Working with the Evil Empire, part II: Distribution, pricing, and royalties

This post was first published by the now-defunct Appazoogle blog on June 12, 2012.

In my first post of this series, I talked you through how I decided to publish with CreateSpace, Amazon’s self-publishing platform. In this installment, we’re going to focus on a part of publishing that most readers don’t think much about—distribution—and a part of publishing that most authors do think about: royalties.

Distribution through CreateSpace

CreateSpace offers three distribution channels for free: its own eStore, Amazon.com, and Amazon Europe. All three are print-on-demand channels—meaning that no warehousing or distribution costs are incurred. Each copy is printed and shipped within a few days of being ordered. Single copies of my book cost $3.59 to ship at standard speeds in the continental United States via orders to CreateSpace, and $3.99 to ship via Amazon.com (an interesting discrepancy).

In addition to these three free options, for a $25 fee CreateSpace sells an “Expanded Distribution” option that includes making the book available to libraries and other academic institutions via Baker & Taylor, retailers via CreateSpace Direct, and bookstores and online retailers via Ingram. Due to my book’s unusual trim size (8 x 10 inches), it was not eligible for the Ingram channel. Because it was also not a book which would sell well in the retail world due to its niche market, I chose to pass on the expanded distribution option.

Pricing and Royalties

Once CreateSpace had finished reviewing my files and had approved the book, I learned what my production costs per copy would be: $2.15 before shipping. (Compare that to the $23.50 it cost me to print up a proof copy via an Espresso Book Machine.) With this information, I could begin to use CreateSpace’s royalty calculator to determine what my cut per sale would be.

As far as pricing, my goal was to keep the work as cheap as was reasonably possible, because I felt more sales at a lower price would be better than a few sales at a higher one. Regardless, I knew the book would never generate enough sales to allow me to retire a wealthy man (or even, actually, pay a month of rent).

CreateSpace required a minimum price for my title of $3.59. At that price, I would make a mere $0.72 per copy sold via the CreateSpace eStore (20 percent royalties) and nothing per copy sold via Amazon.com. While I did not seriously consider pricing my book that low, the calculator allowed me to see that Amazon’s cut from each sale of my book would be 40 percent whereas CreateSpace’s would only be 20 percent.

Those percentages remained the same when I raised the price of my book to $9.95, its initial hard copy price (a price significantly lower than other comparable niche works). After subtracting Amazon.com’s cut and the cost of printing, my royalty would be $3.82 (38 percent). But when the book sold via CreateSpace’s eStore, my royalty would rise to $5.81 (58 percent). (Had I selected the expanded distribution option, my cut from sales through those additional channels would have been $1.83 [18 percent].) Clearly, as an author, it would benefit me if my audience purchased my book directly from CreateSpace’s eStore rather than from Amazon.com. Thus, when my book went live, I heavily hyped the CreateSpace eStore channel over Amazon.com.

For example, my book went live on CreateSpace’s eStore on April 13, 2012. I sold 24 copies that day (almost half of my total sales goal for the project!). By selling them via CreateSpace’s eStore, I earned $47.76 more in royalties than if I had sold them via Amazon.com. By the end of the month, when CreateSpace received a Digital Millennium Copyright Act (DMCA) Notice of Copyright Infringement against my book from a publisher which thought I may have violated their intellectual property (I hadn’t and the DMCA Notice was dropped two weeks later—but that is a story for another day), I had sold 63 copies of my book: 21 more via CreateSpace’s eStore and 18 via Amazon.com. By selling 45 copies via CreateSpace’s eStore instead of Amazon.com, I earned $89.55 more in royalties. My combined April hard copy sales earned me a total of $330.21 in royalties. I was rich! I treated my girlfriend and myself to a nice dinner or two to celebrate. (Now I’m no longer rich.)

The DMCA Notice I mentioned caused a stir in the online community that my book was targeted to, and initial reviews of my book were very, very good. So, after the charge was dropped on May 16, I raised the price of my book to $12.45. I felt it had earned the price hike.

I now earn $5.32 per copy sold via Amazon.com and $7.81 via CreateSpace’s eStore. (Had I chosen expanded distribution, my royalty would now be $2.83.) Through the Amazon Europe channel, my book is now available for sale in the United Kingdom (£7.95) and Europe (€9.95). Note that these prices were chosen by me to be as close to $12.45 while still being a nice-looking price—CreateSpace can automatically suggest prices for you based on your book’s U.S. price (for my book, they would have been £7.94 and €9.92).

While sales have slowed down (after all, I’ve already exceeded my target sales goal and raised the price), I am confident they will pick back up once some (relatively) major websites and bloggers begin to publish their reviews of my book. Additionally, to further increase my title’s sales I also decided to use Kindle Direct Publishing to create a Kindle edition of my book (to be discussed in part III of this series).