The Basics of Writer Finances

So often, people want to be a “writer.” They envision themselves spending their days in moody rooms, sipping on coffee or dark liquor while honing their latest work, checking their email now and then for their agent to contact them about the book-to-film deal you’ve known was coming since the moment you thought up the story. At the end of the day, they’ll close their laptop and have a totally normal, balanced family life, complete with cashing another royalty check that arrives in the mailbox.

For some writers, I mean… yeah. If you have ever read this blog before (or listened to our podcast or had a conversation with me as a person before), then you’ll know I adore Victoria Schwab and reach for her often. Why break tradition today?

For those that follow Victoria “V.E.” Schwab on Instagram, you certainly see something like this as she works on one of a dozen irons in the fire (including books, comics, and tv/film) from her home in Scotland or her parent’s home in France while hyping her love of whisky and sharing articles citing her $1,000,000 book deal.

On the absolutely narrowest glimpse of her social media, Schwab is living the life of a writer that you may always have dreamed about. But let’s break down what is more likely happening…

The Struggle is Real

One thing that keeps Schwab from being the perfect example of an ideal writer’s life is that she actually shows how difficult it is to do what she does. Using a bullet journal, she creates boxes showing just how many hours she puts into her work. Hint for those who haven’t seen… It’s more than a 9-5 job. Recently, she put up a current daily schedule that logged 11 hours of work per day. Again… per day.

Yes, Schwab is working **full time** as a writer. No, it’s not as easy or glamorous as it may seem at first glance. Understand that with opportunities to publish (and therefore make more money) comes a ton of extra work.

Note for those who think a big TV/movie deal will solve all issues: Schwab’s daily schedule includes participating in a TV writers room for six and a half hours.

The Million Dollar Book Deal

Before you see math and scroll away, read this fun little story about the life and times of yours truly…

Once upon a time, I was in a publishing master’s course surrounded by people who are **infinitely** more intelligent than I am. So, riddle me surprised when we were asked to do a royalty calculation and most people in that room didn’t even know where to start.

I find it amazing how many people who are invested in arts and literature do not know how to break down the math of publishing. But you have to understand this math before you become a full-time professional book writer because it does have huge ramifications on whether or not you’ll have financial security in the profession.

We return to Schwab and her $1,000,000, four-book deal with Tor.  

This deal, announced in 2017, stipulated that Schwab would write one trilogy and one standalone novel. Entertainment Weekly projected that all of the titles would be released, at the earliest, by 2024. Now, without seeing the contract (or any amendments made to the contract since then in response to other opportunities made available to Schwab and/or Tor), we can make some educated guesses about what this contract actually looks like for Schwab’s finances.

Let’s start with the amount Schwab will actually see. Since Schwab is agented, we already know she isn’t getting that full $1,000,000 amount. The standard literary agent fee these days is 15%, meaning we can estimate Schwab’s agent is claiming $150,000 of the $1,000,000, leaving Schwab with $850,000.

It was initially projected that Schwab would take from 2017 until 2024 to write and release these four books, or eight years. So, we can calculate that Schwab’s **average** annual income from this contract is $106,250.

Although I bet you had this one already…

If it takes Schwab longer than those eight years to get these books into reader hands, which is likely since none are yet to be published in 2021, that amount dwindles further. It should also be known to you, potential future published writer, that she is receiving more in some years and less in others since most contracts release funds as deliverables or milestones are accomplished (i.e. first draft given to editor, edits completed, release day, etc.).  

How much less fun is it to say, “Schwab makes $106,250 per year” compared to saying, “Schwab has a $1,000,000 deal”?

Well, we aren’t done friends. Now that Schwab has received her portion of the money, it’s time for Uncle Sam to now come collecting.

Now, in the case of Schwab, I am not totally certain what nations she is required to pay taxes. I’m not an accountant: My only credentials on this are Google and my dad’s I-told-you-so’s after years of car-ride lectures on basic finance. But let’s assume that she only needs to pay taxes to the United States.

Writers are considered self-employed. Typically, your employer takes your taxes straight from your paycheck and often splits the cost of those taxes with you. If you’re self-employed, you owe that entire amount to the federal government as income tax. The self-employment tax rate in our year of 2021 is 15.3% of net earnings. To simplify our math, we are going to pretend that Schwab had no business expenses (though you could classify office space, a new computer, WiFi or other resources as business expenses and save some money on taxes). Now, Schwab’s income drops to an average of $89,993.75.

So, now we see the truth behind this $1,000,000 contract. Is $89,993.75 per year still a kick-ass paycheck? Yes. But is it actually as much as you thought it would be at the onset?

Before you quit your day job to become a full-time writer, understand that the glamour of a massive contract is both rare and not always the life changing income they may seem to be. Is Schwab supplementing this contract with other contracts to bolster her income? Absolutely. But the fear for Schwab, or any writer, is that the contracts may stop coming. This income is both what you need to live on now and, potentially, for years to come.

Furthermore, because these amounts are paid in milestones, as said before, there could be years she earns twice as much as our estimation, while the next year she earns none. This is not unusual, so writers need to learn to save their money until it’s truly safe to spend.

Don’t Count on Royalties

So, some of you reading through the math on Schwab’s $1,000,000 contract may have sat there giggling because you knew in the back of your mind that there were still royalties to consider! How dare I hint that that $1,000,000 is all she’d receive from those four books…

It’s true – authors do receive royalties on books sold. However, if you want to make it as a full-time writer, you’ll need to learn that royalties are not something you want to be counting before the check is cleared. Granted, if you become a best selling author, these numbers can look really pretty.

This one is confusing, not going to lie…

While I love discussing how one of my favorite authors got a phenomenal deal, I’m going to move us back to something we know a bit more about… V.E. Schwab’s A Darker Shade of Magic. According to Schwab on Twitter, she received a $15,000 advance for the title. Now let’s add a few numbers for the sake of showing math… We’ll pretend that she received an escalator royalty of 8% on the first 10,000 copies, 10% on all remaining copies sold (in truth, it was probably more complex with different royalty rates for hardcover and paperback, so we are just throwing out some average numbers). Publisher’s Weekly claims that A Darker Shade of Magic and it’s sequel, A Gathering of Shadows, sold a combined 75,000 hardcover and trade paper copies as of 2017. Based on that, the fact that four years have passed since, and the general projection that the first book will always outsell any other in a series, we will conservatively guess she has sold a total of 50,000 copies of A Darker Shade of Magic. Some publishers pay royalties on a retail price, meaning that authors receive royalties based on the retail cost of the book. For A Darker Shade of Magic (paperback), the retail cost is $16.99. So, for Schwab and our guessed sales and royalty figures, this would equate to $66,552 before tax and agent cut.

Other publishers pay royalties on a net price, meaning authors receive royalties based on the discounted value a publisher sells the book to a retailer at. For the sake of argument, we will assume a mass 50% discount to all channels and retails, meaning the amount Schwab receives royalties on goes from $16.99 to $8.50 (rounding in her favor). Redo the above calculation with the substituted value, and her royalties are 25,800 before tax.

Are these phenomenal numbers? Yes. But look at how that equates to income across six years and remove 15.3% in tax and another 15% in agent fees, the numbers don’t make that big of a difference to your annual income. Also, in terms of her newer contract with Tor, she would not have earned out the $250,000 advance with these numbers to earn royalties on those four titles.

Again, still great numbers (especially when combined with contracts such as the one cited before), but these numbers are likely to taper year to year and lack the consistency you may need to live on comfortably.

Don’t Chase Best Seller Numbers

So, I’ve spent nearly 2,000 words hyping Schwab’s numbers, showing you how the numbers are great, great enough to live on with ease, but reminding you over and over that you may not know when your next check is coming or what the number on that check will be.

That’s because not everyone is V.E. Schwab. We know about her deals because they’re good. They’re newsworthy. Most authors do not get newsworthy types of deals.

Just as you may have heard me talk about Schwab if you’ve been following Three Houses Press, you may have also heard me talking about Susan Dennard’s ~exemplary~ newsletter.

Now, be mindful that Dennard is also a well-known Tor author. While she may not have Schwab’s notoriety or workload, her works are significant enough to have been optioned for TV/film, receive international editions, etc. Well, in one very fateful newsletter circa August 2018, she releases more in-depth figures on what she earned when, noting she may have an agent or publisher upset with her later for being so transparent. I am going to run under the assumption that an angry message did come through because, while this newsletter still exists in the bowels of my email, I wasn’t able to find this edition of the newsletter on her website.

In an effort to somewhat respect her privacy and decision to not make this old newsletter overly easy to find, I’ll give you only the two most important numbers… her highest and lowest reported income. Between 2011 and 2017, she earned $47,600 in a year at the highest and $5,950 at the lowest after taxes and agent fees for her writing. She did not earn any royalties until 2016. While she notes that she was paid a less than her peers at the time, I want to add that you should never expect to be the highest paid one in the room. If you are, that’s excellent. But only one person can be on top and, when it comes to making the best financial decisions for you and your family, assuming that you may be underpaid will help you protect your financial security.

Clearly these finances worked for Dennard and her particular circumstances, allowing her to continue as a full-time author and presumably grow her brand and sales over time as she moved from the low-selling Something Strange and Deadly series into the more commercially viable Witchlands series that earned her NYT Bestselling Author status and is currently optioned for TV by the Jim Henson company. But always remember the question isn’t if it worked for them, but if it will work for you. As Dennard even wrote in her newsletter, money is relative. What some may see as a fortune, others may see as pennies.

Write More; Maybe You’ll Make It

So, let’s say you want a career as a writer, but you aren’t quite sure you could manage a potentially abysmal year. Don’t worry, there is still hope.

Even if you can’t live off writing novels, you can get by as a professional writer. You can take on contract work like ghostwriting, editing, or one-off articles for numerous publications. You can find more long-term, consistent part-time work like teaching at a local college or hosting writers functions and events in your area. You can also keep the high risk, high reward mantra up by investing a ton of time and effort into self-promotion by maintaining a blog, podcast, or active social media, which may earn revenue on their own or help you build your name enough to leverage higher advances on a future book deal.  Or, see if you can find full-time work that more closely aligns with writing such as marketing (content development or copywriting are especially writing heavy), communications, journalism, or publishing.

Doing these things may give you the satisfaction of full-time work as a writer while balancing the struggle that is ~income to live on.~

Well, was that enough math for the day?

Math is never fun, and it rarely gives us answers we like, but I hope you better understand the reality of how difficult it is to be a full-time writer. If you genuinely think you’re the next V.E. Schwab, go for it – just don’t be too surprised if your income isn’t quite as astronomical as the headlines about your income or the 11-hour days required to earn that income. If you don’t think that’s you, then maybe enter the field with a bit more caution.

There is so much more to say on the topic of advances, royalties, and author earnings, but I think we’ve covered a fair amount for the day. Tell us in the comments below what you think we should cover next!