This question comes from Tom, over on Facebook. I started typing a reply, and as is my wont, a quick reply turned into a blog post.
Tom: As a voracious ebook reader, Hugh, I’m curious about author income per sale across different vendors.
For example if an imaginary author’s ebook is available from Amazon, B&N, Smashwords, and an author’s own site (for example), all for the same price, is there a difference in what the author makes depending on which vendor I purchase from?
The reason I ask is that as a reader, wanting to encourage authors whose work I enjoy, I would prefer to have the largest percentage possible go to the author rather than someone else.
This seems like a simple question, but there’s a lot to consider. First, a look at the payout percentage.
For the same price, a direct sale from an author’s website will almost always put slightly more money in their pocket (roughly 20% – 30% more) than from a retailer. That’s if they are selling direct, as I and many others do. If there is a link on the author’s website to a retailer, that’s still better than going straight to the retailer, as most authors set up affiliate codes and get a small commission on the referral.
After these direct sales, you’ve got different payouts from different vendors, and on Amazon, it also depends on price. Works priced above $9.99 and below $2.99 earn 35% royalties on Amazon, while ebooks priced between these two numbers earn roughly 70%.
If that starts to sound confusing, let me simplify it for you, because authors often care about a lot more than income per book sold. While I make 30% more if you buy from me direct, I would rather you purchase from a retailer. Why? Because a sale on my site doesn’t help my product ranking. And product ranking increases visibility. Each sale on a retailer is more than a sale: It’s also a vote of confidence.
There’s more. I care about your shopping experience, and it will be better at a retailer like Amazon than it will be on my site. I can’t send the ebook to you over a cellular network and have it just appear. If you lose your digital ebook file, and your link has timed out (which it will, unfortunately), you’ll have to email me for another copy. With a major retailer, that ebook is in the cloud, waiting for you. You can also share that ebook with a friend through some retailers. I want you to do that. I want you to have a great reading experience. So that factors in.
Then there’s the review. If you purchase from a retailer, there’s a good chance they’ll prod you for a review or a star rating. These are gold for independent authors. That’s worth something to me, and so we have to factor that in as well.
Finally, you have the recommendation engine. If you buy my books at Amazon, they’ll send you reminders when I release something new. They’ll also recommend my other works when you shop. That can’t be purchased at any price.
So what are these things worth? Far more than 30% of my income on each sale. By giving up 30% of the list price, I get great customer service, cloud storage for my readers, robust marketing, a boost in ranking, point-of-sale and accounting services, and the word of mouth of a customer review. Wholesalers pay retailers around 50% of their profits for these services. I see it as a bargain, and as a better experience for my readers.
If you really want to support your favorite authors, my advice is simple: Read their books. Spread word-of-mouth. Write reviews. Email them and express your delight.
Readers have no idea how much we value these things. We rely on you all and appreciate you more than you know.