Publishers usually pay authors royalties based on the retail price of the book. However today more and more publishers are paying royalties based on the net price of the book or according to the amount they receive from the bookstores. Remember that bookstores usually buy books from publishers at a discount of about 30 – 50%.

Usually publishers pay the author an advance against future royalties. So on signing the contract, the author receives half of this amount and the other half when the final manuscript is delivered. So this means that if you receive 10% royalty on the retail price of a $10 book, and you receive an advance of $3000, you have to wait for 3000 copies of your book getting sold before your receive any royalty checks.

You don’t lose here as if the book doesn’t actually sell the 3000 copies; it is the publisher who is at a loss. The advance amount here is fixed by estimating the royalty the author receives for the first printing of the book. First time authors get a lower advance than established authors and if you have a picture book, the author and royalty is split between the author and illustrator.

The flat fee you may receive as lump sum for your book means you don’t receive any royalties. The copyright for the book remains in your name or the publisher’s. Authors writing books for established series, those writing a television tie-in novel and magazines usually pay in flat fees.

Getting paid in royalties is usually the better choice for you as you are paid money regularly, which is a better option than being paid a large sum of money only upfront through flat fees.