Dear Tania,
I love your description of the literary ocean because it does seem like that sometimes!
I'm presuming you are self-publishing this book, but if you were writing it to submit to publishers, you would not need to seek an illustrator, nor pay for them. Most publishers like to source illustrators to suit the text, unless you find and work solidly with an illustrator, and wish to submit the work as a team.
Going under the assumption you're self-publishing, finding an illustrator is a lot of fun and I have had the most wonderful experiences working with several for my books, including Tina Snerling, Christina Booth, Andrew Joyner, Kieron Pratt and Jess Racklyeft. I've only just begun illustrating my own books, so the advice I'm about to give you is NOT from an illustrator perspective--it's only what I've learned while working with them. I did, however, employ Kieron Pratt for my first three Riley the Little Aviator books, so I can comment directly on that.
The first thing you need to do is start looking at illustrations--the style you both personally like and, more importantly--the style that would suit your manuscript. Look through loads of picture books and also look online--Pinterest have heaps of children's book illustrations you can peruse.
There's also some established organisations that you can start perusing--Illustrators Australia, Books Illustrated, the Society of Children's Book Writers and Illustrators (SCBWI), and of course, my 52-Week Illustration Challenge has a mass of talent posting daily--and several people have secured working collaborations and even book contracts via the group.
When you've settled on a few people you might like to approach, simply make contact with them and ask their availability and if they would be willing to look at your manuscript. It is VITAL that both creators resonate with the work in question. A picture book is a delicate dance between writer and illustrator, and an illustrator absolutely needs to feel inspired and impassioned by your work. If they don't, it's no slight on your story. Someone may not enjoy drawing buildings or rabbits or seascapes, so it's best to have a small handful of people to approach.
Send them the manuscript. If they love it, you can then begin talking about availability and price.
Like anything, the more established and experienced the illustrator, the more you will pay for them--though this is dependent on their passion for the work. If you are keen to go with an emerging illustrator, you will pay less, but you should also pay them a decent amount.
There are two ways you can pay them. Contract or royalty. Contract is a one-off payment which you both agree upon. This includes all imagery, a front cover and use of some imagery in promotion of the book or website creation. It should also include any possible reworks. Providing drafts (roughs) and liaising closely on each illustration will minimise reworks, as will having working proficiency in digital illustration, as small changes can more easily be made to hand-rendered works. So do check with your illustrator if they have this digital capability. Reworking by hand can be very time-consuming and frustrating, so ensure communications are clear.
If the illustrator has proficiency in page layout and design, and the creation of print-ready PDFs, you could also include this role in your fee, saving you a lot of money when hiring a graphic designer to complete this step.
For outright contracts, you would pay 50% up front and 50% upon completion.
Royalties work differently in that you would contract the illustrator to an agreed amount upon book sales. Traditionally, this is 5% of RRP (NOT of list price, or net profit on RRP) with no further payment for any 'extras'. You would need to pay yourself 5% of RRP for your role as author, and after printing and marketing costs and distributor cut, this will leave you with very little profit, so going above 5% would be foolish. Having said that, if your book does extraordinarily well, you could always pay your illustrator a bonus later on (I did this with Kieron and I also gave him book copies to sell himself at full profit).
Publishers usually offer an advance on royalties at time of signing--and this amount can vary. This advance is paid off when royalties are earned. Usually, offering an advance is impossible for self-publishers (there is so little budget), so the illustrator would need to produce the work upfront without payment, and then rely on later payment when royalties come in. They would need to understand that there is no guarantee of earnings if they take this method of payment. Committing to it could result in nothing-much, but it could also result in a lot down the track if the book does well.
As for payment--this is incredibly convoluted because it depends on countless variables. It depends on who you hire, what their skills are, how many illustrations you'd need, if the illustrations are simple and clean or full page (including background). It would depend on the style you require (some styles and renderings cost more to produce) and if you require someone to take on the graphic design role, too.
As a general guideline, for a traditional 32-page picture book, an illustrator could earn anything from $1000 to $8000, depending on their skill, the style used and the complexity of the images. Famous illustrators could command much more than this, of course. A brand new illustrator doing very simple illos with NO backgrounds may happily take $1000 if they are keen to be published. This brings me to trade-offs.
Anyone who is serious about entering and making an impact on the children's book industry always has trade-offs to consider. If your potential illustrator totally believes in your book and wants to get behind it all the way and go that extra mile and become heavily involved in production, they would probably be willing to take the 'risk' of having no advance and just running on royalties. They will know that having a publication under their belt is a priceless calling card.
Tina Snerling and I worked on a book that supplied no advance. We worked our hearts out, fully believing in our work and in its potential to sell well. We travelled over 18 months without seeing a single cent but the book became a bestseller and when the royalties came in, we were paid handsomely (and are due for more payments soon--hurrah!). That book was An Aussie Year.
Still, no 'money' could ever cover the hours and heart we put into that book. This doesn't matter to me because that book is an essential stepping stone in my bigger career picture, and it's a production I'm very proud of.
So sometimes it's important to see the 'bigger picture' when committing to a work--trading off time and effort for career gain and exposure. This can mean donating one's time, oftentimes for nothing, though this should be VERY carefully weighed up, and should only happen once or twice--not as a matter of course. You DO need to be paid for your time and expertise. Essentially, if an illustrator (or author!) is in it to 'make money', they are not in the right industry (though they absolutely should be recompensed for the cost of illustration materials, which can really add up). Making money in the children's book industry is vital, yes, but it's secondary to creating great books and building great careers and successful publishing companies. Without great books, none of the latter could happen.
I guess what I'm trying to say is that the right illustrator will be in it for the right reasons. If you have a budget that you can't budge on (after warm negotiation), and the illustrator can't commit to that budget, that's perfectly okay. It just means they're not right for the work and you can move onto the next person.
When negotiating, be professional and warm and don't bring emotion into it. Show you are easy to work with and passionate about your project. Be accepting of people's needs and views, and be flexible, but don't ever commit to a price you simply cannot afford.
Also, don't be stingy. If you can afford more than they ask, be generous--karma is alive and well in the children's book industry--and generosity does kick back with huge reward.
Once you have secured your illustrator, I suggest contacting the Australian Society of Authors for contract advice. They are well worth joining for the amazing information and support they provide, and you can write off the annual fee on tax.
Remember, you are not bound by Australia where it comes to seeking an illustrator. I found my very first illustrator in Canada (while I was living in China!) but do note that having someone in your own country can be helpful, it supports local talent, and if both creators are Australian, it means your work can be eligible for Australian competitions, awards and grants.
Connie, I hope this helps you navigate that literary ocean. My best of luck to you with your new book!
Tania
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