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Copyright 2005 Tara K. Harper.  All rights reserved.

TARA K. HARPER
WRITER'S WORKSHOP
How to Make a Living at this Writing Gig

Can You Really Make a Living at This?
A Second Source of Income
Examples - the Math
Example 1 - One Book, One Year
Example 2 - Two Books, Two Years
Example 3 - Two Books, Better Advances
Example 4 - One Book, One Year, and Foreign Sales
Example 5 - Now We're Talking Money...
Example 6 - Royalties 101

Summary


The Big Q:  Can You Really Make a Living at This?

Yes.  No.  Maybe.  

Yes, you can make a living at fiction writing, but very few authors actually do compared to the number of authors who get published.  First, most authors don't write enough to sustain a career, to even begin the attempt at making a living at their fiction writing.  Instead, most authors publish one or two books, and their career ends there.

For career or long-term professional authors, most make their living only partially from their fiction work.  Most of these authors actually have a second source of income to bolster their sagging or relatively low earnings.

For those authors who do make a living at their fiction writing, income can vary wildly from genre to genre, year to year, and career to career.  For example, nonmedia science fiction seems to consistently earn less than fantasy earns, regardless of the author, since the market for science fiction is apparently smaller than the market for fantasy.

Consider two authors who have been in the business the same length of time, in the same genre, with the same number of books sold.  These two authors can earn completely different incomes if their contract terms are different.

Or, in one year, an author might earn $120,000, and the next year earn only $24,000, because of the way the contracts were signed, the timing of the delivery of manuscripts vs. the acceptance of the stories (thus determining the timing of on-acceptance monies), the dates the novels were actually published (which determines the timing of on-publication monies), a delay or cancellation in something caused by sudden change in market, etc.

There is no clear trend that one can point to and say, you should be at this level if you publish X number of books in X number of years.

So can you really make a living at this?  It depends on the market, on how disciplined you are in writing consistently good work and turning in on time, how popular your work is, how good your contract terms are, and how frugally you live.

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A Second Source of Income

For most writers, a second source of income is needed for a variety of reasons.  For example, if you don't earn enough from your fiction writing to pay monthly bills, you will need the second income source for basic reasons:  to pay bills, afford medical insurance, etc.

If you earn enough from fiction writing to pay your normal bills, you may still need a secondary source of income for when you:
  - Have not finished your book in time to get paid soon enough to keep from eating into your savings.          
- Need extra money to pay your taxes because you used everything you earned for living expenses.
- To pay for extras, such as a computer upgrade, a trip to see your family at your brother's wedding back east, books to read, a night out at the movies, music CDs.
- To pay for business extras, such as lunch meetings, hosting your editor for dinner, or flying out to that expensive conference, which might get you an "in" with that new publisher.  Don't forget enough cash to pay for dinner or that unexpected bar bill.
- To pay for large, unexpected family expenses, such as replacing the lawn mower, repairing your car after it's been totaled, fixing the washing machine, repairing the roof because three 180-foot trees just fell on it, termite eradications, veterinary bills, etc.
- To set aside college money for your children.
- To help with family expenses--elder care, medical bills, specialists, and hospice.
- To build a savings account.
- To build a retirement account.

A second career is security.  If you need security, then keep that second job.

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Examples - the Math

You can do all sorts of math to prove or disprove the writing-as-a-living gig.  Some examples are shown below.  These examples are basic--they show the types of income an average new writer or midlist author might see.

For simplicity, the examples use a general tax rate of 25%, which should cover income taxes, sales taxes, property taxes, retirement contributions, etc.  The examples also assume that the deductions are constant for each manuscript, regardless of how much money is made per book--the costs of phone calls, computers, copies, shipping/Fed-Ex charges, office supplies, etc..  For simplicity, deductions will be $600 per manuscript, even though your actual costs will likely be significantly more than that.  (Heck, I spend $600 a year just to print, copy and ship a single manuscript to and from pre-edit readers and to and from my editor [turn-in, final changes, galley checks, etc] over its lifetime.)

Something to note is that even though the amount a book earns might seem impressive, you don't usually receive that money all at once.  For example, a $10,000 (for simplicity) advance might be parceled out this way:  40% on signing, 30% on acceptance, and 30% on publication.  What this means is that, 3 months or so after you sign the contract, you will receive a check for $4,000, less your agent's percentage.  About 3 months after the manuscript is actually accepted by the publishing house (which may be one or two years later), you will receive a check for $3,000, less your agent's percentage, of course.  And finally, about a year later, when the book actually hits the stores, you will receive (about 3 months after that) a check for the final $3,000, less the agent's percentage.  Your average gross income is actually only about $3,300 a year.  Your average net income may be as little as $2,000 a year.  It's something to keep in mind.

The percentages that are received on-signing, on-acceptance, and on-publication vary.  That is a negotiation point for your agent.  For example, some publishers may want to give you only 25% or 30% up front, with the balance divided between on-acceptance and on-publication monies.

The thing to remember is that what you earn will be spread out over at least one year, and probably two or three years for a single-book contract.  What may look lucrative at first glance may not really be a sustained income.

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Example 1:  One Book in One Year

Simplest scenario and one of the most common:

You sell your first book for an advance of $6,000
Agent's percentage:  10%

Earnings:

$6,000

  advance

-600

agent's percentage

-600


cost of doing business (phone calls, copies, etc.)

$4,800

declared earnings

-1,200


taxes and retirement

$3,600

actual earnings for a one-year period

Nice paycheck--if you get it all at once, and if it was your income for only one or two months.  However, that income was for the year--or rather, for the timeframe in which the book is written and published.  Also, you won't get that $3,600 all at once.  You will receive, say, 40% of the advance up front, 30% when the manuscript is turned in, and 30% on publication of the book.

So in one year, you earned $3,600--if you signed contract, wrote the book, had the book accepted, and had the book published all in a single year.  Frankly, an annual income of $3,600 is pretty paltry if you're writing as a full-time career.

Or, as would be more likely in the normal cycle of publishing, you earned $1,800 a year in the two years it took to take the book from manuscript to bookstore.  That's an income of only $1,800/year, and yes, the decimal point is in the right place.

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Example 2:  Two Books in Two Years

Sometimes the publisher thinks the writer can be "grown" if given time to develop his skills and a readership for his work.  In this case, for example, the publisher offers the writer a two-book contract, but for low-to-average terms, to see if the market will respond and sales will pick up enough to justify further contracts.

First book advance = $7,500; second book advance = $8,500.
Agent's percentage:  15%

Earnings:

$16,000

  total of advances

-2,400

agent's percentage

-1,200


cost of doing business (for 2 books)

$12,400

declared earnings

3,100


taxes and retirement

$9,300

actual earnings for a 2-year period

Nicer paycheck.  However, again, remember that you won't get this amount all at once.  Because this is a two-book contract, it's likely that this income is spread out over the two years in which the books are written, turned in, and eventually published.  So the annual income is around $4,650/year--again, not very lucrative.

If you do manage to write both books, get both manuscripts accepted, and get both published all in one year (highly unlikely), you earn only $9,300.  Probably well below the comfort line if this is your only income.

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Example 3:  Two Books with Better Advances

In this example, the publisher thinks that the writer has significant potential because the first book sold well.  The publisher then offers the writer a two-book contract with larger advances.

First book advance = $10,000; second book advance = $15,000.
Agent's percentage:  15%

Earnings:

$25,000

  total of advances

-3,750

agent's percentage

-1,200


cost of doing business (for 2 books)

$20,050

declared earnings

5,012


taxes and retirement

$15,038

actual earnings for a 2-year period

This is starting to look like a decent paycheck.  However, again, remember that this income is spread out over the years in which the books are written, turned in, and eventually published.  So the annual income is around $7,500/year--well below what's needed to make the average rent for the year.

If you do manage to write both books, get both manuscripts accepted, and get both published all in one year (highly unlikely), you earn about $15,000 for the year.

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Example 4:  One Book in One Year, but Sold to Two Markets

If you have reserved foreign sales rights in your contract, you can resell the same work to both the North American market and to a foreign market (such as Germany, Russia, etc).  For example:

You sell one book American (advance = $10,000), plus the same book to foreign market (advance = $5,000).
Standard agent's percentage:  15%
Foreign agent's percentage:  10%

North American advance: Foreign advance:

$10,000

  American advance      

$5,000

  foreign advance

-1,500

standard agent's percentage

-500

foreign agent's percentage

-600


cost of doing business

-350


foreign costs - bank-transfer fees, etc.

$7,900

declared earnings (Am. adv.)

$4,150

earned from foreign sales

-622


standard agent's percentage

$3,528

declared earnings from foreign sales

Earnings:

$11,428

  overall declared income

-2,857


taxes and retirement

$8,571

overall earnings for a one-year period

The foreign monies are specified in the currency of the country involved.  If the dollar is strong, fewer dollars will come to you because the exchange rate requires that more of the foreign currency be exchanged to make up the dollars.  If the dollar is weak internationally, you will see more dollars in your check than expected, thus receiving a higher income from the foreign sales.

For example, if the dollar is weak, you might see the advance as $5,000 (broken up, of course, into the on-signing money and the on-publication money).  If the dollar is strong, the advance might be reduced to only $4,100.  It's a significant difference.

I consider money earned in foreign sales to be "free" money.  You didn't do any extra work for it--that book was already written and finished.  Had you sold the book only in America, you would have earned only $5,925 (after taxes).  Since you also sold the book overseas, you earned more.

Overall, if you sell to many foreign markets, foreign sales can give you a significantly higher income in one year than your single-advance North-American sales might bring in.  For example, there are years in which I earned more in foreign sales than I did from regular first-print advances and royalties.

You can also sell audio rights (books on tape or CD), electronic versions, dramatic rights, and other secondary rights to various markets.

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Example 5:  Now We're Talking Money

When you start to become established, or when the publisher wants to see many more books from you, you might see a significant multibook contract.  If you have reserved the foreign rights, you can again resell each of those works to foreign markets.  Once the books do well in one country, other countries can often be convinced to take a chance on you as a new author in their language.  This begins to create a decent income for the writer.  For example:

You sell four books American (total advance = $100,000), plus each book to two different foreign market (each advance = $5,000; total=$40k).
Standard agent's percentage:  15%
Foreign agent's percentage:  10%

North American advance: Foreign advance:

$100,000

  American advance      

$40,000

  foreign advance

-15,000

standard agent's percentage

-4,000

foreign agent's percentage

-2,400


cost of doing business

-3,000


foreign costs - bank-transfer fees, etc.

$82,600

declared earnings (Am. adv.)

$33,000

earned from foreign sales

-4,950


standard agent's percentage

$28,050

declared earnings from foreign sales

Earnings:

$110,650

  overall declared income

-27,662


taxes and retirement

$82,988

overall earnings for a 4-year period

This averages out to around $20,000 a year for four years.  At this point, your writing is starting to become a sustainable career.  Of course, if you spend the whole amount the first year as one year's income, you will be in serious trouble for the next three years when you have very little income coming in.  You have to remember that the money you earn from each book is usually spread out over at least one year, usually over two years, and possibly over three or four.  The chunks are advances (on-signing monies), on-acceptance monies, and on-publication monies.

A multibook contract means that you are given more money up front.  That means that you won't see as much in subsequent years for the books for which you've already been paid.  To some extent, this creates a feast-or-famine lifestyle.  When you sign a contract, you get the big bucks.  The rest of the time, you scrape by on a few thousand a year.  Or, you can somehow, with remarkable discipline, save a quarter of that initial advance for each year of the contract, and use that as your annual income for those four years.

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Example 6:  Royalties 101

The money you see when you sign a contract is advanced against the money that is expected to be earned by sales.  When you figure royalties, consider the advance a negative amount, then add sales until you start to see the royalties.  This will also tell you how many books you have to sell in order to see royalties.

This scenario uses the advance ($6,000) from Example 1, earlier in this file.

You sell one book for an advance of $6,000; the book earns out in 6 months, with overall sales of 20,000 books.
Cover price:  $5.99
Royalty rate, standard sales:  6%  (36 cents per book)
Standard agent's percentage:  15%

$ -6,000

  total advance

+7,200


book earnings (20,000 books x $.36)

$1,200

royalty earnings after advance is paid off

-180


agent's percentage

$1,020

declared earnings

-255


taxes and reitrement

$765

royalty income for first 6 months

Refer to Example 1.  In the year you signed the contract, you got an advance of $6,000 and took home a net income $3,600 for that year.  The book earned out six months after the book was published about a year later, and it took three months after that to see the royalty check itself.  So, you earn $765 as your annual income for the second year.  Hmm...  Annual income of $765--might pay for one month's worth of bills if  you're sharing rent with someone else...  If you are in this position, I'd say you still need that second job and paycheck.

It is tempting to dream of continuing to have sales of 20,000 books every month.  The reality is that initial sales are usually the big sales.  After the first two or three months, sales usually drop off dramatically.  A book that sold 20,000 copies in the first six months, probably sells only 400-1,000 books every six months after that.

If your book is very successful, it might have initial sales of, say, 50,000 to 100,000 in the first six months, with average sales level of 2,000 to 4,000 books (respectively) every six months after that for the next five years.  With initial sales of 50,000 books, you would earn $12,000 for the first six months (remember the $6k advance), and average $720 each six months after that.  With initial sales of 100,000 books, you would earn $30,000 for the first six months, and average $1,440 every six months after that.  Real numbers vary, of course, depending on a host of circumstances and varied royalty and sales rates.

In the real world, fewer than 10 percent of all books published make it to this level.  Most books never earn royalties.  For most books, the advance is the only money you will see.  My advice is to figure that your income is your advance and only the advance.  Anything else is frosting on the cake.

The trick to making your writing into a living is not necessarily to have large advances--which you would have to justify by having large sales.  One way to make a living is to have enough titles on the stands so that, even if each book earns only $1000 in royalties, the cumulative amount is significant.  For example, having 20 books on the stands could mean $20,000 a year in royalties.  Along with the advance from each new book you sell, you can earn a very palatable income.  You might manage to earn higher royalties and make a living with only six or seven books on the stands.  Either way, you need enough money in savings (or from a second job) to help you reach the point at which you have enough books on the stands to continuously earn a living, not just earn a living for one year.

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Summary

So, can you make a living at this writing gig?  Do the math with your contracts and tax rates, and factor in the costs of doing business (computer, shipping, phone, paper and toner, reference books, health insurance, filing cabinets, etc.), and see what you'll have left in your basket to live on.

There is no shame in holding down a second job.  And, if you're not hungry for income, you are less likely to jump at a lousy contract just to stay published--a contract which might also lock you into a cycle of financial catch-up that ends up spelling ruin, regardless of how much you write.  If you want a career, take the contracts that will help you build a future.  A good contract is one that lets you focus on your writing, not one which takes advantage of how desperate you are for an immediate chunk of money.

Every writer's needs differ.  Know your needs, know what you're willing to take or negotiate away.  Make sure you sell your work, not your self.  That's the only way you will be able to continue writing as a joy, not just as a job for the paycheck.


Copyright 2002, 2005 Tara K. Harper

All rights reserved.  It is illegal to reproduce or transmit in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, any part of this copyrighted file without permission in writing from Tara K. Harper.  Permission to download this file for personal use only is hereby granted by Tara K. Harper.


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