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).
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.
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.
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.
(I am the author of Design for Hackers)