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Negotiating Your ContractThis is part of the online guide The Basics of Writing for Children, by Aaron Shepard, found on Aaron Shepard's Kidwriter Page. Excerpted and adapted from the booklet The Business of Writing for Children, Second Edition, by Aaron Shepard, Shepard Publications, 1997. Copyright (c) 1991-1999 by Aaron Shepard. May be freely copied and shared for any educational, noncommercial purpose.
The Initial Offer The Initial OfferWhen an editor accepts your manuscript, she will make an initial offer. This usually includes a royalty and an advance.Royalty. This is a percentage of the book's price to be paid to you for each copy sold. (Smaller and specialty publishers may instead offer a flat fee, or base the royalty on a percentage of "net income," which can be much lower than the book price.) Typical royalties are 10% for hardcover and 6% for softcover, with automatic reductions in certain cases. For picture books, these percentages will be divided between writer and illustrator. Ask for those standard rates if your editor offers less, but don't ask to exceed them. Advance. This is money paid to you before and/or on publication and charged against your future income from the book. (Smaller publishers may offer no advance.) Typical first-time advances are $1,000 to $5,000, often split into two or three payments. You can almost always get the initial offer raised by $500 to $1000, because editors usually start low to allow for this. THE ADVANCE IS THE ONLY INCOME YOU CAN COUNT ON.
Your First ContractWhen the advance and royalty have been agreed on, the editor will send you a contract. For your first one, watch for the following:Option. This clause gives the publisher the right to buy your next book. This is fair, but make sure there's a limit of two to three months for the publisher to decide. You should also have the right to decline the offer if you don't like the terms. Finally, you might request automatic voiding if your editor leaves. Publication. Make sure there is a clause committing the publisher to issue the book within a certain time -- typically eighteen months from receipt of the finished manuscript, or of the finished art in the case of a picture book. Reserve against returns. Publishers withhold a sizeable percentage of royalties to allow for books returned unsold by booksellers. This practice should be limited to the first three or four half-year accounting periods. Wraparound. If your book does not sell enough copies to "earn out" the advance, a wraparound clause will make you pay it off with income from any past or future books with that publisher. If the contract has one, get it deleted! Reversion of rights. Make sure there are clauses enabling you to regain rights to the book if it goes out of print. (Similar clauses for publisher bankruptcy have no effect, since ownership is then governed by the legal trustee.) Author's copies. You can usually get 15 free copies of a hardcover edition or 25 copies of a paperback. Also make sure you can purchase extra copies at 40% to 50% off.
Future ContractsYour negotiating position with a particular publisher improves with each new contract. After your first, watch for the following:Advance. This should go up automatically with each contract. Royalty. If your first royalty was low, you can probably raise it to standard level for your second book. It might then be raised further after a few successful books. Escalation. If you don't have one, ask for an "escalation clause" to raise your royalty after a certain number of copies are sold. A typical escalation for hardcover might give 12% after sales of 15,000 to 20,000 copies. For paperback, an escalation might be to 8% after 25,000 to 50,000 copies. Subsidiary rights. Your publisher will sell to other publishers the rights to issue your work in various forms and editions. Income from the most important rights is split 50%-50% between publisher and author (and divided again between a picture book writer and illustrator). Other splits may be more in your favor, and you can ask for this if they're not. Recommended:
First serial (for periodicals) -- 80%-20% General HintsWhen an editor offers a contract, it means she very much wants your book and has already invested considerable time in the acceptance process. Don't be afraid to ask questions or request changes! You may not get what you request -- but as long as you stay reasonable, you won't jeopardize the sale.A publisher's contract can be confusing and intimidating, but it is in English and can be understood with a little study and patience. If you simply can't deal with it yourself, you might find an agent to handle it for a 10% to 15% commission. Your editor might recommend one. You could also hire a lawyer to negotiate the contract for a flat fee -- but be sure to find one who specializes in "intellectual property." Many new authors worry themselves needlessly over clauses that can't be changed and that usually make no difference. While it's true that contracts tend to be stacked toward the publisher, that's just the nature of the business. And keep in mind that few first books ever earn more than their advance anyway. So, lighten up and enjoy the check!
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