Hi Nat,
Historically there are no royalties paid on these types of projects.
Mary Grandpre and Scott Hull were successful in leveraging a 1% royalty on the Harry Potter books after book 1. They didn't even ask on the first book even though there were quite a few spot illustrations in side. After the success of the 1st book they held out for a 1% royalty. It took many weeks of the publisher threatening to hire another illustrator but they held firm. You'll never get paid what you're worth or what you want until you're willing to walk away from a deal.
On a first book I wouldn't think anyone would have this kind of leverage because most publishers know that most books don't "earn out"...
The Harry Potter deal lead to other illustrators following the example but I would assume that most have been unsuccessful. Brett Helquist held out for a royalty on "The series of Unfortunate Events" books but was only successful in gaining a royalty after book 3. He also got a 1% royalty.
SVS Instructor
http://willterry.com/
@Will-Terry Great to know, Will! So you're saying we should stick to the PB trade market, lol...jk. So many times the royalty doesn't pay out either..but it is nice to have just in case it sells well.
I was surprised to learn from a friend that Scholastic paid a flat fee for a chapter book that required full color cover and 90+ interiors for a series. I figured since it is a large trade publisher that it would offer royalties.
Happy Creating
www.charlieeveryan.com
@Charlie-Eve-Ryan Illustrators are second class citizens in publishing...unless they are also writing...we should all be writing...
SVS Instructor
http://willterry.com/
@Will-Terry I hear that!
@Will-Terry You guys should put together a writing course too! Any chance that is in the works??
Happy Creating
www.charlieeveryan.com
@Will-Terry Thank you for answering this! This is what I suspected but wasn't sure, and this is such helpful information to have. The publisher is having some very promising things happening with distribution so it's great to know that if the book took off I could at least inquire about a 1% royalty on the second book, although it sounds like that is very rare. Thanks again!
The book is coming out in June for anyone interested, here's a link: http://www.amazon.com/Transatlantic-Conspiracy-G-D-Falksen/dp/1616954175/ref=sr_1_2?ie=UTF8&qid=1457029997&sr=8-2&keywords=nat+iwata
Nat Iwata
www.iwataillustration.com
@Charlie-Eve-Ryan Yes - but we're going to be very picky on who we get to do it...there are a lot of people who say they want to teach it but not many can actually give concrete ideas, methods, examples, strategies, and exercises on writing picturebooks...the search continues 
SVS Instructor
http://willterry.com/
@Will-Terry Oh that's exciting. Teaching art is hard, but I can see how teaching writing and breaking down your process or effectively trying to convey what works and why is even more hard. What you guys do here really is a skill all by itself and not an easy one to do well.
@natiwata Very nice cover illustration Nat! - its cool that they list you at the top of the page on Amazon as the illustrator - if the book is very successful i think you will have a bit of leverage on the next one
@natiwata Awesome cover, great job! Love the design and color choices!
@Kevin-Longueil @Charlie-Eve-Ryan Thank you! The cover was a lot of fun, I'll share some of the interior illustrations once they're public.
I really like your cover...looks great! Congratulations
@Charlie-Eve-Ryan Yes - but we're going to be very picky on who we get to do it...there are a lot of people who say they want to teach it but not many can actually give concrete ideas, methods, examples, strategies, and exercises on writing picturebooks...the search continues
