KDP ePubs: Choosing 35% or 70% Royalties.

Publishing your book involves a lot of decisions and one of the most important is how you choose to publish it in the first place. Traditional publishing involves going through a publishing house or press, whereas self-publishing involves publishing your book yourself or through a self-publishing service.

One option for self-publishing services includes ePubs and Kindle Direct Publishing (KDP) which is run through Amazon.

While ePubs offer you the plus of having a low-cost publishing option, you are limited by only having electronic copies of your book available. KDP, however, is a unique way to publish as it offers both electronic books, through Kindle, as well as pay-to-order copies of the book in paper format. Pay-to-order means that the paper copies are printed on demand rather than in pre-ordered amounts, which means you’ll be saved from ordering mass quantities of your book that may end up not being needed. While we’re focusing on ebooks here, it’s still good to know that you have multiple options if you want them!

If you’re considering releasing your ePub on KDP, there are a few important decisions to make up front.

One of those is whether you select 35% or 70% royalties. It may seem like an obvious answer–of course, you’d want more royalties! But there are some surprising factors behind the decision.

70% Royalty Rate Versus 35% Royalty

The 70% royalty breaks down to 70% of the book’s listing price without VAT minus delivery costs to any countries in the 70% territories. That’s a lot of seventy percents thrown around, so let’s break down what that actually means.

Many countries require something called a VAT (value-added tax) on some types of goods. This tax is one that is added on to a price at each stage of manufacturing and delivery. So, for example, if you have a product being produced in a country with a VAT of 10%, then this 10% will be added at various stages–from the goods being used to manufacture the product, to the retailer buying the product, to the final consumer buying the product.

How does that break down? If the goods to produce the product cost $1.00, then they will be charged 10 cents. The retailer buying the product will then pay 10% on 1.10, so 11 cents. Then the consumer will pay a final 10% on the product when they buy it at 1.21, meaning 12 cents is added and the final product costs $1.33.

But what does this mean to your 70% royalty? Essentially it means that you will receive the book’s price minus the VAT percentage of the country the book is sold in minus the cost of delivery (with ePubs this is typically done by a set price per megabyte of size). If your book takes up 1 MB of space and is on sale for 2 pounds and is sold to a reader in the United Kingdom, for example, where VAT is 20% and 1/10 of a pound per MB, what will your final royalty be?

To calculate this:

[2 (price of the book) – 20% (VAT) x 2 (price) – 1/10 (per MB) x 1 (MB)] x 0.7 (royalty rate) = 1.05 pounds

The 35% royalty on the other hand, is set at 35% of the price minus VAT and does not include a delivery fee.

So if you sell a book in the UK at 2 pounds, you will receive .35 multiplied by (2 minus .40) or .56 pounds. This, of course, makes the 70% seem much more beneficial. But is it?

Terms of the 70% Royalty

When choosing the 35% royalty, you do not need to sign any form of contract agreements and you are free to price your book as you wish. However, when you choose the 70% there are some key factors that you have to contractually agree to.

1. Your book must be priced between $2.99 and $9.99. These are reasonable ePub prices, but this means that if you write sequels to a book and want to price the first book at 99 cents, to draw in readers, you won’t be able to.
2. As mentioned above, you pay for file delivery. This can be as much as 15 cents a megabyte or more, and means that if you have a file that includes images it may be quite a few megabytes.
3. The 70% is only applicable in the 70% territories, and everywhere else is 35%.
4. Your book has to be included in KDP select if you want a 70% royalty from some select countries.
5. You can allow buyers to lend their book to other readers.
6. Your ePub cannot be in the public domain.

What is KDP Select?

KDP Select is an optional program that you can enroll in, but note that if you choose to enroll then you’re required to be in the program for 90 days.

By enrolling your book in KDP Select, you will be added to Kindle Unlimited (where readers pay a flat monthly fee to read as many titles as they wish) and the Kindle Owners Lending Library. Obviously, your book isn’t being sold if it’s used by this service (which acts more like a library), so how do you earn money?

You are paid for each page that a person reads. So if someone samples your book but only reads ten pages, you won’t earn very much. However, if they get hooked and read the whole book, then you will have better earnings. You can find a more direct breakdown of how much this is over at KDP’s site linked here.

With KDP Select, you will also be able to benefit from certain marketing benefits. You can choose either to be included in free book promotions or Kindle Countdown Deals. These kinds of marketing benefits mean that your book is more likely to be picked up by a curious reader, who will then go on to review your book or purchase some of your other titles.

So What to Choose?

Ultimately, this comes down to your own book goals. If you are writing a series and want to be able to price books however you like, want to avoid having your book loaned out, are using text that is in the public domain, or plan to include many images or other elements that will lead to large file sizes, then the 35% is the right choice for you.

If you want wider exposure and higher royalties on your books when they are sold, and don’t mind adhering to more rules, then the 70% is likely the best option.