Oh wow, that is a biiiig topic. I can point out a few areas to look for, but if you’re not going to go with an agent I would seriously recommend having a publishing attorney review the contract before you sign. It might cost you a couple hundred dollars, but the time and money and anguish it could save you is worth ten times that, I promise.
Note: I’m a fan of agents and work with one for my nonfiction books (and plan to with my fiction as well), so if you’re able to find a reputable agent to negotiate for you, it’s a good idea. Some people would rather avoid agents, though, so in that case I’d recommend a publishing attorney. But make sure it’s someone with experience in publishing, because contracts are very specialized with language that a lot of general attorneys won’t have a clue about.
Also, the Author’s Guild has some contract review services for members that are worth looking into if you don’t want to go either of those routes.
One thing to remember: You can negotiate with the publisher, even if you don’t have an agent or attorney. This is your career, so don’t be afraid to stand up for yourself.
Some of the big things that writers don’t know to look out for:
Net vs Gross
Be wary of contracts that state that you’ll only get royalties once the publisher has recovered their costs. They can throw anything in there that they want, including marketing and a bunch of other things that shouldn’t come from your royalties. It’s best to get gross royalties rather than net, but a lot of smaller publishers only work on net. Just know that you might get paid a lot less if royalties are calculated as net rather than gross.
Right of first refusal aka option clause
Publishers want the right to have an exclusive look at your next work. That’s well and good, but you want to limit this as much as possible. If you can get them to do it for the next book in the series, or at least the next book in that genre or with those characters, it’s best. I’ve seen contracts that can tie up an author’s career for 21 years (not kidding), so be careful about this one.
Some publishers want to limit what else you can publish that might be similar to the current book so as not to compete for sales. If they refuse to take out a clause like that, limit it to something very specific: picture books about dentists rather than just picture books, for instance.
There are so many things to watch out for that I’ll once again recommend having an attorney or someone at the Author’s Guild or similar take a look at it first, but here are a few helpful articles about other things to watch for.