Quick refresher on what a royalty actually is
A royalty is the money you earn per copy sold of your book, and it's usually calculated as a percentage of the retail price. However, that percentage is almost never calculated from the whole sticker price, straight into your pocket.
With Amazon KDP, there are several moving parts to consider, such as:
- Different royalty tiers for eBooks
- Delivery fees for eBooks on the 70% plan
- Print royalties that are "X% of the list price minus print cost"
- Lower print royalties for expanded distribution channels
Mistake #1: Thinking that 70% applies to every Kindle book
If you've researched Amazon Kindle royalties, you'll see that they love to post about "Up to 70%!" royalties for Kindle authors. What they don't tell you quite as loudly is the actual rule behind it:
You only get 70% if your eBook price is between $2.99 and $9.99. Outside of that range, you get 35%. So if you price your book at 99 cents to try and get more downloads, you've also quietly cut your royalty rate in half, often without realizing it.
Let's take a look at an example.
Keeping the numbers simple, let's assume you're in a 70% royalty-eligible country like the U.S. Amazon charges a 20 cent delivery fee on your file for the 70% royalty plan. The exact fee varies depending on the file size. We're using a round number here to make the math easy.
Let's say you're selling your Kindle eBook for $4.99. With a gross royalty at 70%, you'd make $3.49. Then take away the 20 cent delivery fee which leaves you with $3.29 per sale.
Now let's look at the same book, on the 35% plan, priced at $2.49. It's on the 35% plan because the price is below $2.99. Your royalty would end up being 87 center per sale, even though you "only" dropped the price by $2.50. That's about a 74% pay cut per copy just to look cheaper on Amazon and stand out.
And that math reveals the first big pattern when it comes to KDP Math 101: Small changes inside the right royalty band are like giving your eBook a small exposure nudge. Small changes that fall outside of that band are like punting your eBook right off a cliff.
Mistake #2: Forgetting delivery and country-based "gotchas" on Kindle royalties
If that wasn't enough, Kindle's 70% royalty tier has two more gotchas that most authors neglect to pay attention to.
The first is delivery fees. Amazon charges a per-megabyte delivery fee on 70% Kindle sales. That's why we make it clear on our blog that Amazon royalties are paid out minus the delivery fee determined by Amazon based on the size of your book. Got an image-heavy file like a children's book or a cookbook? Amazon's going to take a bigger piece of the royalty pie.
The second is country restrictions. That 70% royalty only applies in specific territories, including the U.S., U.K., and certain EU countries. Sales in other countries may default to 35% even if your price is in the "right" range. That's why when pricing your book, ask yourself, "Is the price inside the 70% band in the main markets I'm targeting? And based on the size of my book, what will the delivery fee be?
Mistake #3: Treating KDP print royalties as 60% of list
This one hits both paperbacks and hardcover books — the very books that your readers will assume and expect to be more expensive. Amazon's KDP POD (Print On Demand) royalties are around 60-70% of retail price for print books sold on Amazon. For books under expanded distribution, Amazon pays 40% of the retail price.
The actual formula that KDP uses for standard Amazon print sales is:
Your print royalty = (List price x royalty rate) - print cost
So your actual earnings will depend heavily on your page count and printing specs, not just your list price. Let's look at an example of a 300-page paperback priced at $14.99.
The KDP royalty rate on Amazon is 60%, and let's say hypothetically, the KDP print costs for your specs ends up being $4.50. You'd think you'd earn 60% of $14.99 ($8.99), a decent margin. However, you'd actually end up earning $4.49 per sale, with a gross royalty of $8.99 minus the $4.50 print cost.
When you factor in expanded distribution, where Amazon only pays 40% of list, your gross royalty is $6.00, minus the same print cost, which leaves you with just $1.50 per sale. Same book, same buyer, but different channel, and you don't even have enough for a cup of coffee.
Let's say you set your list price to $7.99 because you want your book to be affordable. Keeping the same $4.50 print cost and 60% Amazon royalty rate, you end up making a whopping 29 cents on a print book. If your print cost happens to tick up more, with better paper or more pages, you can end up with royalties so low that KDP won't even allow that price.
So what's the solution?
Fortunately, there's a way to avoid this. We've written up a detailed pricing guide that walks you through it, but at the core of it is this question. Rather than asking "What's everyone else charging?" Ask yourself:
How much do I want to earn per sale, and what price do I need to hit that, given KDP's rules?
You don't have to fret over endless calculations to get it right. Just ask yourself a few simple questions before you hit "Publish." When you do, know that Amazon will definitely take their cut, but make sure that you've done the math well enough so that there's plenty left for you.