Live and Learn!
Recently I was unpleasantly surprised to see that Amazon was selling my major books on Kindle at $0.99 while I had listed them at $2.99. So far as I could find out, they were not price-matching any other source for those books. So I wrote to them to find out why and how long they intended to keep this discounted price going. They answered that they were matching a discounted price on Kobo. That is now apparently so, although I have never had a sale on Kobo. They are getting their books from Smashwords, and Smashwords has no record of a sale.
Well, who started what is beyond my ability to figure out, but the real shocker came when Amazon went on to explain how a discounted price affects royalties. Now, I always understood that if you offer a book for FREE, they don't pay royalties. Fair enough! But this was what I did NOT know. Here's their explanation:
"The price at which we sell your book may not be the same as your list price. This may occur, for example, if we sell your book at a lower price to match a third party's price for a digital or physical edition of the book, or
Amazon's price for a physical edition of the book. In this case, if you have chosen the 70% option for your book, your 70% royalty will be calculated based on our price for the book (less delivery costs and taxes)." That means I get less than $0.66 for a book priced at $0.99.
They go on to say, "If you have selected the 35% royalty option, your royalty will be calculated off your list price, regardless of the price at which we sell your book, ( unless we are matching a free promotion for your book on another sales channel, in which case your royalty will be zero.) That means that if I have chosen the 35% royalty option, I will receive $1.05 for each book sold, even if Amazon sells it for $0.99.
You can switch to the 35% royalty option at any time. Well, obviously it pays for me to switch from 70% to 35% right now, but I'll have to keep an eye on it every day. If they return to the original list price, I'll have to go in and change my royalty settings again. Does it make sense? No, of course no -- not at our level. Maybe for Amazon, the benefits of paying some lower royalties overall outweighs the pennies they lose on my discounted royalties temporarily. But for me, it seems annoying and petty.
For more details on pricing for the 35% and 70% royalty options, please visit the following link: