How Amazon KDP Calculates Printing Cost & Royalties
The basic formula for printing cost is:
Fixed cost + (page count * per page cost)
And the calculation for royalties is:
(60% of list price) – printing cost
You can learn more about royalty and printing cost calculations on Amazon KDP’s website here.
Note that for black and white ink books, the printing cost stays the same until 108 pages. This means that your printing costs (and royalty) will be the same when your book is 24 pages long or 108 pages.
If your book happens to be, for example, 80 pages long, you can still add 28 pages without increasing the printing cost.
For colored ink, the printing cost stays the same until 42 pages.
How Amazon Calculates Royalties for Kindle eBooks
The basic royalty structure for Kindle eBooks is quite simple. From $0.99 to $2.98 and $9.99 to $200 the royalty is 35%. From $2.99 – $9.99 the royalty rate is 70%.
Also, another element to keep in mind is the delivery costs which get subtracted from your total royalty, when you opt for 70% royalty.
They are $0.15/MB for the US, £0.10/MB for the UK, and €0,12/MB for the European marketplaces.
It’s quite obvious that Amazon is incentivizing publishers to price their kindle eBooks in the range of $2.99-$9.99.
Learn more about pricing here.
Why is my book’s price on Amazon not the same as I set it in my KDP dashboard?
Most often this is because Amazon is running a discount for your book. And that is good news! Whilst Amazon reserves the right to adjust the price for your book, your royalty will remain the same as for the list price that you set. This means that your sales rate is likely to increase without you earning a lower royalty rate. The discount comes out of their cut of the book’s sale price.
Should I choose black and white or colored ink?
Colored ink costs significantly more than black and white. For this reason, we would suggest that if you do go for the colored ink option, you make very good use of it. Your book will have to be priced much higher with the colored ink option.
An example of good use of the colored ink option would be a children’s picture book. Each page is in full color, so it is easy to justify the increased price.
An example of “not-so-good” use of the colored ink option would be a 200-page book with a few colored pictures here and there.
The costs are not calculated based on the amount of ink used but from the number of pages that your colored ink interior has.
How to Pick the Best Price for Your Book?
There are multiple factors to consider when selecting an optimal price point for your book:
After all the effort that you put into producing your book, it is only fair that you get paid! So first things first, you should select a price point that allows you to collect an acceptable royalty, which is what our print royalty calculator is made to help you do.
Prices of Other Books in the Same Niche
Do not forget about basic market dynamics. If there is a market for your book, then there also are going to be other books competing to satisfy that same demand.
In more basic terms, this just means that consumers will evaluate your book against your competitor’s books. If most competing books are priced around $15 and you attempt to sell yours for $20, you most likely will get fewer sales than you could at a lower price point.The BookBeam Extension allows you to quickly see averages of book prices for whatever your niche may be. Learn more here.
Brand perception is simply how people perceive the author and in some cases the publisher. J.K. Rowling, for example, the author of the Harry Potter series, has a very strong brand, therefore she (or her publisher) is able to price her books higher without seeing a drop in sales.
If you do not have the branding power of the likes of J.K. Rowling no need to worry because the reviews of your book can fill in that gap for you. The reviews and ratings of your book will shape people’s perceptions of your book and brand.
Having lots of positive reviews may give you the opportunity to increase your book’s price without losing sales.
There are reasons why a 500-page SAT prep book costs around $30 and a blank journal costs only $5.99. A big part of it is value perception – how valuable do people perceive the contents of the book to be? How much intellectual and creative investment was necessary to produce this product?
Usually, there will also be some correlation with page count here.
Amazon’s Ranking Algorithm
Amazon’s algorithm also plays a part in all of this. It is mainly geared to accomplish 2 objectives: 1) help customers find products that they like (and will buy), and 2) generate revenue.
Price also plays a big role in this. Amazon first likes books that convert (clicks that turn into orders), but it also likes books that generate revenue. If you can manage to have both – high conversion rates and a high price point relative to competitors, Amazon will love your book and it will rank it in high positions in search results.
Your Overall Strategy
Pricing can be a powerful component of your overall marketing strategy. The general rule of thumb is the lower the price, the more easily you’ll get sales. You could think of it as a barrier. The higher the barrier (i.e. the price), the more other factors (like social proof) that you’ll need to have to get people to buy your book.
During the launch period of your book, and when your book does not yet have lots of positive reviews, you may want to sell your book at a lower price. You do not yet have the power of social proof to help your book sell, which is why it may make sense to lower the price point to help get things moving.
How often does Amazon KDP pay royalties?
Royalties get paid out approximately 60 days after the end of the month in which a sale was reported.
Electronic payments (EFTs) do not have a minimum payout threshold. For Check and Wire payments it is $100 in the US marketplace and 100 euros in the European marketplaces.
Should I choose paperback or hardcover? Which is better?
Generally, it is best to start with the paperback version and then create a hardcover version later on. Paperbacks tend to sell more, mostly due to the possibility to sell them at lower price points.
Hardbacks can be a good additional format to offer. You will most likely sell much fewer hardcover copies than the paperback, but with the print-on-demand model, there is not much to lose since there are no inventory costs to consider.
The main costs to offer a hardback are the reformatting of the cover and interior as well as the time it would take to upload the files to Amazon.
It is also worth noting that these can vary across different niches and categories. For some niches, it may not be relevant to offer a hardcover version.
Why is there an additional “VAT” cost for European marketplaces?
VAT stands for Value Added Tax. 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 for books is quite low:
- Germany – 7%
- France – 5.5%
- Spain – 4%
- Italy – 4%