In case you hadn’t noticed, the KU Payout is dropping.
In July it was $1.81 (yah!)
In August it was $1.54 (sad face)
In September it was $1.52 (is it stabilising?)
In October it was $1.33 (whoa, hold up).
It means that many people are now considering jumping out of Select and distributing wide again. Even I’m considering it, but I wanted to take any emotions I had out and see if it made good business sense to stay or go.
Let’s take the latest figure of $1.33 to make the calculations, since it’s the lowest (so far), so it’s (currently) worst case scenario. I don’t want to speculate whether it’ll rise or fall in the future because my last crystal ball stopped working after the last update (heh).
I’m also going to use the Amazon royalty rates rather than each store for sake of easy math because I’ll too lazy to look up the rates at each store – but they’re similar enough not to make too much of a statistical difference.
So back to $1.33.
Obviously if you price your books lower than $2.99 you are still better off in KU as the royalty is substantially higher.
At 0.99 cents your royalty is (0.99 x 35%) = 35 cents
At 1.99 cents your royalty is (1.99 x 35%) = 70 cents
(even at 2.98 your royalty is $1.04 at 35% but no one is crazy enough to price there when one cent higher bumps you into the 2.99 royalty so I don’t know why I’m even bringing it up.)
For shorts and promo books priced low, KU is still good value.
What about those books priced in the 70% bracket?
Here are five popular prices for books on Amazon and where many indies price themselves:
At $2.99 x 70% = $2.00*
At $3.99 x 70% = $2.70*
At $4.99 x 70% = $3.40*
At $6.99 x 70% = $4.80*
At $9.99 x 70% = $6.90*
* I’m rounding down to take into account delivery fees. These fees vary according to file size.
On a 1:1 ratio, it looks like you lose money on borrows under the 70% bracket.
Most people are reporting many more borrows than sales, so it’s not a fair comparison.
Now every book and every author is different and will have different borrows to sales ratios, you can (and should) calculate your own.
Let’s use a ratio of 2:1 borrows to sales because that’s what mine is for my whole catalog (my fiction alone has a much larger borrow to sales rate, I’ll get to that below).
Therefore 1.33 x 2 = $2.66
So price points $2.99 and $3.99 are still good to have in KU comparatively (at this stage).
Priced above that? Then it depends.
My non fiction is priced higher than my fiction. They also don’t have the same borrow rate as my fiction does. Once the Select terms are finished for the two non fiction I have in, I’ll pulling them out of Select and distributing wide again.
The fiction, for now I’m keeping it in. I have one novel that has a 16 borrows to 1 sale ratio. For some reason this book just doesn’t sell much but gets lots of borrows (it’s priced at $3.99).
There is another thing to take into account too:
Borrows count for a books ranking (some are speculating that it gives a bigger rank boost than a regular sale, but I have no idea.) So the extra visibility that you get for that rank might make a lower payout more palatable.
At the end of the day, for me, it’s still worth it to keep my fiction in. The borrows more than make up for any lost sales on other sites. (I never sold much there anyway).
How much would it drop before I’m out?
I wanted to figure out, for me, how much could the KU payout drop before it would no longer be economically viable to stay in?
My fiction priced under $0.99 is staying in even if the payout falls to 35 cents since that’s equal to the sale royalty. (I don’t have anything at 1.99).
For those priced $2.99 & above, my borrow ratio is 4.5:1 (told you my fiction borrow to sales ratio was high).
For my $2.99 titles, I’ll stay in as long as the borrow payout is above 45 cents. $3.99 titles will stay in above 60 cents, and $4.99 titles will stay in above 76 cents. (These figures have been calculated by dividing the royalty rates above by 4.5 (my current ratio)).
So therefore I’m still in a very healthy place right now, even at $1.33. It could theoretically go as low as 76 cents and I’ll still keep my all fiction in. Below that and I start taking my higher priced books out depending on where it settles.
I hope it doesn’t of course because I like money, but at the moment I’m still better off staying in.
Hope this has helped you in your decision,