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By Stephen Windwalker

Windwalker 1.jpgDRM. Authors and publishers, have you considered the impact of Digital Rights Management on your ebook sales? A large and growing number of Kindle owners cares about this issue, and some consider it in making ebook-buying decisions, since they are aware that DRM restricts their rights to do all the natural non-commercial things we’ve been doing with books since we began reading. But what many at both ends of the creative process do not know is that there are tens of thousands of DRM-free books in the Kindle Store. Nearly every book uploaded via Amazon’s Digital Text Platform (DTP) for the Kindle is DRM-free. All you have to do, if you want to make your ebook DRM-free, is follow the instructions for uploading your book via the DTP in The Complete Step-by-Step Guide To Publishing Books, Articles & Other Content for the Amazon Kindle (Creating Your Own Success Story with New Technologies) (also available in paperback and as a 4-in-1 Kindle combo edition).

Kindle Pricing. Shhhh. With all the attention paid to the $9.99 price point for Kindle bestsellers, few authors and publishers understand how pricing and payment issues really work in the Kindle Store. Focusing only on titles uploaded via the DTP here, it’s worth pointing out the following:

Amazon automatically pays a royalty or commission of 35% of the retail list price to the author or publisher for each copy sold in the Kindle Store.

Amazon automatically applies a discount of 20% to the customer price of Kindle books where the retail list price has been set by the author or publisher at anywhere from $1.24 to $12.49.

Thus, for books with a retail list price between $1.24 and $12.49, it is more appropriate to say that Amazon automatically pays a royalty or commission of 43.76% of gross sales proceeds for each copy sold. Since the aforementioned discounting occurs automatically at the software level, any rightsholder wishing to establish a customer price point of, say, $7.99, would naturally set a retail list price of $9.99.

For Kindle books where the retail list price has been set by the author or publisher at anywhere from $12.50 to $24.99, Amazon automatically applies whatever discount is necessary to bring the customer price point down to $9.99, and continues to pay a royalty or commission based on the retail list price. I’ll leave the ensuing math to you, and say only that, if you wish to establish a customer price point of $9.99, doing the math is well worth your effort. And if the numbers you enter lead you to arrive at a result of 87.52%, well, all I can say is that you are on the right track.

For Kindle books where the retail list price has been set by the author or publisher above $24.99, I have not been able to discern any rhyme or reason beyond saying that the discounted price jumps up very quickly so that it is bound to have an immediate impact on sales. The result is that any author or publisher with even a rudimentary understanding of price-sales elasticity would never set a retail list price, on the DTP, anywhere between $25 and $40.

Interestingly, one result of all this is that, for a book whose retail list price is $9.99, Amazon’s take is $4.49 (out of the $7.99 paid by the customer), whereas it is $1.25 (out of $9.99 paid by the customer) for a book whose retail list price is $24.99.

Despite the fact that Kindle owners generally recoil from Kindle-edition fiction priced (after discounting) above $9.99, there is considerable evidence that for many technical, business, and how-to titles, Kindle owners are willing to pay a higher price and certainly do not consider $9.99 too high.

By Stephen Windwalker, publisher of Kindle Nation

 
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