEAR THIS. I SURE DIDN’T. BUT IF YOU want to write fiction for a living, you will need another source of income.

Either find yourself a full-time job or marry yourself a working spouse unless you have plenty family money and don’t need to worry about income.

Though it is certainly possible to earn a living at the writer’s trade, the chances of making much money early in your career are very slim. Virtually non-existent.

First, be advised that you can’t earn a living by writing short stories. There aren’t enough markets. And the markets that do exist (anthologies and a few magazines) don’t pay much.

Unless you sell a story to a really top market (such a Playboy) you’ll be lucky to get more than a couple of hundred dollars for it.

Take a look at the math. If you’re incredibly good and prolific and write a story every two weeks and they all sell, you would have 26 stories over the course of a year. If every one of them sold for $200, you would be earning an annual income of $5,200. (At least you wouldn’t have to pay income tax.)

To earn a living, you must write novels.

Here is another tough truth: the first novel you write probably won’t sell. When you hear stories about a “first novel” that takes the literary world by storm, they’re referring to an author’s first published novel. It might be the second, third, or twelfth novel that the author actually wrote. Those earlier ones just weren’t fit to be published.

Almost nobody’s first attempt at writing a novel results in anything worth reading except maybe as a curiosity. (This truth wouldn’t necessarily apply to the first attempt at a novel by a seasoned poet, playwright, screenwriter, journalist, or short story writer.) Why bother to write the first novel if it won’t sell?

For one thing, there is a chance, however slim, that it might sell. For another, you have to write the first novel or you’ll never get down the line to the one that does sell.

It’s a step toward your destination. Without taking the first step, you just don’t get there at all.

Okay.

Let’s move on to your first novel that sells.

When you finally hear that a publisher has made an offer to buy your novel, celebrate! No matter what the publisher intends to pay you, this is one of the great moments of your life.

Your book has sold! Almost everyone dreams of selling a novel, but you now stand among the select who have done it. Enjoy your triumph. You deserve it. Scream and dance. Call everyone you know and blurt out the news. Break out the adult beverage of your choice. Go to a fine restaurant if you can afford it.

But don’t quit your job.

You’ll want to.

Oh, boy, will you want to!

In the euphoria of your first novel sale, you’ll have an overwhelming urge to quit your job and write full time.

Resist it.

Here’s why.

For one thing, the publisher probably won’t let you have the full amount of the advance all at once. Depending on your contract, you may get half the money when you sign the contract (known as “on-sign” money) and the other half upon publication of the book.

That second half can be elusive. They probably won’t publish the book for at least a year.

Maybe not for a year and a half. After the book is published, you’ll have to wait two or three months longer before you actually receive the payment.

As for the “on-sign” money you probably won’t see a penny of it for four to six months.

A couple of months might pass before the contract is even finalized. After that, most publishers will keep the on-sign money for at least two more months before sending it to your agent. Only the very best agents will then send the payment to you immediately.

They have clerical work to do such as removing their 15% (very few agents take only 10%). Like the publishers, many agents will take their time about sending your money to you. (It appears that they have other uses for it.)

The upshot is, don’t expect to see your on-sign money any time soon. My advice: after a month has gone by, start bugging your agent. Ask where the money is. You might get it faster particularly if your agent isn’t naturally aggressive if you pester him a bit. (The squeaky wheel gets the oil.) Encourage him to pester the publisher.

In my own situation, I had an excellent agent named Ralph Vicinanza who was very diligent about getting money from publishers. After a reasonable amount of time had gone by, he would start phoning the publisher daily to ask about the missing payment. My current agent, Bob Tanner, does a great job of getting the money and sending it to me as fast as possible.

If you have an agent who isn’t aggressive about obtaining your money or who doesn’t forward it to you promptly find a new agent. Find one who cares about you, who realizes you need that money, sometimes desperately.

Let’s move on.

You finally receive the on-sign payment for your first novel less your agent’s fee.

Look at the check.

How long will you be able to live off it?

At the lower end of the scale, you might get only $1,500 to $2,000 for a first novel, especially if it’s to be published as a paperback original. Somewhat better houses might offer you $5,000. You’d be lucky to get an advance of more than $5,000 from a U.S. publisher for a first novel.

At that rate, how many novels would it take to earn a good annual income?

If you wrote four books in a year, they all sold and you got the entire amount on each acceptance you would be up to a grand total of $20,000 for a year of writing. ($17,000 after the agent has taken his fee.)

Not exactly a fortune, is it?

And I hate to write this but your next novel might not sell. Mine sure didn’t.

After your first sale, your publisher will have an option to buy your next work. But they don’t have to buy it. And for any number of reasons, they might not. You can then try to sell it to a different publisher, but that might not be easy.

The advance money from your first sale could very well be the only writing income you’ll get for a whole year or longer.

How far can you stretch $2,000 or even $5,000?

Of course, your advance might be higher. Sometimes, a writer really gets lucky comes up with the right book at the right time and gets it to the right editor and your advance might be astronomical. If that happens, you’re in a different realm. You can probably do without most of my advice. Enjoy!

The fact is, however, a first novel makes an author rich so rarely that you don’t really need to bother your head about it.

Let’s talk about more likely sceneries.

Your first novel is bought for $5,000 or less. About a year later, it is published. Suppose it does really well? That can happen. It happened to me with The Cellar.

Your initial $5,000 is an advance against royalties. You might be entitled to 8% of the book’s cover price, meaning you get eight cents for each dollar. If the eight cents add up to more than $5,000, you have earned back your advance and you will be owed additional money.

Say your book sold so many copies that you earn $80,000 over your advance. The publisher has to send you $80,000! You’re in the chips! Your ship has come in!

Now, at last, you can quit your job!

Well, maybe not.

There are things called “accounting periods” and “monies being held back against future returns.”

The first accounting period generally ends about six months after a book’s publication date. About two months after the end of the accounting period, your agent should be sent a royalty check. That is at least eight months after the book was published but frequently longer.

But will you get $80,000? You wish.

You’ll get more like $34,000.

$40,000 minus $6,000 for your agent ($4,000 if you’re lucky enough to have an agent that only takes 10%).

The missing $40,000 of the $80,000 you think you’re owed is being “held against returns.”

In truth, it is being held so that the publisher can keep it longer. They use your money for other purposes, such as paying salaries, printing costs, advances to other authors, whatever.

Unless maybe they’re just going for the interest on it.

Okay, so you ended up with $36,000 instead of $80,000.

No big deal, right? You’ll get the rest next time.

Wrong.

Six months later, you should receive your second royalty statement for the book. But it won’t be for the $36,000 you probably expected. It’ll be in the amount of $17,000.

($20,000 minus your agent’s fee.) Six months after that, you’ll get $7,225. Six months later, it’ll be half that amount. Six months later… Each payment will be half as much as the previous one until the amount has been whittled down to nothing. Eventually, you do get your full $80,000. It takes five or six years, though.

If that shocks you, it should.

Somebody is getting screwed, and it is the author.

However, you should consider yourself very fortunate if you have earned out your advance. It is a sign that your book did better than the publisher expected, and that they didn’t pay you a high enough advance in the first place.

Many writers never see a royalty check.

Let’s get back to advances something writers do see if they sell a book.

If your first novel does reasonably well (but is no blockbuster), you might be offered the same amount for your second book. Or maybe a couple of thousand more. (Or they might dump you. Who knows?)

After a few novels that have all sold reasonably well, you might be able to get your advance up to $10,000 or $15,000.

Which isn’t too bad. You’re fairly successful if they offer you that much.

But they probably won’t buy another book from you for a while because, all other factors aside (such as rejections), most publishers don’t want to publish more than one book per year by any author.

So, can you live on $15,000 per year?

Let’s take it to the next step. If you’re very successful (but still not a bestseller), you might be offered an advance of $50,000 or even a little more. And maybe you get a contract for two or three books at that amount. Now we’re talking real money.

Say it’s a three-book contract for $150,000. Sounds great. And it isn’t bad.

The contract, of course, will divide up your payment like a pie being fed to the 101st Airborne. You’ll get a good chunk of on-sign money. (Which will lead to owing a big chunk to your friends at the IRS you need to pay quarterly estimated income taxes, you know. After the on-sign money, your payments will be divvied out in much smaller portions. You’ll get a payment on acceptance of each book, and on publication of each.

Already, we’re talking about a sevenway split. If your contract includes both hardback and paperback publication, the money will arrive on ten different occasions. (These matters vary a lot, depending on many factors.)

If all goes well, you’ll receive most of your $150,000 over a period of three years. This would give you an income of approximately $50,000 per year.

But something might go wrong. Maybe the publisher doesn’t accept your second book, or your third. Maybe your first book doesn’t sell as well as they’d hoped, so they look for ways to get our of the contract.

A lot can go wrong, and usually does.

Many U.S. publishers don’t exactly keep their promises… or their contracts.

Even if you’re lucky enough to get the entire $150,000, it doesn’t seem like quite so much money after it has been spread over a period four or five years.

On a really bad note, the sales of your first or second or third novel might disappoint your publisher, so you don’t get offered another contract. And word gets around that your stuff doesn’t sell so well…

I’ve painted a very gloomy picture, haven’t I? Well, plenty of writers will be quick to point out that I didn’t paint it gloomy enough.

The thing is, you need to know the score.

You don’t want to be taken by surprise by the tough facts of a writer’s life after you’ve sold your first novel and quit your job.

Hang on to that job.

Unless you’ve got income from another source, you’ll run into extremely bad times if you try prematurely to make a living from your writing alone.

I don’t know much about inherited money. If you’ve got so much that you don’t need a job, you can write full time without any problems. Whether or not you’d be driven by a hunger to succeed might be a different matter.

If your spouse has a good job and is willing to support you and the family while you try to be a writer, that’s great. And it may be a real solution if you’re a woman and a housekeeper.

In spite of women’s liberation,” however, the man is still almost always expected (lip-service to the contrary) to be the bread winner of a family.

No matter how “liberated” your wife might be, you’d better get ready for some big-time resentment if you stay home to write fiction but don’t quickly produce some decent money.

Before you know it, your wife will almost certainly start to consider you a loser, a loafer, a freeloader. You’ll feel enormous pressure to succeed. And you don’t need that.

What you need is a job of your own.

As I realized from hard experiences, a job of your own gives you great freedom.

Without it, you’re under horrible financial stress. Even if your books are selling okay, you have to wait and wait and wait for payments to arrive. You watch your bank account dwindle away. You watch your credit card balances grow till you hit your limits. You watch bills come in… bills you can’t pay. And you watch for the mailman, praying that today, at last, he’ll bring you the check you’ve been expecting and expecting…

Maybe an on-publication payment that’s three months overdue. Maybe the check’ll arrive in time for you to pay your mortgage or your rent or your car insurance or your income tax. (It almost never does.)

With a job that pays the way, all those troubles vanish.

Don’t give it up until you’re absolutely sure you can get along just fine without it.

A good job is a lifeboat. Though the temptation might be overwhelming, don’t jump off it and start swimming at the first sign of an island. The island is probably a lot farther away than it looks.

While it is very difficult to make a living as a fiction writer, income derived from writing can be a great source of additional income. It’s like moonlighting as your own boss.

You work your own hours. Whatever you’re able to make, no matter how little, is extra income, like a bonus. And you always have a chance of hitting the jackpot.

You can’t exactly live on a $5,000 advance, but you can take a darn good vacation. Or re-roof your house. Or start saving for a rainy day or for the day you decide to go full-time as a writer. Five thousand bucks is pretty nice when it’s frosting on the cake instead of your annual income.

When is it safe to quit?

It’ll never be entirely safe. (But then, any job can go down the tubes for one reason or another.)

There may come a day, however, when it no longer makes financial sense for you to hold down a nonwriting “real job.”

Though I painted a dismal picture in the earlier portions of this piece, excellent money can be made by writing fiction.

Writers of bestselling novels earn many millions of dollars every year.

But you don’t need to write bestsellers to earn a good income. Even if your novels are being bought for $10,000 to $50,000 each, you can make a significant income.

How?

There are many ways to earn money as a fiction writer, but they only work if you produce.

You have to write and sell novel after novel after novel. (And perhaps some short stories along the way.) By producing a lot of finished pieces, you can create an overlapping of payments.

The secret is to write a lot of books.

This is how it works.

This is how you can be a successful, semiwealthy author without ever having a bestseller…

Ready?

Here is an example (but there are countless possible variations).

During the course of a year, you might receive the on-publication payment for a hardbound edition of a novel that you wrote last year, on-publication money for the paperback edition of a novel you wrote two years ago, on-sign money for a new contract for books you haven’t written yet, on-acceptance money for a novel you finished a month or two ago, film option money for a novel that was published three years ago, royalty checks for several of your older books that have sold beyond their advances, payments for a short story or two that you knocked out during the year, money for three or four of your old novels that your agent has sold to a foreign publisher.

And so on.

You may be selling your novels, one per year, to a U.S. publisher for about $20,000 each.

But due to what I’ll call the Pile-On Effect or (P.O.E.), you might very well earn an actual income of $50,000 -$100,000 (or more) over the course of a single year.

The Pile-On Effect is how a normal, non-bestselling writer can earn a good income. The more you write, the better it works.

However, it can’t be achieved easily or quickly. It has to be developed over a span of several years. The key to P.O.E. is the number of books you write and get published.

It doesn’t work very well if you’ve only sold two or three books. But by the time you’ve sold ten or fifteen, it will almost surely be generating plenty of money.

You need to keep a nonwriting source of income to sustain you until you’ve produced enough material for P.O.E. to kick in.

When is it safe to quit the job and write full time?

As soon as you see that the Pile-On Effect is producing a steady, large income. How large? That’s up to you and your spouse.

Generally, by the time you see significant results from P.O.E., you should be able to earn more money from writing than from your “real job.” At that point, any job other than writing becomes a waste of time and money.

It’s quitting time.