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.