Here's a basic run-down on what publishers do (and don't do) and how a new writer goes about it.
You do not pay a publisher to put out your book.
A legitimate publisher considers your book to be their product, and they invest a lot of money into it to make it successful. That money includes editing (many rounds of editing and revisions), copy edits, proofing, typesetting, and things like graphic design, printing, shipping, and distribution. As a result of all that, they have a lot of overhead and keep most of the money.
But they do NOT ask the author for money. Companies who do are called Vanity (or, the nicer term, Subsidy) Publishers. If you go with one of them, you're essentially self-publishing. (See below.)
Vanity publishers have a very bad reputation, especially those who pretend they're legit and are doing YOU a favor. ("Just pay us $4,000, and we'll publish your amazing book!" Ha. Run. Run like the wind! An example of this type of deal: Publish America.)
(Check the Predators and Editors site to check for shady agents, editors, and publishers before signing anywhere.)
The Writer Is Paid Royalties.
Royalties are based on book sales. Statements (and checks!) usually arrive twice a year. (If you ask me how my book is doing, I can't tell you until I get my next statement.)
Royalties are based on a percentage of the book price, usually retail, although sometimes it's wholesale, with royalty percentages ranging from 6.25% to 15% (lots of factors go into the number, which I won't get into now).
Larger publishers often offer advances. An advance isn't just free money. It's money that the publisher is gambling will pay off. If Joe Author gets a $5,000 advance, he gets no more money in royalties, EVER, unless royalties he would have earned from books sold exceed $5,000. When that happens (which doesn't always), he's "earned out" his advance and will then receive royalty checks.
Advances are pretty rare in the LDS market (unless your name is big enough that the publisher knows that a book by you is a guaranteed check in the bank, and I can think of maybe four names like that). I know a few authors who've managed to get advances, but they're very few and far between.
Some math: You can end up waiting years before seeing a dime on your work. I began work on Chocolate Never Faileth May 1, 2009. I'll see my first dime from it February 2011. And that's a FAST turnaround.
More math: There's not much chance of making really good money from publishing a book, especially fiction. (Non-fiction, with someone who has a big platform, is another animal.) A novelist could very well get about sixty-five cents per copy sold. (So pop that dream of a mansion and a Mercedes. Ain't happening.) The rich novelist, especially of a single book, is a serious myth. (It happens, sure, but you have a better chance of being struck by lightning.)
Another issue is returns. The writer is paid on books ordered by and shipped to stores, not on books that actually walk out of the store in a customer's hand.
So your royalty check may not reflect actual sales. This can come back to bite you when a bunch of stores (especially ones who buy in bulk, say WalMart or Costco) return cases of unsold books.
What happens: your royalties account goes into the red. You were already paid on those books. While you don't need to cough up money to pay your publisher back, you ARE in the red until future royalties add up to be enough to get you into the black again.
This is why return reserve is so common. For example, my publisher withholds 10% of my royalties earned in every check to cover any possible returns. (And then we both cross fingers, hoping that returns don't exceed 10%.) If, after the next 6 months, we don't end up with lots of returns and I'm in the black, I get that 10% paid in my next check.
What's a pain is when you're in the black from other books but a different book gets lots of returns. Your royalties for your new book are then cannibalized to pay for the returns of a past one. (Not that I'm speaking from experience or anything . . .)
Agent or No Agent? (And What Does an Agent DO?)
Whether you'll need an agent depends on the market you're trying to break into. The LDS market, for example, is small enough that agents simply couldn't making a living in it. It's rare that an agent negotiates a deal here. (It's happened, usually with authors who already had an agent for another project. I could list a few examples, but it's pretty rare.)
Even authors who have agents for national project often negotiate their own LDS publisher contracts. One fun example was Dean Hughes, who was working on his Children of the Promise series, unbeknownst to his national agent, who thought he wasn't doing much work (ha!) and surprised him when she sold a nine-book series for him to write.
For most national houses (versus regional or niche publishers) you will need an agent just to get in the door to be considered. Agents are the gatekeepers who pass along manuscripts to editors that they feel have promise so editors aren't wading through what's called the "slush pile."
Agents have relationships, connections to the publishing world. They're the ones with the Rolodex. You don't. They can sell your book to the best house. You can't. They negotiate the contract. After a book is sold, they can go on to sell foreign rights (which can be a pretty hefty amount of money, if you sell rights in lots of countries), movie rights, and so on.
Agents take 15% of what you earn, WHEN you earn it. That may sound like a lot, but getting 85% of, say $90,000 is a whole lot for more than 100% of $5,000. Agents earn their money.
One big caveat: NEVER pay an agent anything upfront. Run from an agent who asks for reading or other fees. If they have costs to be reimbursed for (copies, postage), that'll come out of a royalty check. You should never be paying them anything directly. They get paid when you do.
How Do You Approach Publishers/Agents?
When I started, we didn't have Professor Google to help. I had to rely on the book edition of Writer's Market. Now they have an online version, and you can find a multitude of blogs out there written by agents and editors on how to write a query and how to approach publishers. (So much is out there, you really have no excuse for not educating yourself.)
Publishers Take so Much Money; Why Not Self-Publish?
A couple of reasons: first, the chances of your book being professionally edited, typeset, and having a great cover are pretty sad. (Self-published books usually LOOK self-published.) That means fewer sales. (People really do judge books by their covers.)
A second, and possibly bigger, factor is that publishers already have distribution arms, relationships and histories with bookstores. Indie writers don't. Bookstores are generally wary about taking on books that don't come from a reputable publisher, especially because they usually can't return unsold books to the author the way they can to a publisher. (This is especially true if the writer used a print-on-demand company.)
It doesn't do a writer much good if they have flat of 4,000 copies of a book in their basement and they can't sell them. Sure, you'll make several bucks per book, but if you're selling under 100 copies, where's that getting you?
They're changing the face of publishing. How far and in what ways remains to be seen.
One issue is that there are SO MANY e-books out there, so readers still need a way to vet the good from the bad. Publishers still provide that service.
That said, a lot of self-published e-book writers are making pretty good money. But they market as much as they write. They get professionally designed covers, get their books edited, interact with e-book readers, usually have multiple books for sale, and more. It's not an easy route. It's work either way.
I have one Kindle book so far (soon to be three). My first novel, Lost Without You, went out of print some time ago, and after the rights reverted back to me (and after a minor rewrite), I got it onto the Kindle last summer (it's also available on other e-reader formats through Smashwords, which includes Apple, Kobo, Sony, and more).
Sales were slow at first, but they're picking up. And while I'm not going to get rich off it, having the book there is getting me more readers all the time. And here's one great thing: the book won't go out of print again. Ever. I can get more sales as the months go by, not fewer.
For more on this, I was interviewed by the Kindle Author blog today. Check that out for more on my experience with Lost Without You and e-books.
I'm hoping that by February, my grammar guide and my second novel, At the Water's Edge (also out of print), will be available on the Kindle and other e-book formats.
Those are the most common questions I get about publishing. If you have more, throw 'em at me, and I'll add them to a future post!