The money pit …

• Posted in About Books, On Writing

Jim C. Hines (whose Jig the Goblin books I like) has an interesting post up about money and writing. Go check it out.

Why am I mentioning this? Mainly, because of my cousins. They were recently in town, and whenever I see them, I always get questions about how much money I’m making on my books and when I’m going to quit my day job. Everybody seems to think that I’m getting rich or something. Trust me when I tell you that I’m not — not even close.

The book business is really not as glamorous as people think. And no, I’m not making wads of money. To illustrate this, I thought I’d do a post about where an author’s money goes. The numbers below are completely hypothetical and for illustrative purposes only. With that caveat, here goes:

$10,000: Say you sell a book, and you get an advance of $10,000. Given the economy and the way publishing is floundering right now, this is a pretty good advance — especially if you’re a debut (new) author. Your agent automatically gets 15 percent — or $1,500 — of this money. So you have $8,500 left.

$8,500: Uncle Sam is going to take about another 15 percent of what’s left after you pay your agent — $1,275. It’s a little thing called self-employment tax, and it sucks. So now, you have $7,225 left.

$7,225: Say you like to save money and you put this in the bank. You’re going to have to pay taxes on the interest that it earns. Just to make the numbers easier, let’s say that’s $25. So now, you have $7,200 left.

$7,200: Now, it’s time to do promotion. Getting bookmarks/business cards/letterhead made can easily run $1,000. Let’s say you spend that much on paper products/office supplies/etc. and another $1,000 on creating a Web site. That’s $2,000, so now you have $5,200 left.

$5,200: Now it’s time to buy ads. Depending on the size you want, a single ad can easily cost $500 — more if you want color. Let’s say you drop another $1,000 on advertising. Now, you have $4,200 left.

$4,200: You’ll probably want to travel to a conference or two when your book is out to promote it and maybe meet your editor/agent. Conferences can be expensive. Let’s budget another $2,000 for travel/hotels/food/conference fees. Now, you have $2,200 left. Do you see where this is going?

$2,200: Postage is also a major expense. You’ve got to mail out books to contest winners, bookmarks for promotion, etc. Let’s say you spend another $200 on postage — and I am being very, very conservative here just to keep the numbers even.

$2,000: Let’s say this is what you’re left with after all the taxes, expenses, etc. That $10,000 advance isn’t looking like so much now, is it?

$1,000 per month: Now, let’s consider your time. Say you write fast, and it took you about two months to write your book. So you’ve made $1,000 per month of work. Not great, but not bad, right? Wrong. Because we haven’t talked about the revisions, copy edits, and page proofs you’ve had to do for your editor.

$500 per month: Let’s say the revisions, etc. take another two months to do. So now, you’re down to making $500 for four months of work on your book — and this doesn’t even factor in all the hours you spent on promotion or gas to drive to post office or a hundred other things that crop up in an author’s life. Which brings us to this …

$0: Sadly, this is probably what you’re going to end up with out of that $10,000 advance when you consider taxes, promotion, your time, etc.

So really, being a writer is like being in a money pit. Every little thing sucks those precious dollars out of your hands. Authors write books because they love writing, not because they’re making fortunes. Almost every author I know has some sort of day job to help support themselves, including yours truly.

Anybody who thinks that writing is a quick ticket to getting rich is crazy. And us authors? We’re probably the craziest ones of all for doing it. But hey, love does strange things to people …

Got questions? I’ll answer what I can in the comments.

12 Responses to “The money pit …”

  2. Jim C. Hines says:

    PR – you keep the advance whether you sell enough books to earn out or not. Say I get a $5000 check up front for my book. If I sell $6000 worth of books, I get an extra $1000. Go me!

    If I tank and only sell $2000 worth of books, I still keep the $5000 advance. I’m not sure what downside you’re seeing here…

  3. Charlie Stross says:

    This, for me, is just plain wrong.

    * I don’t get stationary and business cards printed — the nearest I’ll get to that is running off a few comp slips on the laser printer and guilotining them myself.

    * I don’t advertise. That’s my publisher’s job.

    * Website: I do it myself, but fork over about US $1000 a year to rent my own colo server. This doesn’t factor in the time cost of running my blog (which gets roughly 15-20,000 readers per article, and 75-250 comments — it’s a *popular* blog).

    * Postage: I probably spend under £100 (that’s $130) a year on postage. Mailing out prizes? Weird!

    * Convention travel: I do about six cons a year, four of them international — although I try to ensure that at least two of them are paid for by the convention (as a guest of honour slot). Actually I spend a *lot* on travel, probably around US $10,000 a year. Note: it’s a business expense and comes off my profit before the tax man takes his cut.

    * Different promotional work: I aim to do two interviews a month, if not more (it peaks at around two a week when a new book is coming out). Every time I visit a city I try to hit the specialist SF bookstore (if there is one) and signstock. And so on.

    Finally, the advance. My first novel’s net advance was $15,000 for North American rights only. Then I got half that again for UK rights. Foreign language translation rights eventually matched the North American advance, and finally the book earned out and payed a decent royalty in North America and the UK. The result is a revenue stream that is still delivering three-digit chunks of money five years after publication, and delivered more than triple the advance within 18-36 months of the initial deal. So if you’re successful, the picture isn’t as bad as it looks at first sight …

  5. Jennifer Estep says:

    PR — Nope, Jim is right. You get to keep the advance, even if your book only sells 2 copies.

    But it is important that you sell enough books to “earn out” your advance — that you sell enough books to earn back that $10,000 you got to start with. That indicates that your book is doing well — or at least as well as the publisher expected it to. Publishers are more likely to stick with authors whose books earn out their advances than those who don’t.

    Jim — Thanks for the link and stopping by. I thought your post was really informative. Stepsister Scheme is winging its way to me from Amazon even as I type …

    Charlie — Every author is different in what they spend money on. It depends on your book and genre and stage of your career and a dozen other things. I was just trying to give some general figures.

    For example, I’d say that postage is my single biggest expense. Whenever I have a new release coming out, I get bookmarks made, do promo letters, and mail them to bookstores and reader groups all over the country. I also give away a couple of books to my newsletter subscribers every month, mail manuscripts back and forth, etc. It adds up quick — much quicker than I’d like!

    Anyway, thanks for sharing your info.

  6. Angela Barry says:

    May I ask for clarification on your travel? If you are a guest at a convention, they don’t pay for your travel normally? Do they cover your food and hotel costs while you are there at least? I thought that was usually the case.

    Are you including travel/hotel costs for book signings as well in that? Thank you!

  7. Jennifer Estep says:

    Angela — Sure, no problem.

    I’m basing the travel portion on my experiences going to mainly romance events. For example, the annual Romance Writers of America conference in July (one of the major events of the year) has a fee of $425 this year. The hotel is around $200 a night, and the event lasts 4 days. So that’s about $1,200 right there — not including my gas and some of my food.

    Some of the smaller regional RWA events have much lower conference fees — $100 or so or less. But your hotel is still going to run at least $75 a night. If it’s in driving distance, I can usually go to a smaller RWA (or similar) weekend event for about $400-$500.

    Now, if you do a workshop at one of the RWA events, you usually get a discount on the conference fee, which helps.

    I’m sure the big-name, guest of honor authors (like a Nora Roberts) probably get their expenses comped, but I’m just not that well-known. Most authors aren’t.

    I’m not sure how it works at more fantasy/sci-fi oriented conventions. But even if you’re going to something like Dragon Con where the fee isn’t so high to get in, you’re still going to have to pony up for your hotel room, gas, etc.

    Anyone care to chime in with some fantasy/sci-fi con travel info?

  8. Alana Abbott says:

    Whew! Those are a lot of expenses. I think I’d end up being on the more frugal side with Jim and Charlie–but that may come from having done royalties-only work with a very small publisher. I’d definitely spend some of an advance on promotions, but I think I’d be plotting out how that money would get me paid through the next book selling… 🙂

    Complete tangent: I finished Jinx and really enjoyed it. The superheroes we’re meeting beyond the big name crew are really fleshing out the world more and more, and I’m excited to see who the lead will be for the next one!

  9. Jennifer Estep says:

    Alana — It is. I try to be as frugal as possible, but even small things like paper and printer cartridges can add up quick. For example, a cartridge for my printer is about $80 now, and I use at least three of them a year. So that’s about $250 a year just for ink.

    So glad you enjoyed the book!. :ww:

  10. Jim C. Hines says:

    Late getting back to this, but in terms of SF/F cons, I still try to stay on the cheap side, doing mostly the local (4 hour drive, max) conventions. Chicago is the furthest, and I split the ride and the hotel room. And as an author, they reimburse the actual registration so long as I’m doing panels.

    I did GenCon last summer, and that was a little different. More driving, but I crashed at a friend’s place. Not ideal, but it works for my more frugal approach.

    The last con I did was ConFusion, which probably ran me about $150 for the weekend. Ad Astra in Toronto was closer to $300 or so, but that’s about as pricy as they get for me.

    One of these days I’d like to get to more of the World SF and Fantasy Conventions though, at which point the hotels will cost more and we’ll be dealing with plane travel and such.

  11. Jennifer Estep says:

    Jim — No problem. I haven’t done any fantasy/sci-fi cons yet, but I’m thinking about doing Dragon Con in Atlanta next year and some more in the Southeast.

    I was wondering if there are usually book signings scheduled at the cons or if it’s more a you-set-up-your-own-table-like-a-dealer kind of thing?

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