What Authors Earn: Amazon Book Royalties and Publishing Costs - article

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 two self-publishing platforms: CreateSpace and 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.

Amazon book publishing costs and royalties

CreateSpace royalties and costs

CreateSpace is Amazon's print book publishing service. When you publish with CreateSpace, your book is printed on demand whenever someone orders it. Your book can also be converted into a Kindle e-book.

Royalties: You earn the list price minus Amazon's share (which includes a fixed charge, per-page charge, and sales channel percentage). There's a royalty calculator which helps to illustrate how the royalty changes based on your type of book and where the book is sold. You earn the most when you sell your book through your CreateSpace eStore, and the least through their expanded distribution channels, which includes Ingram and Baker & Taylor. CreateSpace uses its Kindle Direct Publishing (KDP) division to handle e-books published through CreateSpace, so the e-book royalties are the same as KDP's, which you can learn more about in the next section.

Here's an example of the CreateSpace royalty you could earn based on a black and white, six-by-nine inch book with 250 pages. It's up to you to choose the list price. Let's say, $13.00. The higher the list price, the higher the royalty (but potentially fewer sales):

- com: $3.95

- CreateSpace eStore: $6.55

- Expanded Distribution: $1.35

- Amazon Europe: GBP £57 (that's about $3.45)

- Amazon Europe: EUR €92 (that's about $3.44)

Why the differences in royalties based on where it's sold? That's the difference in the sales channel percentage. For books sold through Amazon.com or Amazon Europe, the amount charged is 40%. Sales through the CreateSpace eStore registers a 20% charge. And expanded distribution sales has the heftiest charge of 60%. There are more details on how CreateSpace calculates royalties on their website.

Cost: Amazon book publishing costs with CreateSpace varies on the services you need. You can publish without incurring any costs if you use their free, do-it-yourself book interior reviewer and cover creator, and use a CreateSpace ISBN. However, you may choose to purchase services, such as design, editing, marketing, and Kindle conversion. Depending on the services you select, you can spend hundreds or thousands of dollars—it's up to your needs and budget for your book.

Kindle Direct Publishing royalties and costs

Kindle Direct Publishing (KDP) allows you to publish Kindle e-books and print books for free. As their name suggests, the company originally focused on only publishing Kindle e-books, but since February 2017, it expanded to offer print publishing too. KDP is similar to CreateSpace, but it has important differences as well, such as differences in distribution and service offerings (you can view a feature comparison on their website).

Royalties: KDP offers two e-book 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 e-book sales, your e-book 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").

Print book royalties are seemingly identical to CreateSpace's, but with different wording. 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." CreateSpace authors also receive a 60% royalty for books sold through Amazon; however, they do not describe it as such.

Cost: It's free to publish an e-book or print book with KDP. The company doesn't offer professional services like CreateSpace does. 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.

Other Amazon book royalties

Kindle Unlimited and Kindle Owners' Lending Library royalties and costs

When you publish an e-book 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 e-books as they like and keep them as long as they want. Kindle Owners' Lending Library also allows its users to "borrow" e-books 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.

Amazon royalties for books not published through Amazon

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 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 e-book sales, you receive "50% of the digital net, less any returns." You can learn more about AuthorHouse royalties on their website.

Reach your publishing goals

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 CreateSpace or 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.

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