What is the difference between the 35% and 70% royalty on Amazon KDP?
The basic royalty structure for Kindle eBooks is quite simple. There are 2 options: 35% royalty rate and 70% royalty rate.
70% Royalty Rate
Price points ranging from $2.99 to $9.99 are eligible for a 70% royalty rate.
When you opt for 70% royalty, depending on your digital file’s size, there may be a delivery cost, which gets subtracted from your total royalty.
More information about delivery costs later in this article.
35% Royalty Rate
All price points ($0.99 – $200) are eligible for a 35% royalty rate.
In the European stores, for both royalty rates, there is a VAT (Value Added Tax) cost to consider. It is a tax that is very similar to a sales tax in the US.
What is VAT (Value Added Tax)?
VAT stands for Value Added Tax. It is a tax that is applicable to the European stores only – Amazon Germany, Amazon France, Amazon Italy, and Amazon Spain.
It is quite similar to sales tax in the US. It’s a tax applied to goods and services.
The good news is that VAT rates for books are quite low:
- Germany – 7%
- France – 5.5%
- Spain – 4%
- Italy – 4%
Which royalty rate is best for me?
Whilst you will be the best person to answer that, in general, prices in the ranges from 0.99 to $1.99 (35% royalty rate) are good for launch periods, when you want to sell more copies at a smaller profit or without a profit. You can use this to build reviews faster and to rank higher for the main keywords related to your eBook.
Price points from $2.99 to $4.99 (70% royalty rate) are more optimal when your book is more established, is ranking well for its main keywords, and has a good set of positive reviews. In this range, it will be much easier to turn a profit, due to the simple fact that you get to keep much more of each sale.
For price points above 4.99, it is advisable to have a stronger brand and/or for your book’s content to justify a higher price point.
You can learn more about the technicalities of Amazon KDP Kindle eBook pricing here
What are Delivery Costs & Digital File Size?
Delivery cost is a fee that is applicable for the 70% royalty rate.
Delivery costs are $0.15/MB for the US, £0.10/MB for the UK, and €0,12/MB for the European marketplaces.
Digital file size is a metric used to calculate the delivery costs in a fair and standardized way.
How are the delivery fees calculated?
The calculation for delivery cost is:
Digital file size * delivery cost
An Example Scenario
Let’s say your manuscript word file is 4 Mb. You upload, your manuscript to Amazon KDP and your file is converted and compressed to 0.8 Mb.
In this case, your delivery costs will be $0.15*0.8 = $0.12.
How can I know what my digital file size is going to be?
Great question! First of all, your digital file size is the size of your manuscript *after* compression that’s done by Amazon KDP. This happens automatically after you upload your manuscript to Amazon KDP. The compression reduces your file size several times.
You cannot really know exactly how many times smaller your file size will be after compression due to variables like the number of images in your manuscript. However, usually, the reduction is in the range of 4 to 7 times.
The surest way to find out is to simply upload your manuscript to Amazon KDP and see.
You will see it on step 3 of the upload process, in Kindle eBook Pricing: