Thursday, 4 June 2015

What price an e-book?

I was asked today to 'have a word' with my publishers as The Liar's Key ebook is £9.97 on Amazon.

I don't have any say in setting the price for my books, and while my publishers would listen politely if I were to talk to them about it ... they would do exactly what they think is right for the company, to maximise their chances of earning back the sizeable investment they have already made.

£10 is not an insignificant amount to me - I would have to want something quite a lot to put down a tenner for it. Even if it was a book that could entertain me for a week. So I'm not dismissive of people's concerns about cost.

However, here is the breakdown of that cost as I understand it:

£9.97  ----   Amazon take 20% of the price as Value Added Tax. You might imagine this is then paid to the government, and I understand from the news that bad press has finally convinced Amazon to do that in the near future - but certainly until recently they were registered in a tax haven and kept the bulk of the VAT for themselves. This leaves:

£8.31  ----  For all self published books over £1.99 Amazon takes 30% of the sale price (after VAT) for themselves. I'm assuming it's similar for everyone. This leaves:

£5.82  ---- As with all big publishers Voyager take 75% of the money that Amazon hands over from the sale of ebooks. This is standard and much better than the deal on paper books. I'm not complaining. This leaves:

£1.46  ---- My agent takes the standard 15% from all my royalties. He's a good hard working chap and I wouldn't be an author if he hadn't risked his reputation on me. This leaves:

£1.24 ---- The tax man takes 20% of my income. Given that I benefit from free healthcare for my very expensive disabled child, I can't complain. This leaves:

99 pence.

99 pence to buy (on publication day) the longest book I've ever written and one that I laboured on night and day for 12 months.

If you're prepared to wait a year the kindle price will be considerably less. Prince of Thorns is now £1.99 on kindle.

So, when I look at it as a brief window where I can put 99 pence in my pocket for each copy sold ... I don't think it's too outrageous a price.

And, thanks to author Jason M Hough I have his understanding of the breakdown for US Amazon:

Consider a $9.99 ebook.

The split is based on retail price, regardless of what Amazon decide to sell it for.

$9.99  ----  Amazon and the publisher split this 50/50. Amazon give the publisher $5. They can sell the book for $1.99 ... they'd just lose $3 a copy. This leaves:

$5.00  ----  75% of which goes to the publisher. This leaves:

$1.25  ----  15% of which goes to the agent. This leaves:

$1.06  ----  on which Jason pays income tax, leaving in his pocket:

85 cents.

Edit - a word on why I have no problem with my publishers taking the share that they do:

Publishers (often) pay advances - which aren't in addition to royalties - they're royalties 'in advance'. However, if the book doesn't sell, the author doesn't have to return the advance - so the advance is a financial gamble for the publisher and a guarantee/surety for the author. All this helps take the sting from the division of the sale price. The publishers invest significant sums in the advance and in production, and potentially in advertising, and this risk taking is why they're rewarded with the percentages they get.

My publishers have paid me advances that I was very happy with and that allowed me to plan ahead with security, risk free.


  1. There are authors who I trust enough to shell out $10 for an ebook...and many more that I will wait for a price drop for.

    $2 on a sale can bring me to try a new author or at least buy their book. I've discovered authors this way.

  2. Mark,

    I can't seem to find Prince of Thorns for £1.99 on Kindle in the nor the websites. If you don't mind pointing me to the right link I'll buy the book gladly (I have the audiobook, but I love this book so much that I'll buy it again without a thought).

    Here is the link to the UK store I have:

    And here is the link to the US(.com) store:



    1. You're quite right... it was £1.99 yesterday! It goes to £1.99 periodically for a month or so, at least 5 times in the last 12 months - sure it'll do it again soon.

  3. Sorry, how do you get dunned for being a self publisher and dunned again for having a publisher? (Apologies if this shows up twice.)

    1. This book is published through Voyager, not self published. Hope thats helps

  4. Ok, so it's expensive because amazon and the publisher take everything for themselves? :-/

    1. It's expensive because amazon hosts, carts, and distributes the books, and does the returns and tracking and customer service for it.

      It's expensive because the publisher prints, promotes. edits, copy edits, and freight forwards the published books to Amazon.

      Otherwise, yes, Mark could, theoretically, sell these books from a red Radio Wagon or from his Garage, and see how far he get's with that.

      This is, of course, after he has paid for a content/copy/line editor and then a cover artist, a formatter, and someone to print said books.

    2. It's certainly true that selling on Amazon carries benefits that are almost universally considered worth the cost of doing so. And at the end of the day that's what matters - a service is offered - if you pay for it you consider it worth the price.

  5. It's rather sobering to look at it in those terms. It puts that cover price into a whole other light.

  6. So... How is the best way to buying a book from you? I mean, the way a reader can give you more money, counting on percentages and things like that. And it isn't a bit unfair the cut Amazon and the publisher get from your work? Could you maintain your rights on ebooks and publish them yourself aside from the paper books deal you have with your publisher?

    1. Actually a good-price ebook puts more money in my pocket than any of the other formats, by a significant margin.

      Self-publishing is always an option - the fact that so few established authors take that route is eloquent testimonial to the ways in which publishers earn their share. Not least through paying advances and absorbing the financial risk. The majority of books fail to earn out their advance. Publishers do well on successful books but the author of a poorly selling book is often ahead on the deal. Even if a book sells well, if the advance was large the publisher may lose money.

    2. While it is certainly true that the 'push' given by publishers is a tremendous help in launching an author, are they required once you reach a certain stage of mainstream success? I'm sure the next ASoIaF book would sell millions even without a publisher.

      An unknown self-published author will likely struggle; but now that you are established, is there any non-contractual reason for you to not self-publish?

    3. I have no contractual reasons not to self-publish - I could self-publish a book tomorrow if I wanted to. I wouldn't want to do all the work required to manufacture paper copies and get book stores to stock them though - and I would miss the excellent help provided by my editor, proof readers etc.

    4. I'm sure that's true. I guess I was thinking more of ebooks, so manufacturing wouldn't be an issue.

      And since you seem like a nice guy, I'm guessing there is also a loyalty factor - since your publishers were instrumental in your success, you likely wouldn't want to ditch them now. I would likely feel the same if I were in your shoes.

      I was just wondering because I thought it would be an interesting hypothetical. Once an author reaches a certain level of fame and success, a level where their name is likely enough to sell books, what would prevent them from going the 'selfie' route and cut out the publisher's commission? GRRM, Stephen King, John Grisham, James Patterson, etc. They don't exactly need a ton of marketing muscle behind them to shift copy...

      Based on your breakdown for ebooks, one of them could theoretically make $5 per sale instead of 85c, which is a rather significant difference.

      Have any Named authors tried that, I wonder?

  7. I would love to know how it works with audiobooks. I pay Audible (another Amazon company) £7.99 per month, which entitles me to (almost) any book from them on a monthly basis. They also generally offer me the chance to purchase 3 further credits for £6 each. Liar's Key (due out 18th June) is currently £12.24, but I wonder how many people pay full price. Given the additional production costs of an audiobook I think Audible offer pretty good value for money, esp. compared to an eBook at £9.97.

  8. "I understand from the news that bad press has finally convinced Amazon" You are confusing two different things.

    Since 1/1 VAT is now paid is the buyers location instead of the sellers location, this previously allowed amazon to change less VAT, they didn't take any of it for themselves, just played the rules to lower prices. Since then 20%, or the local sellers rate is paid directly to the relevant government.

    The change they are making now it to stop running B2B contracts + some others through Luxembourg, and benefiting from the lower corporation tax rate. As they make a loss anyway, and are investing vast sums in new warehouses, I have my doubt it will result in much if any extra tax paid in the UK.

    1. I based my comment on articles similar to this one:

    2. To summarize Steve a little clearer for non-accountants (I'm an author/IT guy who works with accountants):

      - Amazon sends the VAT to the government. The government's stricter rules make that a higher % than it used to be
      - their tax haven usage lowered the corporate tax they have to pay

      So your math is right, but your further comment isn't fair to Amazon (though Steve is right that they'll find other ways to minimize their corporate tax)

  9. I was glad to pay the ~ $13 USD for the Kindle version on back in February, you're books have been more than worth it :) .. thanks for the fantastic books man, you keep writing, I'll keep buying ;)

  10. I think that £10 for an ebook is too expensive purely because if I'm going to spend that much on a book, I would rather own the softcover. I'll be heading off to the bookstore this weekend to pick up my copy.

  11. This article moved me so much that I bought the kindle edition for ~$13 today.

    Brilliant books!