Posts Tagged ‘palin’s advance’

What Was Sarah Palin’s Advance?

October 28, 2009

palinEveryone in America is asking today what was Sarah Palin’s advance for her book, Going Rogue. We can’t say for sure, but we can calculate a range by applying some reasonable assumptions. Alaska reported that during the final six months of Palin’s governorship she received a “retainer” of $1,250,000 for her book from Harper Collins, her publisher. Let us assume that this was simply the first payment of an advance to be paid in several parts. Typically an advance is determined by the projected royalties on the first printing of a book. In the case of Palin’s, the print run was 1,500,000. Royalties on hardback books vary from 10-15% of list price. They can be even higher for some blockbusters. Let’s assume that her per book royalty is 15% or $4.35 per book. This would give us an expected advance of $6,525,000.

Another metric that we could use is the estimated number of equal payments that are made for any advance. Typically an advance is divided into a number of equal payments which are made at certain benchmark times. Smaller advances are usually in two parts. Larger ones can be in three. Very large advances can  be made in four parts. Since Palin’s advance is clearly very large, we assume that the reported advance was the first of four payments. This would give us an estimated advance of $5,000,000, similar to the previous estimate.

Of course, the normal economics of publishing don’t really apply to deals of this size. So my calculations would have considerable uncertainty.  The rumored amount on the street when the deal came down was $7,000,000.