Before you invest a penny into advertising, it’s integral you know how much your book is worth.
Provided you’ve written a stand-alone novel that’s available everywhere and not included in Kindle Unlimited, the answer to this question is easy. In this case, each sale is worth the commission you receive. For instance, if the list price for your e-book is $4.99 and you receive a $3.44 commission every time it sells, your book is worth $3.44 per sale.
The Kindle Unlimited Conundrum
The picture grows muddier when you analyze books available through Kindle Unlimited (KU). KU authors receive commissions based on total page reads for their books, and the payout percentage changes every month.
Confused yet? It gets more complicated.
Not everyone reads your book from start-to-finish after borrowing it. Some don’t read a single page before returning the novel to KU, while others tear through every page.
To determine the average commission you receive when someone borrows your book, you divide the total royalties earned from page reads by the number of borrows. If you earn $270 from page reads after 100 borrows, you earn an average of $2.70 per borrow.
The problem is, Amazon doesn’t share the number of KU borrows with its authors. Why? Only Amazon knows. Without access to total borrows, we can’t calculate how much a borrow is worth.
Fortunately, we have ways to estimate how much a sale is worth, and that’s all that matters.
The Total Sales Formula
Every month, Amazon tallies your total earnings by adding sales royalties to KU page read royalties. You can use this data to estimate the amount of money you make from each book sale, including the hidden borrow data.
The formula I propose is battle-tested and easy to implement. Divide your total royalties (sales royalties plus KU page read royalties) by the number of e-book downloads. Here’s an example.
KU royalties: $380.16
Sales royalties: $250.02
Total royalties: $630.18
E-book downloads: 60
Adding KU royalties to sales royalties yields total royalties of $630.18. Next, we divide total royalties by the number of e-book downloads.
Average total royalty per download: $630.18 / 60 = $10.50
That $10.50 figure is a lot higher than the $3.44 commission most authors make on a typical $4.99 e-book sale. Such is the power of page reads.
But wait. You don’t receive KU page read royalties when someone purchases your e-book. And readers who borrow your book through KU won’t purchase the e-book, unless they love the book so much that they want to own it forever. Aren’t we adding royalties from two separate reader groups and dividing by only one reader group (the e-book buyer)?
Yes, but that isn’t a problem. The proportion of page reads to e-book purchases shouldn’t change much from month-to-month, though you’ll notice fluctuations over time as KU grows or shrinks in popularity.
Don’t give yourself a headache. Just use my total sales formula. The math is easy and it works.
You can download your sales data from Amazon as often as you wish. But easier methods exist.
Several websites aggregate Amazon data for free or a small fee, and a few include earnings from “wide” distributors like Nook, Apple, and Kobo. My favorite is Book Report, an application I’ve used to build my author business for several years. If you earn less than $1000 per month, Book Report is free to use. After you pass the $1000 per month threshold, you pay about $20 per month.
These data aggregators break down royalties from e-book sales, KU page reads, and print sales. They compile total earnings for each book and for your entire portfolio, while also providing e-book download numbers. This makes it easy to implement our total sales formula.
Homework: Determine how much money you earn for every download of your most popular book.
How Much is Your Series Worth?
Now that you know how much you earn from an e-book download, let’s expand our formula for a book series.
Not every reader will read your series from start-to-finish. Some will quit after book one. Super fans will devour every delicious page in your series. As before, we’ll use averages to place a value on each sale of book one.
Add the e-book and KU page royalties for your entire series. Now divide this total by the e-book purchases of book one. Here’s an example from my six-book Wolf Lake thriller series.
KU royalties: $46855
Sales royalties: $19479
Total royalties: $66334
Number of downloads for book one: 1978
Each Sale of Book one is worth: $33.54
Wow. The $33.54 figure blows away the $10.50 number from our stand-alone book example. This is why so many authors love to write in a series. Every new entry raises the value of book one, giving us leverage.
While you’re free to calculate these figures by hand, I recommend using a data aggregator like Book Report. These applications break your earnings down by series, saving you hours of work.
Knowledge is power. Now that you know how much you earn from every book download, it’s easy to determine how much you can spend on advertising while still turning a profit. We’ll look at advertising soon.
Did you enjoy this article? Comment below if you want more content like this in the future. Happy writing!