I thought it would be fun to break down the dollars and cents of an ebook sale. Who gets what? What’s Amazon’s haul? What does that legendary 70% royalty really add up to?
Suppose you live here in Washington State in the bucolic Pacific Northwest, and you buy Outrageous Fortunes from Amazon.com (the numbers for other ebook retailers would be similar).
The price is $2.99.
But you notice that your credit card is charged $3.30. That’s the down side of Washington State: a sales tax near ten percent. So you have blessed the people in Olympia with 31 cents, so they can keep the schools open and the buses less late.
So Amazon kicks the $0.31 to Washington State, sends 70% of the $2.99 to me, and keeps the rest — $0.94 — for itself. Amazon’s cut, then, is a little less than a buck.
My 70%, on the other hand, is a hefty $2.05. This is a comparable dollar amount to what an author with a traditional publisher’s contract might receive for the sale of a $15 to $25 book — and there’s your indie revolution that Konrath and others have written so much about.
Hold on, there’s another player involved, and that’s the American government way over in Washington D.C. As long as I’m a sole proprietor, the IRS helps itself to 28% of my royalties, or 57 cents of that $2.05. That leaves me with a post-tax royalty of $1.48.
(The U.S. Government also gets a cut of the $0.94 that went to Amazon, since most of it ends up as income for Amazon employees or vendors. I would estimate 10% to 30%… let’s call it 20 cents, leaving Amazon with $0.74 and giving the U.S. Government a total haul of $0.77.)
The final breakdown of an ebook sale:
$0.31 to Washington State
$0.74 (roughly) to Amazon
$0.77 (roughly) to the United States
$1.48 to me.
All from the $3.30 paid by the reader. I think a better definition of “royalty percentage” would come from what I actually receive divided by what the reader actually pays, or $1.48 / $3.30 = 45%.