Over the past few posts I have been comparing the distribution sales channels and the author royalties of a book published by Amazon (HCG Protocol) with a book published by Outskirts Press (Sell Your Book on Amazon).
To recap, Amazon’s book HCG Protocol is available through 8 unique sales channels while Outskirts Press’ book Sell Your Book on Amazon is available through over 50. HCG Protocol earns $5.23 for the author every time a copy is sold on Amazon, while Sell Your Book on Amazon earns $6.58 every time a copy is sold on Amazon.
Actually, since we’re now going to discuss that paragraph in more detail, let’s be more specific. A few postings ago when I compared royalty rates for different distribution channels, I wanted to compare apples to apples, so we pretended HCG Protocol had a retail price of $14.95, so it compared exactly with the $14.95 retail price of Sell Your Book on Amazon. The reality is that HCG Protocol has a retail price of $12.77, so in reality, it actually does NOT earn $5.23 every time a copy sells on Amazon. It actually earns 35% of $12.77, which is $4.47.
In my last posting, I revealed how Sell Your Book on Amazon’s pricing works at Outskirts Press, and how the 100% author profit of $6.58 is reached.
Retail Price (14.95) – Trade Discount (20%) – Production Base Price ($5.36) = Author Profit ($6.58). That equates to a 44% retail profit.
So how does Amazon’s pricing work? Well, for books published by Amazon that are sold on Amazon, Amazon pays a 35% retail royalty. Obviously, that is less than a 44% retail royalty paid by Outskirts Press. 35% does seem good in comparison to most self-publishing companies, just not in comparison with Outskirts Press. But is 35% on Amazon good? Let’s not forget that HCG Protocol is only 50 pages in length. If you use the same formula above, you discover that Amazon’s publishing printing costs are pretty high:
Retail Price ($12.77) – Trade Discount 20% (this is probably actually 0%, since they’re selling it from their own website, but let’s give them the benefit of the doubt here) – Production Price (X) = Some profit, a certain percentage of which is $4.47.
First, let’s determine the trade discounted price, which is 20% of $12.77, or $10.22. From that amount, the author is earning $4.47. Ergo, the difference is the production cost and whatever percentage of your profit that Amazon is taking (since they don’t pay 100% royalties). $10.22 – $4.47 – (% of your profit) = the printing price, which must be less than $5.75 for a 50 page book.
Here’s an interesting hypothetical situation, particularly if you are the authors of HCG Protocol, Tiffany Prinster and Linda Prinster; or perhaps if you happen to have published YOUR book with Amazon… The same book at Outskirts Press would have a retail price of $12.95, and would earn $5.84 instead of $4.47 for every sale, through 42 more sales channels, including Barnes & Noble. Does that justify the $1000 publishing package price of our most popular Diamond package? Well, it depends upon how successful the book is. In their case, with a current Amazon Sales Rank of 1,851, the answer is an unequivocal “YES.” They’re probably selling 100 books a month or more. So if they were making $1.37 more in profit for every sale had they published with Outskirts Press, plus widening their distribution channels from 8 to 50, at 100 books a month, they would break even in 7 months and would then be reaping the increased benefits of higher profits and greater distribution. Only the authors know exactly how many books they are selling, and perhaps how many MORE they could be selling through 42 additional sales channels. They might break even much faster.
And that brings us to perhaps the most ironic part of publishing with Amazon, which I’ll reveal next time when I wrap up this comparison of HCG Protocol with Sell Your Book on Amazon…
President of Outskirts Press 