September 19, 2012 by James Calbraith
So, as mentioned before, I happened to have run a successful KDP Select promotion during a total meltdown of the reporting system. When the system finally came back online, the Kindle forums were full of publishers complaining about the wrong numbers on their dashboards. Initially, I was one of them. I just couldn’t make head nor tail of the figures. It seemed to me that the royalty reports have nothing to do with the sales reports, and vice versa. I was eager to blame it on the system bugs, but after a little bit of calculation I realised the reports were right – I was just reading them wrong (also, they are a bit counter-intuitive at first sight).
So to help you avoid such headaches in the future, here’s how to read KDP reports during or after a Free Promo.
1. Month-to-date Unit Sales – this is straightforward. As long as the reporting doesn’t screw up, this report will show you exactly what happens with your book since the beginning of current month. But just in case something is not clear, here’s the run-down:
- Units sold are the books that you’ve sold for a certain amount, more than $0.
- Units refunded – refunds on the books actually sold, not given away for free
- Net units sold – the difference between the two.
- Units borrowed – books lent by Amazon Prime users
- Free units – Promo – here are all free downloads you’ve given away in the course of your promotion
- Free units – Price Match – here are the books you’ve sold for $0 because Amazon found your book being given away for free somewhere else, and you’ve selected 70% royalty rate.
Let’s do this on a following example. For space, we’ll cut unnecessary columns from the sales table. We’ll also assume the price of a book is $1 and that week and month have started on the same day:
|Title:||net units sold||units returned||units borrowed||free units-promo|
So far so good. But let’s say the week of the promo ended and you want to see how much money you got! You head on to the next report,
2. Prior Six Weeks’ Royalties
Aaand… suddenly nothing makes sense. What you probably wanted to see was something like this:
|Title:||units sold||units refunded||units borrowed||units given away||royalty rate||royalty (USD)|
But what you are seeing is more something like this (again, columns removed for clarity):
|Title:||units sold||units refunded||avg offer price||royalty rate||royalty (USD)|
Alright, WHAT THE HELL JUST HAPPENED?
First of all, you will notice (if you hadn’t before) the borrowed books are not counted here. That’s because the price for borrows is not fixed, and will only be calculated once the current Select period is over, using a complicated formula involving how many books were borrowed by how many people and so on.
Second of all, you will notice suddenly two royalty rates, even though you distinctly remember setting 70% on everything. That’s because, if you never clicked the little “why?” on the dashboard, certain countries using Amazon.com for buying e-books don’t offer full 70% royalty rate. Some of the major ones include Australia, New Zealand and, up until recently, India. Those 35% purchases come from these countries.
Now that we have those two issues out of the way, let’s look at the numbers. An offer price of $0.02? When I first saw that my immediate thought was “hey, so I actually get paid 2 cents for every free book I give away? I must do that more often!” And the second thought was “hey, what happened to that hundred books I actually sold for a dollar? It must be a reporting glitch!” And the third was “I need to write an angry post on the KDP forums!”
Here’s what actually happens: the royalty report mixes both free and paid units into one lump amount, and calculates the average price from that. What the table above shows is that out of 4000 free units, 3500 have been downloaded in countries with 70% royalty, while 500 have been downloaded in countries with 35% royalty. At the same time, 50 books sold in the former, and 50 books sold in the later.
It’s easy enough to see that on the examples above, because we’re using round numbers and some basic assumptions, but it’s harder to spot when your numbers are more random, and your months and weeks are out of sync. Normally you won’t have an easy way of knowing just from looking at the six weeks’ report how many books have sold at full price and how many have been given away, and you’ll have to wait until the 15th of the next month for the full, detailed report.
But what about the royalty?
HERE WILL BE MATH. The equation that I think (this is all conjecture, by the way) Amazon is using in the Six weeks’ Royalty table is as follows:
Avg. offer price = (US * ALP) / (FPU + US)
Where US = Units Sold, ALP = Avg. List Price during the week (minus price match discounts) and FPU = Free Promo Units. In our example, this amounts to ($50*1/3500+50) = $50/3550 = $0.022535
From this you get your final royalty amount as follows: $0.022535*3550 = ~$80, $80 * 70% = $55
(Note that in the report the avg. offer price is rounded down to $0.02, which will give you a very different result – I hope (although I have no way of knowing) that Amazon is only rounding down on the report and not in actual calculations :)
The same calculations can be made for the 35% royalty option: (50*$1/500+50) = $50/550 = $0.1; $0.1*550 = $55, $55 * 35% = $19.2
So there you have it. I hope this post helped to clear some of the confusion. I wish I knew why Amazon is unable to give us any more detailed reporting, but I suppose we should be grateful for what we have? Anyway, that’s all I managed to get out of the numbers.
PS: If you found this post helpful, you can thank me by buying one of my books :)