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MintLife Blog > How To > The Economics of Self-Publishing an E-Book: Part 2

The Economics of Self-Publishing an E-Book: Part 2

How To

Hello again, authors and wannabe authors.

Last week, we looked at how to get your ebook ready to sell and how much it will cost to get it ready.

By now, you have a great cover, and your manuscript is copy-edited, properly formatted, and ready to submit to the major stores.

What’s next? How much will it cost? And how much will you make on each book sale?

The price and the take

The four largest ebook stores are Amazon, Barnes & Noble, Apple’s iBooks, and Kobo.

While Amazon is the gorilla, don’t ignore the others.

Kobo has massive market share in Canada and France, for example, and Apple, building on the success of the iTunes music and app stores, sells ebooks in countries where Amazon doesn’t yet tread.

All of the stores offer similar terms. They want you to price your book between $2.99 and $9.99, and most stores penalize you with lower royalties for pricing outside this range.

In general, when you list your book directly with a store, you’ll collect 70% royalties, paid monthly. (Barnes & Noble pays 65%; Amazon pays 70% minus a “delivery fee” proportional to the size of your ebook file. Yes, really.)

My book sells for $4.99 in the US, so I collect about $3.50 on each sale. To decide on a price, I looked at the prices of similar books and tried not to charge more. As in any market, a higher price doesn’t necessarily mean higher profits.

In the future I might experiment with lowering the price of my book and see if that will generate more sales.

Cut in the middleman

Some authors have had big success targeting only Amazon. If that’s your strategy, by all means go straight to Amazon’s Kindle Direct Publishing (KDP) site and get started.

Submitting your book is a snap, and in most cases it will be available for sale in a matter of hours.

If you want to sell your book on multiple stores, however, you have a decision to make. Do you want to hire a distributor to get your book into stores or do it yourself?

Each method has significant advantages and disadvantages. Cheapskate control freaks (that’s me!) will find themselves in the do-it-yourself camp; those who want their book distributed as widely as possible with minimal work should hire a middleman.

There are two well-known distributors for self-published ebooks that I can recommend. Both charge modest prices and have slightly different business models.

Smashwords charges nothing to list your book, but they take a modest portion of your royalties: you earn 60% on sales through their retail partners, and they take the rest.

Your book will also be for sale on the Smashwords site itself in various formats, and you earn higher royalties on direct sales from their site. (Smashwords doesn’t distribute to Amazon; you still have to do that yourself via KDP.)

BookBaby charges a flat fee ($99 for the basic package) and then passes all the royalties on to you without taking a cut. The company distributes to all the major stores including Amazon.

One caveat: if you need to update your book (because you fixed some typos, say), BookBaby lets you do that once per year for free, and then charges $50 for each additional update.

When I uploaded my book, I thought it was perfect. I’ve since updated it six times.

DIY style

I ended up deciding to skip the middleman and distribute my book myself, for reasons both practical and petty: I wanted direct access to the store interface so I could make quick changes to the book and its price, and I didn’t want to pay anyone $100 or 10%.

(Honestly, though, the value offered by the distributors is excellent.)

The downside to DIY ebook distributing is the downside to DIY anything: you spend a lot of time fussing over details.

You get your hands dirty. You have to enter the same information over and over (title and subtitle, subject headings, bank account numbers, and so on).

And every time you want to update your book or change the price, you have to go to at least four stores.

Amazon, Kobo, and B&N all offer simple interfaces for submitting your book:

Amazon: KDP
Kobo: Writing Life
B&N: Nook Press

Now, for Apple: Downloading the iBook app is easy. Submitting your ebook to iBooks is a little more complex.

First you have to sign up for a bookseller account. Then you package your book using a Mac app called iTunes Producer (runs on a Mac).

You also have to prepare your book in EPUB format; there’s no option to convert a Word or other document. If you want to sell your book on iBooks and aren’t reasonably techy, then you can use a distributor.

Doing the math


Now your ebook is on sale, and the masses are snapping it up. How snappy do they have to get before you make back the $1500 you spent on production?

Assume your book sells for $4.99 and you make an average of $3.40 on each sale (to account for Amazon’s distribution fee and the pricing and royalty vagaries of the world ebook market). That’s 442 sales to break even.

Or you price your book at $2.99, distribute through Smashwords, and earn around $2 per sale (because some of your sales earn 60%, some 70% via Amazon, and some 85% via the Smashwords store).

Now you need to sell 717 copies to break even.

Are you likely to sell that many copies? No. As the Smashwords FAQ puts it, “You should keep your expectations low because most authors don’t sell many books.”

So what’s an author to do? Smashwords offers an excellent free guide to promoting your ebook, but prospective authors need to think about their sales potential before there’s a book to promote.

In particular, you need to ask yourself whether you have what agents and publishers call a platform.

Are you already well-known for something online? For being funny on Twitter, for having a popular blog about aviation, for a previous novel? That can translate directly into book sales.

Are you relatively unknown but have an awesome book idea that you believe will be widely appealing? Consider raising money via Kickstarter or another crowdfunding site.

Make a simple video, come up with cool rewards, and post a free excerpt from the book. You’ll find out quickly whether the idea is as great as you think.

Contrary to conventional wisdom, you don’t have to be famous to raise money on Kickstarter. Random people with cool ideas raise a few thousand there every day.

Is writing books your hobby? That’s fine.

Even if you go all-out and hire a great cover designer and copy editor, it’s still cheaper than plenty of other hobbies. Like aviation.

Matthew Amster-Burton is a personal finance columnist at His new book, Pretty Good Number One: An American Family Eats Tokyo, is available now. Find him on Twitter @Mint_Mamster.


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