Setting a selling price for self-published Kindle eBooks or KDP Print books (formerly CreateSpace) sold on Amazon begins with understanding your costs. There are two components to book and eBook costs when selling on Amazon using KDP (Kindle Direct Publishing):
1. The cost of sale: what Amazon charges the self-publisher for each unit sold.
2. The Amazon sales commission for selling your book.
Kindle eBooks
The KDP self-publishing portal is unique among all eBook selling platforms because it often charges a delivery fee to send books to buyers. This is in addition to the sales commission you pay Amazon for each sale.
Calculating Kindle eBook delivery costs
Amazon charges $0.15 per megabyte (MB)—the file size of your Kindle eBook—for each book sold priced between $2.99 and $9.99 assuming you choose the 70% royalty option (see below). There is a minimum charge of $0.01 and delivery fees vary by country. There is no delivery fee for books priced below $2.99 or above $9.99 (the 35% royalty option).
You can do a rough estimate by multiplying the delivery fee times your file’s size, but that will not be accurate. The most reliable and precise way to calculate the Kindle delivery fee is to upload your file to KDP’s pricing page and see what the tool says. (In KDP, after listing your eBook, the final screen is the pricing page.)
For example: a novel is 95,000 words. The file size of the eBook file we uploaded is 3.421 MB, so if you were to multiply this by $0.15, the delivery cost is $0.51, right? Not so fast—Amazon’s official Kindle pricing calculator says the delivery cost is $0.10.
Note the “file size after conversion” is much smaller (0.64 MB) than the file we uploaded. This is because KDP processes the eBook file for delivery to their various Kindle reading apps, and the final file size is smaller.
Also note “Other Marketplaces (12).” Clicking the down-arrow to the right, you’ll see the delivery cost for each country varies, depending on where Amazon is authorized to sell your eBook (you can opt-out of individual markets; this is something you decide). Visit this Amazon page for more details.
Avoiding the Kindle eBook file delivery cost
Except as noted below, the only way to get around this charge is to select the 35% royalty option. Clearly this is not a good choice for most people, but for books with a very large file size—cookbooks, art books, travel books with lots of images, for example—it may make sense. Use the KDP pricing calculator to be certain about what the fee will be.
Again, books priced below $2.99 and above $9.99 are not subject to the delivery fee.
Sales commissions/your royalties
Unless you sell your eBook directly to readers (from your website, for example), you will pay Amazon a sales commission. As with any product and any store, the person buying your book is a customer of that store and the store is in business to make a profit.
Amazon’s sales commission is based on your royalty rate.
· 35% royalty: the Amazon sales commission is 65% for books priced below $2.99 and above $9.99
· 70% royalty: the Amazon sales commission is 30% for books priced between $2.99 and $9.99
Who pays taxes?
Some 160+ countries around the world charge what is called a value added tax, or VAT, on purchases. Amazon passes these taxes on to you by reducing your royalty by the amount of the tax, regardless of the royalty rate.
35% royalty rate x (list price – applicable VAT) = royalty
70% royalty rate x (list price – applicable VAT – delivery costs) = royalty
Fortunately, the United States is one of the very few countries that does not have a VAT.
Not all eBooks are eligible for a 70% royalty
There are several rules and exceptions to getting the 70% royalty, so you might need to take these into consideration when deciding how to price your book.
Some territories/countries are excluded. However, sales in most of the English-speaking countries pay the higher royalty. You’ll find a list of those here.
Public domain eBooks are excluded.
eBook sales in Brazil, Japan, Mexico, and India pay 35% royalty unless your book joins KDP Select (KDP Select requires a 90-day exclusive).
You must agree to make your eBook lendable for a 14-day period. This allows your reader to lend your book once. More about eBook lending here.
If you also have a physical edition (e.g., a paperback), the list price of your eBook must be at least 20% below the price of this edition in order to qualify for the 70% royalty.
What happens if Amazon offers your book for a lower price?
There are a few other rules about when you might receive less than you expect. This happens when you put your eBook on sale or another eBook retailer offers your book for a lower price and Amazon matches that price.
When you agree to sell your book on Amazon, you agree to not sell it at a lower price elsewhere. If you do, Amazon is authorized to match that price.
If this happens and your book's price falls below the minimum 70% list price requirement, you will receive the lower 35% royalty. Obviously, this is meant as a deterrent.
Finally, these rules and policies may apply to books sold via KDP and do not apply to all books sold on Amazon. Individual publishers and aggregators can have their own arrangements.
What is your royalty when you run a KDP Select Countdown Deal?
A key benefit of KDP Select is the ability to run a reduced-price sale for a one- to seven-day period. When this happens, you get to retain the 70% royalty if the sale price is lower than $2.99. Here's an example.
Let's say your Kindle eBook is listed for $4.99. In this case, you get 70% of $4.99 less delivery costs and any taxes. If you run a Countdown Deal to sell the book for $1.99, you receive the same 70% royalty (less delivery charges and taxes).
You can lower an eBook price at any time, but you won't get the 70% royalty if the price is below $2.99. A Countdown Deal is the only way to retain the higher royalty.
See the resources section below for more information about KDP Select and a link to our guide.
What if you are using an eBook aggregator?
You don’t have to use Amazon’s KDP to make your eBook available in the Kindle store. In fact, there are many services that can do this for you—for a price. Examples include Draft2Digital, Smashwords, Bookbaby, and IngramSpark.
You basically pay a flat fee or a percentage of royalties for the convenience of using a single company to list and manage your eBook in multiple stores. But since most eBooks are still sold (or borrowed) in the Kindle store, and not all services work the same way, it pays to study the options, costs, and tradeoffs carefully.
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