Self-publishing is no guarantee to riches, but you want to maximize your earnings. In this article, we’ll review what the distributors offer, including:
- Royalty percentages
- Payment timing
We’ll also discuss Amazon’s program known as Kindle Unlimited.
Royalties – How Much?
Note that royalties will be lower in some countries because of taxes, especially value-added tax (VAT) in countries such as the UK.
Amazon. They offer two tiers of royalties for self-published authors: 35% or “70%”. “70%” is in quotes because you don’t actually get 70%. First, “70%” is only possible if your e-book is priced within their accepted range ($2.99 to $9.99, unless you’re running a promotion) AND exclusive with them. That means your e-book can’t be sold through iBooks or Barnes & Noble or anywhere.
Furthermore, “70%” is reduced by a fee for the amount of data transmitted. If you have a short book, with no illustrations or extras, your e-book files will be small and you’ll receive nearly all of the 70% royalty. If you have a large book data-wise, with illustrations and pictures, that 70% will be reduced much more.
So, why would you ever be exclusive with Amazon? You might make this decision because they have the largest market share, by a large margin, at least in the US where they have around 74%.
Let’s work through an example:
You sell 74 books @ $4.99 each and get 66% royalty. That earns you $243.71.
(74 × $4.99 × 66% = $243.71.)
Amazon and everyone else:
You sell 74 books with Amazon and get 35% royalty, and 26 books with everyone else at 70% royalty (the latter assumption is generous). Your total royalty is now only $220.06.
(74 × $4.99 × 35% + 26 x $4.99 × 70% = $220.06.)
In this case, the Amazon exclusive deal earns you more money, while the other option gives you more readers.
How these numbers work out depends on your market. If your story appeals to Apple lovers, then your market with iBooks will be larger; if iBooks continues gaining market share, an exclusive deal with Amazon may not be your best bet.
Apple iBooks pays 70% in royalties with no fees deducted for data transmission. Apple iBooks also advertises being available in 51 countries, which sounds great. But remember:
- Unless you’re writing in local languages, your market in other countries may not be large
- Readers who live in countries without Amazon websites can still shop at Amazon websites
Nevertheless, some people are big Apple product fans, so publishing through them may gain you some customers. Furthermore, iBooks apparently has no cap on the price of its books, so if you write a series you could offer a boxed set for more than the $9.99 at other distributors and still receive 70%.
Barnes & Noble NOOK books pays different royalty rates for NOOK books according to their prices. In the US, the royalties are: $0.99 - $2.98 (40%); $2.99 - $9.99 (65%); $10.00 - $199.99 (40%).
Kobo pays 70% in many situations and 45% in many others. They also advertise being available in 191 countries. Some of these markets are tiny; plenty don’t read much in English; but if you can sell books in Malta, more power to you.
Smashwords’royalties are complicated because they include sales at their own website and also sales made at other websites. They pay 85% or more of the net sales proceeds from the work, but net sales proceeds depend on what other distributors pay. Let’s assume your e-book retails for $4.99 and look at two cases.
If it sells at Smashwords you receive $4.24
85% x $4.99 = $4.24
If your sale was through Barnes & Noble, you receive $2.75, because you have to first apply the Barnes & Noble royalty rate.
65% x 85% x $4.99 = $2.75
Racking up royalties is great, but you can’t spend the money until it reaches your bank. Timing of payments is different for each distributor, and for some, you have to meet thresholds.
Amazon pays within sixty days of a sale, usually the last day of the month. If you sell a book in February, you’ll receive the royalty at the end of April. Amazon has no thresholds. Even pennies, perhaps for a few pages read in India, get deposited regularly.
Apple iBooks usually pays 45 days after the close of a month. So for books sold in February, the payment date is usually April 15.
Barnes & Noble NOOK Books pays 60 days after the close of the calendar month during which a sale occurs only if the total royalty for that month is greater than $10/£10/€10, according to your payment currency. For example, a June payment would be for sales made during April. If the total earned royalty for any one month is less than $10/£10/€10, that amount is carried over to the next month.
Kobo pays when you hit $50, and if so, once per month.
Smashwords pays monthly, always within 40 days of the previous month’s close, and usually 30 days or less. However, because most sales come from other distributors, there’s an additional lag. If you have sold an e-book via Apple iBooks through Smashwords, Apple has to pay Smashwords before Smashwords can pay you. On the good side, if you receive your royalties electronically (PayPal) from Smashwords, the threshold is one cent (for paper checks you must be owed at least $75.00).
The extra incentive offered by Amazon to authors to publish exclusively with them is to let readers in the Kindle Unlimited program read these books without limit and to pay authors for each page read (only the first time read) The amount you get for each page read is tiny, usually a little less than half a cent in the US, and even smaller amounts in other countries, but if you have a book that people want to read, these pages add up. The pages are “Kindle Edition Normalized Pages,” generally smaller than what shows on a printed page, so your e-book will have more KENP than a printed book.
Amazon has the option to vary the amount paid per page from month to month. They make a big deal about how they add more to the fund every month, but they keep lowering the amount paid per page.
- February 2017: 0.4974 cent/page
- March 2017: 0.4604 cent/page
- April 2017: 0.4574 cent/page
Most major publishers do not participate in Kindle Unlimited, meaning that the books available to Kindle Unlimited subscribers are often self-published. In a way this is good: self-published authors have a better chance of being read. On the other hand, some people do not subscribe to Kindle Unlimited because they think the quality of the available books is too low.
Most authors don’t make a lot of money with their stories; still, you want to make the most you can and get your money sooner than later.
Remember the markets are always changing, so the right decision today may be the wrong decision tomorrow.