For new authors, the thought of book royalties can be both exhilarating and utterly confusing. You want to know exactly how much you'll earn for all of your hard work, but new terminology and perplexing math may cloud your view of payday. Plus, you need to understand what your book publishing costs will be. After all, when you self-publish, you foot the bill, so you need to keep costs and royalties in mind to truly understand what you'll earn publishing a book.
Amazon is one of the world's largest booksellers, so understanding Amazon royalties and self-publishing costs is a good place to start. So, how much royalty will you earn when your book is sold on Amazon? That depends on how you published it and how readers access your book.
First, let's look at royalty earnings and costs when you publish a book through Amazon's Kindle Direct Publishing. Next, we'll examine how royalty payments and costs work through two of Amazon's content access channels, Kindle Unlimited and Kindle Owners' Lending Library. And finally, we'll consider Amazon royalties when you publish through other self-publishing companies or traditional publishers.
Kindle Direct Publishing (KDP) allows you to publish Kindle eBooks and print books for free. As their name suggests, the company originally focused on only publishing Kindle eBooks, but since February 2017, it expanded to offer print publishing too. KDP is similar to Amazon's previous publishing platform, CreateSpace, but it has important differences as well, such as differences in distribution and service offerings.
Royalties: KDP offers two eBook royalty options: 35% or 70%. With such a big difference between the numbers, there must be a catch to the 70% option, right? Well, yes. To receive 70% royalties on eBook sales, your eBook must meet their list of requirements, which regulates the list price, areas of distribution, and exclusivity of sales through the Kindle Store for sales in certain countries. The only other factor deducted from your royalty is tax. You earn "Royalty Rate x (List Price – applicable VAT) = Royalty," as it's explained on their website (VAT stands for "value-added tax").
For print book royalties, on KDP's website, it states: "Paperback royalty rates are 60% of the list price displayed on Amazon at the time of purchase, minus printing costs, applicable taxes, and withholding."
Cost: It's free to publish an eBook or print book with KDP. The company doesn't offer professional services like CreateSpace did. But remember: even though the publishing service offered is free, that doesn't mean you shouldn't invest in your book. Spending money on a quality cover design, editing services, and a marketing campaign makes a huge difference in the success of a book.
When you publish an eBook with KDP, you can also earn royalties through two of Amazon's services: Kindle Unlimited (KU) and Kindle Owners' Lending Library (KOLL). Kindle Unlimited is a subscription service that allows its customers to read as many eBooks as they like and keep them as long as they want. Kindle Owners' Lending Library also allows its users to "borrow" eBooks without a due date. It's available to Amazon Prime members who own a Kindle e-reader, Fire tablet, or Fire phone. If you have a book in KDP Select (which is a requirement for the 70% royalty), then it will automatically be available through KU and KOLL.
Royalty: You're paid for the number of pages the customer reads in your book for the first time (if a customer reads your book again, you're not paid again). You receive a combined royalty payment for both KU and KOLL according to your Kindle Direct Publishing schedule. Royalty earnings are determined by how many pages of your book were read that month, but it's not a fixed price or rate. According to KDP, "The share of fund allocated to each country varies based on a number of factors, such as exchange rates, customer reading behavior, and local subscription pricing. Author earnings are then determined by their share of total pages read, up to a total of 3,000 pages per customer per title."
Cost: It's free to include your book in KU and KOLL, however, you do have to meet their requirements, including exclusivity to sales only through the Kindle Store.
If you didn't publish your book through one of Amazon's publishing options, but through a different self-publishing company or traditional publisher, then the Amazon royalty structure doesn't apply. In this case, seek royalty details from your publisher to understand how much royalty you'll earn when your book is sold on Amazon.
For example, here's how royalties are calculated when you publish with AuthorHouse, a supported self-publishing company. For print books, AuthorHouse gives authors a royalty rate of 10% through distribution channels, including Amazon. You earn 25% of retail price when your book is sold through AuthorHouse's bookstore. Regarding eBook sales, you receive "50% of the digital net, less any returns." You can learn more about AuthorHouse royalties on their website.
Now that you know a little more about Amazon book royalties and book publishing costs, you can better understand what you could earn as an author when you publish through Kindle Direct Publishing. Put this information to use when creating the budget for your book. If you expect to earn back what you spend creating your book, estimate how many books you'll have to sell to get back in the black. Is the number realistic and attainable? If not, you may need to adjust your goals or budget. By setting realistic expectations now and establishing a budget within your means, you can realize your publishing dreams without breaking the bank.
Oh yes, you can! Get things clarified first and you will be on your way.