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I'm not the author, but I'll give you an answer that may justify this crazy pricing scheme.

Amazon takes a 70% commission on Kindle books priced above $9.99 or sold outside of selected countries (e.g., USA, UK, etc). They "only" take 35% for books sold in such countries AND priced below $9.99.

You may think that $22.79 is a magical number they pulled out of their asses. But multiply $22.79 * 30% and you get $6.84.

If they priced it $9.99, they'd get $9.99 * 65% which is $6.49. So less royalties for the publisher.

Now... at $9.99 the book would certainly sell more copies. However, if you consider all the copies sold outside of the selected territories will have 35% royalty regardless of how low the price is, and the fact that a $9.99 ebook cannibalize your $25-35 physical book sales, the option of pricing your Kindle $20+ no longer sounds crazy.

Some publishers outright opt out of this race (e.g., Pragmatic Programmers).

I love Amazon, but they are literally gouging authors and publishers. They should have a flat 30% rate, Apple-style, and let the market decide at what price they'll buy books. Alternatively, keep the flat rate and place a cap on the price of the e-books sold through the Kindle platform (e.g., $10 for fiction, $30 for non-fiction).

Great explanation. The pricing for an upcoming Kindle version of a PDF ebook is something I'm struggling with. My current thinking:

Kindle version: ~$10

PDF ebook + Kindle version + supplements (sold from my site): ~$24

The Kindle version is great for portability, but doesn't have the clean formatting, etc. you get from the PDF. I'm considering offering a coupon to Kindle users to get a discount for the "deluxe" version (essentially, less the cost of the Kindle version).

All this because Amazon has forementioned crazy royalty scheme.

You were probably rounding up in your post but if not, shouldn't you price the kindle version at $9.99? It seems if you add the extra $0.01, you'd make $3 vs. charging $9.99 and making $6.99. Wouldn't want you getting screwed by Amazon's strange publishing terms.

Yep, I meant 9.99, thanks.

You think foreign sales are that strong that they'd jack the price up that much and be profitable at it?

Also, I thought that Amazon actually lost some battles with the publishers, in terms of being able to set the prices they wanted, rather than what the publishers wanted.

Your 35% and 70% rates are certainly those that apply to the KDP - but do they apply to publishers like Wiley as well? They presumably have more bargaining power than someone self-publishing.

Really interesting explanation.

I bought 2 books today.

The Lean Startup - (Kindle edition) $12.99

Design for Hackers - (Dead tree edition) $25.32

1.) It's surprising to me that The Lean Startup is priced at 12.99 if they give amazon 70% of the royalties. Seems like they should have priced it at 9.99.

2.) Design for Hackers is a book where illustrations matter. Paying for the dead tree version is better. At only a few bucks off the dead tree version, the Kindle version doesn't seem fairly priced considering the degraded reading experience.

It is possible that Crown Business (Random House) has a better royalty arrangement in place with Amazon. For all we known, even Wiley could have one and it's just pricing the book as if they didn't.

Thanks for that explanation! Now I understand better why I don't get a larger cut for ebooks. I guess since Amazon commands the distribution, they can command a larger portion of the sale price.

(I am the author of Design for Hackers)

Thanks, I had no idea about this crazy scheme. Now at least I know that it is Amazon to blame, not the authors and not even their publishers (which were my first suspects).

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