If you’re planning to self-publish your book, you’d probably like to know just how royalties will be calculated and how much you can expect to earn for your hard work.
We’ve done the research and will show you exactly how publishers and distributors calculate author royalties for eBook sales.
How Do Self-Published Authors Make Money?
In this article, we’ll discuss how eBook royalties are calculated for self-published authors. In Parts 2 and 3, we’ll discuss how royalties are calculated for self-published paperback books and audiobooks as well.
First, you have to learn how to self-publish your book.
The vast majority of self-published books are sold via Amazon.com, so most self-published authors prefer to publish on Amazon, since Amazon will generally sell more books for self published authors than all other online book distributors combined.
The other major eBook distributors are:
Nook / Barnes & Noble
Amazon’s market share for eBook sales in the US is likely at least 60% and at least 78% in the UK, according to sales figures from a recent Hachette investor presentation.
Once your book has been published and you generate sales, here’s how self-published authors get paid.
eBook Sales and Royalties
For eBook sales, the author gets paid a royalty percentage based on the sales price (not counting taxes) minus an electronic file delivery fee.
eBook Royalties Calculation
The formula to calculate your eBook royalties looks like this:
Royalty Rate x (Retail Price – Delivery Costs) = Royalty Earned
The royalty rate you get paid from Amazon for eBooks is 70% of the retail price if the price of your eBook is between $2.99 and $9.99. If your book is priced between $0.01 and $2.98 or greater than $9.99, you get paid 35% royalties. Thus, most self-published authors prefer to price their eBooks between $2.99 and $9.99 on Amazon to receive a higher share of royalties.
Also, for eBook sales to certain countries, Amazon will only pay 35% royalties unless the author enrolls the book in the KDP Select Program (KDP stands for Kindle Direct Publishing and the website is www.kdp.amazon.com).
Ebook Delivery Costs
Amazon also charges an electronic delivery cost for books with the 70% royalty rate option.
Here are the fees Amazon charges in different countries for eBooks with the 70% royalty rate option based on file size (MB stands for Megabyte):
Amazon.com: US $0.15/MB
Amazon.in: INR ₹7/MB
Amazon.ca: CAD $0.15/MB
Amazon.com.br: BRL R$0.30/MB
Amazon.co.uk: UK £0.10/MB
Amazon.com.mx: MXN $1/MB
Amazon.com.au: AUD $0.15/MB
Calculating eBook Royalties
Okay, let’s do the math.
For this exercise, let’s assume your self-published eBook is priced at $2.99 on Amazon.com and the file size is 1 MB (which is much larger than the average eBook, unless it has numerous high-resolution pictures and diagrams). Furthermore, your eBook is being purchased by a US customer on the Amazon.com website.
Recall the royalty payment formula Amazon uses:
Royalty Rate x (Retail Price – Delivery Costs) = Royalty Earned
Therefore, we would get this calculation:
70% x ($2.99 – $0.15) = $1.988
Thus, your royalty earned per book would be $1.99, or just under $2.
Again, remember that sometimes your sales might be at the 35% royalty rate for international sales in certain countries, so not every sale would be at the 70% royalty rate.
Downloading Amazon Royalty Reports
Amazon provides detailed royalty reports for all sales during the previous month on the 15th of each month. In other words, on January 15, 2015, all KDP authors will receive a royalty report for all sales during December 2014.
In the report, authors will be able to see how many sales for each book were at the 70% royalty rate and 35% royalty rate, as well as any books borrowed from the Kindle Unlimited or KOLL programs, and any books downloaded for free from a KDP Select Free Promotion.
All KDP authors can download their reports by going to https://kdp.amazon.com/reports and then clicking “Prior Months’ Royalties.” Amazon also has live sales reporting as well for eBook sales, but these sales do not include detailed royalty calculations.
Kindle Unlimited and Borrows
Self-published authors may also enroll in Amazon’s KDP Select program and Kindle Unlimited program to receive extra payments from eBooks borrowed or rented by Amazon customers.
When an author’s book is enrolled in KDP Select, any Amazon Prime member can borrow one book a month for free. In return, Amazon pays the author out of the KOLL (Kindle Owner’s Lending Library) pool. The amount of money in the pool varies every month, and recently Amazon has been adding more bonuses to the pool because of the huge success of the Kindle Unlimited program among Amazon’s customers.
Until recently, an author would get paid over $2 each time a customer borrowed their book. Lately, this number has fallen to around $1.31 causing some self-published authors to want to leave the KDP Select and/or Kindle Unlimited program for fear that Amazon’s payments for borrows might continue to decline.
However, in my experience helping to publish thousands of self-published eBooks over the last three years, all the other eBook distribution platforms combined don’t even come close to generating the kinds of sales and royalties that Amazon can for a self-published author.
For example, a few months ago we did a major launch for a nonfiction eBook bundle on all major platforms (except iBooks, because their review process and customer support is abominable) with several authors and generating over $20,000 in sales. Over 98% of those sales came from Amazon.
When Does Amazon Pay Royalties?
Amazon pays royalties only on eBooks, print books, and audiobooks that are sold and NOT refunded by customers.
For eBook royalties, Amazon pays the author or publisher 60 days after the end of each month’s sales.
For example, if you earn $1,000 in royalties from book sales in January, Amazon will send your royalty payments 60 days after the end of that month’s sales. So you would receive royalty payments for your January eBook sales on April 1.
Paperback Sales and Royalties for Self-Published Authors
Now that you’re familiar with the payment process for eBooks, learn more about paperback publishing royalties for self-published authors in Part 2.
Also be sure to check out all of our resources specifically for self-published authors, from making an audiobook to designing a book cover.
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