Using Amazon’s latest proposal, the author would sell 174,000 ebooks and be paid 35% of revenue, earning $608,300. That amounts to $41,700 less than selling 100,000 ebooks at $13.00 per unit wholesale. Just to break even with their pre-agency revenue, then, an author has to sell 85.7% more ebooks than before, not 74%. And you must remember the 74% is an average increase in sales, which means not everyone will achieve this. Amazon, however, are guaranteed revenues of $521,478 on 174,000 ebooks priced at $9.99.

–M. A. Demers unpacks Amazon’s math.

Note she’s specifically referring here to a proposal from Amazon, released during the Amazon/Hachette contract kerfuffle.1

Demers’ description of the machinations between Amazon, the Big 5, and Apple are also interesting, giving some background on how exactly we got to where we are today.

I think the take-home, however, is that book pricing is enormously complicated, which means it’s very difficult for someone outside the industry (hell, even people inside the industry) to do the calculations working out the relationship between what a reader pays for a title and what an author receives. Companies like Amazon can then take advantage of this by proposing “simple” formulas, a la their 35/35/30, which make it seem like they’re being generous and self-sacrificing.

Yeah, well. Protip: companies don’t get to the size of Amazon (or Hachette, or Apple, for that matter) by being “generous and self-sacrificing”, that’s for sure.

  1. That really needs a ‘ship name, in my opinion. Amette? Hachazon? Forest Axe? Hm… []