Monday, January 19, 2015

KDP List Price Requirements

Authors distributing their works through Kindle Direct Publishing should be aware that Amazon has recently altered their ebook pricing structure for the 35% royalty option to include restrictions based on file size. As you can see from the screen cap above there are now three divisions within the 35% option, requiring new minimum prices for files over 3Mb in size, with $1.99 as the new minimum list for those between 3 and 10 megs, and $2.99 as the lowest allowable price for files over 10 megabytes in size.

Until now there were no conditions set on the size of an ebook file in the 35% margin and no delivery charge associated with the file delivery, so that for a .99 cent title an author receives .35 cents, regardless of the file size. Ebooks receiving the 70% royalty have always been subjected to a .15 cents per megabyte bandwidth fee for the initial download, which is one reason the minimum price for this option has been $2.99 from the start. By comparison, at .15 cents per megabyte a .99 cent title at the 35% royalty would cost more to deliver than its profit margin affords at sizes over 2.3 megs. As a practical example, the file for The Saga of Beowulf is 2.31 Mb (640 pages in print, with a half dozen images), which deducts exactly .35 cents from my profit for each purchase.

With ebook files beginning to increase in size (often dramatically) as multimedia content is added, the logic here is obvious: Amazon is looking to a future when ebooks sold in KF8's more content-rich format will frequently contain enhanced audio-visual content, and thus require greater bandwidth to deliver - the addition of a single video, for example, can swell the file size to 50 megs or better depending on its length and compression ratio, and even shorter graphic novels will be hard pressed to come in at much less than that and keep the image quality decent. But since Whispersync delivery is free to users, the added cost must come from somewhere. Consequently, Amazon is making something of a preemptive move here as it eyes the future.

The most obvious and practical result of this new policy is that for titles with files larger than 3 Mb the .99 cent price point is now no longer an option. Amazon is essentially stating that going forward .99 cent titles are restricted to basic text-only ebooks of a reasonable length (or very short works with a handful of images). In essence, there will be no such thing as a .99 cent enhanced ebook on Amazon. For larger books, prices must be higher.

But the most interesting thing about this structure change is that while at first glance it appears to put a heavy limitation on the 35% option, in fact the 35% rate is by far the more profitable for larger files. A 10 Mb file at 70% will cost the author $1.50 in delivery fees, leaving only .59 cents on a $2.99 title after Amazon deducts their 30% share, whereas the same ebook at the 35% rate would net the author $1.05 - .46 cents more! And of course, the difference only goes up as file size increases: a 50 meg file at 70% will cost the author a whopping $7.50 for delivery alone! This effectively eliminates the 70% royalty as a possibility for enhanced ebooks, which is why Amazon has just raised the bottom line for the other option.

As you can see from the table I made above, in practical terms 7 Mb is the dividing line for a $2.99 list title. At that size the 70% royalty nets $1.04 after delivery fee is charged, a penny less than the same $2.99 title with the 35% margin chosen. One can always raise the price, but that has drawbacks of its own each author will have to justify for themselves. For an ebook listed at $4.99 the dividing line increases to a 12 Mb file, with the 70% royalty netting six cents less at that point than the 35% option, but sales will also likely drop by half due to the higher price, depending on your popularity as an author, so you'll have to take that into consideration as well. Of course, if you're a well known author none of this will matter to you much, as you're probably charging $15 or better for your books, and unlikely to be reading this anyway.