Earning out means your book has sold enough copies that the royalties generated have repaid the advance your publisher gave you. Until that point, every sale goes toward recouping the publisher's upfront investment. Once you earn out, each subsequent sale puts money directly in your pocket (well, in your royalty statement, which arrives months later). Most traditionally published books never earn out, which is why the advance is often the only money an author sees from a given title.
Earning out is one of the most misunderstood milestones in publishing. It does not mean your book was a success (plenty of profitable books for the publisher never earn out from the author's perspective). And not earning out does not mean your book was a failure. But understanding the math helps you plan realistically. If you know your advance is $20,000 and your royalty rate is $2 per book, you need to sell 10,000 copies before you see another dollar. That is the kind of number every author should run before signing.
McInerney's debut earned out quickly and became a cultural phenomenon, turning a relatively modest advance into a steady royalty stream.
Despite a reported $3.5 million advance, Tartt's Pulitzer-winning novel sold well enough to earn out, proving that prestige and commercial success can align.
Clarke's unexpected follow-up to Jonathan Strange became a word-of-mouth hit that outperformed expectations, demonstrating how a book can earn out on slow-burn momentum rather than a big launch.
Run the earn-out math for a hypothetical book deal. Pick an advance amount (say $15,000), a cover price ($17.99 paperback), and a royalty rate (8% of cover price). Calculate how many copies you need to sell to earn out. Then look up average sales figures for debut novels in your genre. Does the math feel achievable? This exercise builds the financial literacy that separates informed authors from surprised ones.