Royalties, Advances and Flat Fees - How do they work?

How are children's writers paid for their work? There are two main ways - 1. Advance against Royalties, or 2. Flat Fee.

These two payment types usually correlate with what kind of publisher you are working with. Trade publishers (see previous blog) usually offer a contract with an Advance against Royalties. Educational publishers usually offer a Flat Fee.

What is the difference? Flat Fees are negotiated, one-time payments. You are hired to write a book for a specific fee. For example, you may be hired to write a biography for an educational publisher. Say they offer you a $1,000 fee. You would get $500 when you sign the contract and the other $500 when you hand in the completed manuscript. Then your payment is complete. You do not receive any additional funds. This is called Work-for-Hire or a contract with a Flat Fee.

Trade publishers usually offer writers a contract with an Advance against Royalties. For example, you are selling your book to a trade publisher. They offer you a $5,000 advance. You receive $2500 when you sign the contract and $2500 when you deliver the final manuscript. Then you wait. Royalties are payments based on the number of books that are sold. (Say you get $1.00 per book. So, if 300 books are sold, you receive $300.) But here is the part a lot of people don't understand. You must "earn out" your advance before you receive any royalties. So, if your advance was $5,000 you must sell 5,001 copies of your book before you get any additional money. Once you have sold the 5,000 copies, you will start receiving royalty checks in the mail.

We often hear about people getting big advances. This is good if you want/need more money up front. But, ultimately you will receive the same amount of money in the end. And if, by chance, your book does NOT sell out its advance (the 5,000 copies in our scenario), then the publisher may look less kindly on you when you want to sell them book #2.

So, bottom line - expect to negotiate a flat fee for educational publishers. And when you sell a book to a trade publisher, yes try to get a good advance, but don't worry about getting a huge amount. A smaller advance up front just means receiving royalty checks in the mail that much sooner.