KDP Select and the New Pay-Out – Maximizing Profit by Finding the Sweet Spot

No, not this Amazon. The other one.

A lot of high-profile indies have spoken out in favor of the new KDP Select pay-out system, rewarding longer works with more money. Under the old system, you could publish a ten page short story, enroll it in Select, and get paid just as much per borrow as a guy who enrolled a 500 page novel. Great for the short story author, not so great for the fantasy author. Come on, 500 pages? You know it’s fantasy…

Anyway, as many of you are aware, borrows aren’t rewarded anymore, PAGES are. I’m not opposed to this system. The majority of people who buy my books read them. I know because I’ve got a good sell-through rate on my series. But when I take a look at the cold, hard math, I’m not sure if it’s a good deal or not.

Since I’m not a “super star seller,” I get the average indie pay-out of a half a cent a page. Based on this number, the 500 page novel should only garner $2.50 in “borrow” royalties (according to Amazon) and that’s only if someone reads all 500 pages. I don’t know about you, but if I had a 500 page novel, I’d be selling it for $4.99. Maybe $3.99 if I was just starting out. BTW, the royalty on $3.99 is $2.79, 29 cents more than what you’d receive in Select. As for my novellas, I price them at $2.99. Take The Black Cats for instance. It’s 162 pages long. Considering my half-cent per page payout, I’m only supposed to get 81 cents in royalties if someone reads the whole thing. Right now, if someone buys my book, I get $2 in royalties. So the math’s not working out for me.

Except there’s got to be a sweet spot, right? That spot where you get paid the right amount for what you’re selling? In a word: yes. But there are a lot of variables and moving parts that may or may not line up for you. If someone does not read until the end of your book, the math is all wrong. Keeping that mind, I’ve come to the following conclusions:

99 Cent Books: If you have a book that’s seventy pages and priced at 99 cents, the borrow pay-out is even with normal royalties. (Math Alert: 70 x .005 = .35) If your book is longer than seventy pages and STILL priced at 99 cents, you’ll actually profit from being in Select.  Let’s say you have a 100 page book priced at 99 cents. If someone reads YOUR WHOLE BOOK, you’ll get 50 cents (that’s higher than the normal 35 cent royalty you’d get with a “buy”). Under this pricing scheme, keep your book above 70 pages and you’ll do well.

$1.99 Books: If you have a book that’s 140 pages and priced at $1.99, the borrow pay-out is even with normal royalties. Here again, if your book is longer, you’ll actually make a higher profit with borrows. The longer the book, the greater the profit percentage.

$2.99 Books (and above): Here’s where it gets dicey. Your book has to be 400 pages or longer in order to beat the normal royalty. Incidentally, for a $3.99 price point, your book has to be above 600 pages!

It boils down to this: if you’ve got a bunch of 99 cent novels or $1.99 novellas, Select might be for you. But if you’ve priced your book reasonably well (i.e., not dirt cheap) and it’s of “average” novel length (around 300 pages), then Select might not be worth it.

But these numbers don’t take the following into account:

Incremental Sales vs. Stolen Sales: Would those same readers who borrowed your book buy your book if it wasn’t in Select? That’s the $64,000 question. How much “sales leeching” happens as a result of Select? In other words, what percentage of KU People would’ve paid for your book if it wasn’t in the program? Are the “borrows” incremental income? Or are they stealing from the true sales? If anyone has the answer to this, I’d love to know. Because if 100% of your borrows wouldn’t have touched your book if they had to buy it, then the Select proposition begins to make sense. But since Amazon doesn’t like to share customer data, I can’t begin to guess.

Bells & Whistles: Amazon makes Select pretty darn compelling with their ad capabilities and their free/countdown days. But the promotions are not definitely not as effective as they used to be, and the ad bidding has gotten out of control. There are a lot of indies willing to bid ridiculous amounts per click, above and beyond financial reason, with no thought to ROI.

As for me, I’m thinking more and more about enrolling shorter, cheaper works in KDP Select because this makes financial sense. Which is odd, since Amazon switched pay-out systems to cut down on the number of folks like me doing this. But unless something changes (i.e., the pay-out dramatically increases or the promos become wildly effective again), I’m not sure I’ll continue with Select for anything above $1.99.

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Your turn. I would love to hear your thoughts on Select. Are you in it? Do you love it? Do you think it’s awful? Let’s dish!

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