Writers experience the full spectrum of salaries. It's exciting, because there's a chance of earning a high income, but it's difficult to have a realistic idea of how much money you can make. Some published writers will make less than a thousand dollars this year while others will make millions.
How can we create an accurate five-year financial plan? A two-year plan? A plan for this year?
We can't. But we can research and come up with a tentative plan.
Here are a few questions to ask yourself:
1. How much do I want to earn from my writing this year?
2. How much do I want to earn annually five years from now?
I would not recommend answering 1. $1,000,000 and 2. $10,000,000. I'm not trying to stomp on your dreams because it may very well be in your future, but the vast majority of writers will not make this much money. Let's align our expectations with reality.
Your writing salary will depend on many factors, including your genre, publishing house, release month, marketing, number of books you write, and whether you have an agent or not.
If you are already published, you may have an idea of how much you can expect to make with each of your books and freelance projects. Then again, you may not. Writers may not see royalties from their books for more than a year. Unpublished writers are even less able to project income.
If you haven't been published yet, there are a few factors to consider when attempting to estimate your future income.
- Do you know if the book you're writing would most likely be published in hardcover or as a trade paperback?
- Do you know a typical advance and the royalty percentage offered to new authors with the publishers your book would most likely be contracted with?
- Do you know the number of books you can write in a year? Will your publisher allow you to write that amount?
- Do you plan on having an agent? Don't forget the agent's 15%.
- As we discussed on Monday, taxes must be paid, and since you're self-employed, expect to pay through the nose.
Unfortunately, I can't give you salary figures for the different genres, nor can I list the advances and royalty percentages you can expect. However, there are two resources that can help. Brenda Hiatt's Show Me the Money is an excellent resource for writers. She gathers salary information from anonymous writers and breaks down typical numbers for various publishing houses.
Publishers Marketplace is another great resource. The full site costs $20/month and gives information on all of the book deals. No, you won't learn the exact amount an author was paid, but you will learn who the book sold to, if it was a good deal, and the agent who sold it. The free, condensed version, Publisher's Lunch, gives a daily snapshot of publishing news.
When you have a rough figure of possible income for your book, you can start estimating. If you're close to getting published, meaning agents and/or editors are routinely requesting your work or you're finalling in contests, estimate you will sell one book in the next twelve months. To come up with a five-year plan, you'll need to research the amount of books the publisher you're targeting will release by an author in a year. If most of their authors write one or two books annually, you can hope for the same.
Will the projected income from these books replace your current salary? If not, brainstorm other ways to earn money from your writing. Maybe you could publish novellas by e-publishing or submit articles to magazines? Write your ideas down and estimate the additional income they could add. No one is saying you have to pursue these options, but it's comforting to be prepared to make extra money during off times.
Join me on Friday for our final installment about financial planning: saving for the future.