Category Archives: ER

How I Negotiated My Book Contract (Part I)

After FIREing from my marketing job at a semiconductor company in 2014, I had loads of free time. So, I dedicated a few hours every day to writing a book. It was a collection of simple tips I’d learned during the part of my career I loved most: Planning products and working with customers in order to understand their roadmaps.

My intention was to post these tips as an ebook on Amazon, and sell it for a few bucks a pop. As I finished the book, I was contacted by an acquisitions agent from an actual, bona fide, New York publishing house. Hm, this was interesting. I put my copy of ‘how to publish an e-book kindle’ aside, and skyped with her. A few weeks later, she sent an official offer.

In this series of articles, I’m going to share my experience getting from the offer to a signed contract: What I learned about book contracts, how I negotiated for what I wanted, the compromises I made, as well as the advice that various people gave me.

Let’s start with the offer.

My initial reaction seeing the email in my inbox was glee. I immediately forwarded it to my mom to share my excitement.

After reading the offer, however, my excitement gave way to disappointment. The terms seemed paltry.

Royalties: Print: 10% on net price up to 10,000 copies sold; 12.5% up to 20,000 copies sold; 15% thereafter;
Ebook: 15% on net
Audio: 15% on net
Advance: $1k contract sign, $1k manuscript delivery, $1k publication.

I understood the logic behind a low royalty on print editions, as the cost of printing is non-zero. But 15% on ebooks? That seemed absurd. And I had no idea on audio books or the advance.

It was time to do some research.

First, I logged onto kboards. It was the path of least resistance. I had an account already, and had received decent advice in the forums in the past. Advice ranged from desperate (any interest from a real publisher was a gift and should be capitalized on immediately), to supremely confident (“My contract is 50/50 profits on all ebooks and I would never accept less.”).

I moved on to google. For understanding paperback royalties,  I found the article,  “Negotiating Book Terms and Royalties,” on www.foner.com to be useful. Here, I learned helpful insights. In a negotiation, the author wrote that it’s, “easier to move the (volume) break points, even eliminating the lowest category, than to increase the final royalty.” In the offer above, the volume break points were 10,000 units, then 20,000. I could recommend we cut those in half.

Then I wondered if those volumes were realistic. I quickly found out no. For a business self help book, I’d be wildly successful if I sold 8,000 copies. That means I would never advance to the second tier, and I’d be stuck with 10% on net for all sales.

Here’s an idea of what ‘10% on net’ means. Say the list price of the book is $15. Depending on how the publisher calculates ‘net’, my ‘10% on net’ pay off per book would be between 90¢ and $1.05.  However, 10% on list price, would be $1.50. Thats between 43 to  67% higher. Even 8% on list, would be 15-33% ahead of 10% on net.

List-based royalties come with simplicity and clarity.  There’s no need to worry about how ‘net’ profits are calculated, or if the book is selling at a massive discount. No matter what, if a book sells, I would get a % of the list price. Period.

As for ebooks, 15% of net seemed crazy low. I’d imagined 50% would make sense, as there’s such minimal overhead. Split the profits, right? I quickly discovered that the Writer’s Guild felt the same way. I also came to learn that the industry standard rate was 25%. So, I was right – the offer was indeed, low.

I wasn’t sure why an audio book royalty rate was even listed, as the plan was only for paperback and ebook, so I put off looking into that. Even so, 15% of net seemed quite low.

I’m not a master negotiator.  I’m not an idiot, but I do acknowledge that I haven’t exactly studied the topic. I understand concepts like anchoring, and that the first person to put out terms has the advantage, but my experience in negotiating a contract is scant. So, I reached out to four people whom I respect for their negotiating skills: two women and two men.

The women encouraged me to do my homework, research contracts, decide on what I want, then counter with those terms. The men advised me to shop the manuscript to other publishers in order to brew up a bidding war.

In the end, I researched the topic in each paragraph, and asked for what the writer’s guild and various writers recommended. The publisher agreed to all but one of my approx 2 dozen changes. Yeah.

… or Keep Working?

I’m sitting at the kitchen counter of my friend’s lovely home in Silicon Valley. I’ve been couch-surfing* for a few days and am set to stay two more weeks. I’m not sure if I would have asked her if I could stay for such a long time a year ago (pre-MMM). As it is, we’re having a wonderful time together – I leave for long walks here and there and return with fixins for dinner so I hope she is not feeling overwhelmed with this extra body in her house.

So far we’re having a fabulous time. We just returned from GLAMPING in Half Moon Bay, where I thoroughly enjoyed all of the camping ‘must haves’ such as a wine bottle holder, REI kitchen furniture / appliances and area rugs in the tents. Seriously, it was a blast enjoying all this high-end equipment I wouldn’t buy for myself. Three old friends – drinking and roasting s’mores around the campfire with retractible marshmallow roasters. So … much… fun.

Today another friend (and co-worker) picked me up early so I could make it to the Monday sales and marketing meeting, at which I presented. The presentation went well, and through the remainder of the day I bumped into old colleagues and friends and enjoyed catching up. I didn’t volunteer retirement unless they asked about my plans, then I’d share ( I think a few may be checking out MMM tonight 🙂 ).

Then I had my 1:1 with my boss. He wanted to know my final date and the status on a few items. We discussed the situation with finding my replacement: we still haven’t found anyone. ‘Rather than July 31, how about we just make July 25 my last day?’ I ventured. Then he dropped it. “I’d like you to consider staying on for a while, you can work out of Malaysia, but no expat perks of course. We’d like you to continue until we find a replacement.”

I told him I’d think about it.

AGGGGH. On one hand, my ego is flattered, of course. But agggh! July 31 was going to be IT! I shared the info with my friend (who I’m couch-surfing with) on our way home from work (she works across the street from my office – so BONUS! with me in the car she gets the commuter lane – I’m feeling like less of a leach and more of an asset every day 🙂 ).

So after arriving home, she gets on a conf call for work and I walk to the grocery store – and I thought more about it. The only reason my company can’t replace me is because they are trying to do it on the cheap. I’ve got 18 yrs experience – so I’m a high level / high compensation employee, let’s call my level ‘E’. But they are trying to hire at cheap-o level ‘C’. It occurs to me to offer to ‘bridge’ the role – doing bare minimum work part time for some amount of time if and only if they change the new hire requisition to level ‘D’. Just a thought – I mean, it would be nice to rake in serious cash for minimal effort – but perhaps it is a bit of ‘one-more-year-itis’. I thought through this as I bbq’ed pork ribs**, roasted veggies and boiled pasta. My friend got off the call, and said, “Oh, I’m going to cry – it smells so good and dinner is waiting for ME for once! :). We ate, and now it is time for wine and dark chocolate on back porch with my friend. I love her! I’ll ruminate on this whole gig-extension tomorrow.

*actually I’m staying in their lovely guest room.
**made a marinade of old mustard, maple syrup, salt and olive oil from bottles in her fridge :).

It’s Time to Stop Working

Our flight departs tomorrow at noon: Penang, Malaysia to Seattle, Washington. We’ve been here nearly two years, and now, a day and a half is all that separates us from my parent’s house in Bellingham. Soon, I’ll be sleeping in the bedroom where I listened to The Cure on my Emerson tape deck in middle school, and plowed through The Great Gatsby lying on my futon in high school.

My husband and I work at the same company, and in 2012 we found ourselves in Malaysia on a sweet expat package assignment. If I’d have been on MMM two years ago, we would have pocketed more of the expat perks (14 months in a 5000 sq ft beach side condo wasn’t the most frugal accommodation – we are now in a cheap house), but somehow we’ve wobbled none-the-less into FI. My husband’s last day as a wage-slave was today. He’s worked 25 years at the company. He is 50. My last day will be July 31st. I’m 41.

I estimate our annual savings rate has been about 20-30% on any given year. If FIREing had been a clear goal earlier, it could’ve / would’ve been 40-60%. I’ve got naturally occurring frugal instincts, but they stayed in the minor leagues absent a clear FIRE goal. Between the social pressure to ‘not be so friggin cheap’, and a feeling that I was somehow entitled to blow a few hundred every month on clothes, we did what so many other people did and let our expenses rise with income.

Fortunately we set our investing on auto-pilot a long time ago:
– max ESPP purchases (10%)
– 401k with generous employer matches (~10%)
– Automatic deposit into ShareBuilder account. (~10%)
– But what really did it were stock option grants that could be 10-50% of salary. These went toward mortgage pay down / addition on the house / frugal kitchen upgrade (IKEA anyone?) / purchase an apartment complex as investment property.

Our biggest financial problem 2 years ago (besides hookers running a ‘day care’ out of an apartment in our investment property*) was being too heavy in company stock. Now it is being too heavy in cash. I’m too much of a puss to throw it all in one ETF at once, so I’m DCAing. But that is okay. We are transitioning into living off of savings, so I’m happy to be sitting on some cash.

With the help of the MMM forums I’m feeling good about our FIRE plan and transitioning to 4% SWR (actually 5% while daughter in college). So I’m comfortable with our plans. But I’m bracing for backlash in Washington.

My mother has little patience for cheap people. “If you want it then buy it!” is an example of her advice. It isn’t that she is money-unaware, rather I think she considers money talk to be déclassé and as such, she becomes uncomfortable when money is mentioned as a consideration. Eager to move on to more pleasant topics, she snaps. “Oh don’t be silly. If you want it then buy it!”

Also I’m nervous about talking to my nieces and step-daughter about finances. I offered to teach them some of what I know ( as they are just starting out ) and I am already anticipating the eye-rolling, despite the fact that, online at least, they seem genuinely interested. Luckily people in the MMM forum have provided solid advice.

Of course all of this is in my head in Penang, Malaysia. Family and home is half a world away. I will take their comments as they come, not lead with our situation, and try and stay open.
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*At least that is what they told the cops. Perhaps I’ll write about this later. Actually the hooker situation was more like 2007, but ‘25% vacancy rate’ isn’t as fun to write.