Before you quit your day job there are some things you'll need to consider on the financial front of becoming a novelist. I have several author friends who'd quit working to write full time. Within a year they were back in the job market, working regular jobs. Why?
Rare is the advance that would replace the average yearly income. In the Christian market $20,000 is considered a
high advance--I challenge you to try to live on that for a year with five kids and a mortgage (and that this payment would be spread out, probably over 18 months)! Most first-time authors can expect between $2,000 and $5,000 and that will be divided into two or three payments. In a three-payment deal, the first third is payable on signing of the contract, the next at an approved synopsis, the third at an "acceptable" manuscript. Or if it's a two payment deal, the first half at signing, the second at an "acceptable" manuscript. When you consider how many hundreds of hours you put into writing your masterpiece this is well below minimum wage. Maybe a gig at Burger King wouldn't be a bad idea instead!
"Acceptable manuscript"--this is the terminology used in most contracts, but I challenge anyone to define where that line is. Generally speaking it happens once you and your substantive editor, usually an inhouse person, have finished going back and forth with revisions and the line editor has had their way. But as an editor, I've had several experiences of working back and forth, sometimes over a period of months or years, on projects only to finally decline the novel. It's not a common occurrence, after all by this point the publisher has a lot invested and would like to recoup their money. Still, it does happen. Don't lose sleep over it however; truth is once that contract is signed the publisher wants to make it happen as much as you do.
You'll be paid once or twice a year. I don't know how many of you can manage to live on one or two paychecks a year, but it's tricky. Farmers are pretty used to it, I guess. It helps to have a spouse with a regular income to keep everyday life afloat. There's a reason the phrase "starving artist" exists.
Many authors never get another check after that initial advance. So, while you may think, "This book will keep earning me money for years to come," you may be fooling yourself. Earning money beyond your initial advance is called "earning out." Being able to earn out is essential if you want a career that lasts beyond your first one or two contracts; after all, how many publishers want to sign an author who will only lose them money?
On the plus side you can deduct a lot of business expenses that are part of your regular costs. For example if you go grocery shopping at Sam's and also buy office supplies while you're there, the mileage to Sam's is deductible as are the office supplies. Your office space, cost of heating and cleaning it--all deductible. Do you pay your daughter or son to keep up your website or type for you? It's deductible. You'll have to keep careful records and reciepts. I hire an accountant to do my yearly income taxes--he saves me far more in tax payment than he costs me. (BTW: Back to School is the best time to stock up on your business supplies--when notebooks are $.10 a piece I buy them by the case!)
Another plus is that if you do earn out, you'll get unexpected paychecks. I bought a new dining set (with seating for 10) I'd been dreaming of for years with my last royalty payment on
A Can of Peas.
As you sell more books you can expect bigger advances. Combined into two- or three-book deals these checks can be a good size, even if they are divided into payments. My checks have paid for a new well (we do, after all, live in the country!); windows and vinyl siding for our house; a new roof; vacations; adding a family room, office, fourth bedroom and second bath to our home--the kinds of things we don't always "budget" for out of my husband's paycheck.
More later,
Traci
