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I recently uploaded my first fantasy novel to Amazon's Kindle Store. The idea behind making it available on Amazon is (1) to hopefully gain more exposure and (2) maybe make a buck or two in the process. I'd like to take a moment to look at the latter of those reasons by asking the following question: How much, really, can one make selling an e-book in the Kindle store?
First, there's what Amazon calls the "Suggested Retail Price", or SRP. This is set by the author at the time the e-book is uploaded:
The price you charge can range from a minimum of $0.99 to a max only Bill Gates, Warren Buffett, or Bernie Madoff (before he admitted to his Ponzi scheme and was locked up for 150 years) could hope to afford. Amazon, however, discourages price points above $9.99; you'll find many bestsellers featured prominently on the Kindle store-front selling at this price due to discounts Amazon has applied.
That brings us to our next point of discussion: Amazon's discount. We've all seen it, where Amazon takes a product that normally retails for $129.99 and discounts it to $69.99. The same principle applies here, though the discount in no way impacts an author's royalty. From my extensive research (which consisted of reading through a handful of posts on the Amazon DTP Forums until I found this one), I discovered this statement from Customer Service:
"...please know that as per our terms and conditions, our decision to discount products is based on a number of considerations which can vary over time. You will continue to receive the set percentage of the list price you set for every sale, even if Amazon changes the retail price for your content."
What this basically means is that while there may not be a method to their madness concerning what gets discounted and by how much, if and when they do discount your e-book, it will not negatively affect your royalties.
So now we come to the royalty itself, or how much we actually make per sale. The simple answer is 35% of the SRP. For a longer answer one can look to Amazon's DIGITAL PUBLICATION DISTRIBUTION AGREEMENT:
5. Royalties. Provided you are not in breach of your obligations under this Agreement, we will pay you, for each Digital Book we sell, a royalty equal to thirty-five percent (35%) of the applicable Suggested Retail Price for such Digital Book, net of refunds, bad debt, and any taxes charged to a customer (including without limitation sales taxes) (a “Royalty”).
That means for every e-copy of The Hall of the Wood sold, currently priced at $0.99, I'll make $0.35. Amazon gets the remaining $0.64. As above, should Amazon choose to discount my e-book, I'll still make the 35% royalty on the original SRP, so still $0.35. I can adjust my price point up a bit and make a little more per unit sold, but of course can't drop it below the minimum $0.99 threshold.
So, that might be more information than you cared to know, but there it is.