I am often asked how much money I make. Seriously, I am.
This may occur in a private conversation with (or email query from) a fledgling author, or it may occur at a reading I'm giving at a library or bookstore in front of a hundred people. Do strangers ask those of you who are teachers, doctors, receptionists or fire fighters how much money you make? I didn't think so.
Maybe it has to do with being a "public figure" in a society where our celebrities' lives are fair game. Often, though, I think it has to do with the questioner's longing to be able to quit his or her day job and write full-time. That's a longing I understand and looking at the question from that angle makes me want to help.
Toward that end, I'm going to share a little about this misconception that novelists are rich. This topic is so complicated and multi-faceted, that I'll only be scratching the surface. Feel free to ask questions and I'll do my best to answer, but I have to tell you that finding meaningful statistics on what authors earn (ie, what publisher's pay) is extremely difficult.
My friend, mystery writer Margaret Maron, responds to the "How much money do you make?" question by saying she makes about the same as a teacher. I think that's a fair answer, and generous of her to offer it. What I usually say is that I am fortunate to be able to support myself as a writer in North Carolina; living in the Washington DC area was much tougher. I dare say that Margaret and I are doing better than the vast majority of writers, however, and we've been at it forever and a day.
Let's look at the romance genre for a minute. I choose romance because it consistently outsells all other fiction categories and because I do have some stats on what romance authors are paid, thanks to Brenda Hiatt, who has been collecting this information for several years.
It's impossible to sum up all of Brenda's information here, but if you check out the link, you'll see that advances range from zero to $200,000. (This last figure definitely skews the results and most likely went to one or two very lucky and talented authors; the median advance for that particular publisher is $17,500.) Category romances, such as the Harlequins and Silhouettes you see in the supermarket, average an advance of about $4,000 with an earn out of $12,000.The stand-alone books (ie not category and often called "women's fiction") may or may not earn more. Science Fiction author Tobias Buckell has collected similar information for Sci-Fi and Fantasy writers, by the way, and found the median advance for a first time novelist is $5000.
What do I mean by "earn out?" Generally speaking, an author receives an advance. Let's say that a particular author receives an advance of $10,000. She also receives royalties against that advance, meaning that she will not see any more money until her royalties have moved beyond the amount of the advance. A typical royalty rate for a $7 paperback is 8%, so she'll receive .56 per book sold (which is different than books shipped. It's not unusual for a full 50% of the books a publisher ships to be returned to the publisher after they've languished too long on the bookstore shelves.) If the publisher shipped 50,000 books and 25,000 of them are sold, the author has earned out $14,000 and will receive (eventually. . . sigh. We are paid twice a year) a royalty check for $4,000. If 35,000 books are returned (it happens), the author has been "overpaid" by $1600 in her advance. She will not have to repay this money to the publisher, however.
Therefore, the author, in this very simplistic example, is now ten thousand dollars richer, correct? Not so fast. Most likely she has an agent, who receives 15% off the top. So the check our author receives is for $8,500. She must then sock away a chunk of that for the taxman, of course, along with the fifteen percent she needs to pay social security, since she's self employed. (although it's tempting, I am not even going to mention the cost of health insurance for the self-employed.)
There are exceptions, and we certainly hear about them. Charles Frazier received an advance of $8 million after the success of Cold Mountain. And we hear of first-time authors receiving million dollar advances when a publishing house thinks it's discovered the next JK Rowling, but the odds of that happening are about as good as winning the lottery.
I hope this helps clarify some of your questions about "what authors make." The bottom line is, if writing is your passion, then please keep at it, but do so with your eyes open, your focus on your craft. . . and your day job front and center.