Part 2 — The Economics of All the Things I Did Wrong with My First Kindle Release
First, if you haven’t read Part 1, I encourage you to start with that explanation of how I came to be here. In short, I wrote and published a 15K word short novella* as my first Kindle release. I didn’t know what I was doing, but figured it would be a good hands-on way of learning. Here’s what that education cost me.
Let’s start with the basics. Kindle has two different royalty tiers because they are trying to discourage a race to the bottom on book pricing, which I can appreciate. For books priced at $2.99 or higher, the author earns 70% royalty. For books priced less, the royalty drops to 35%. That’s fine for novels, but for short stories or novellas the author must decide whether to risk getting bad reviews because the readers didn’t feel like they got their money’s worth, or take the lower royalty on an already-low priced item.
I chose the latter, setting my novella at $1.49. I felt like that was a fair price given that some full novels go for $2.99. So that you don’t have to do math, my royalties come to $0.52 per sale.
I also enrolled the book at Kindle Unlimited. If you’re not familiar with KU, it’s the Netflix of Kindle books. The reader pays a monthly subscription and gets access to an on-demand library of titles enrolled in the program. Books in the program earn royalties based on pages read. The price per page changes from month to month, depending on how many subscribers are in the program, how many total pages were read, and other arcane formulas. The important thing to know is that even at the 35% royalty rate for sales, I make even less when someone reads the book on KU. For October, it came to about $0.32 if someone reads the whole novella.
Now for the moment you’ve all been waiting for — my numbers.
And now for royalties. How much did all of this earn me?
Examining the chart, at least it looks like October ends on a high note, and November is shaping up to be good too, right? Unfortunately, no. Remember, this is a Halloween-themed novella. Sales fall off a cliff and page reads rapidly taper off to zero. By mid-November, I had no new sales and those who added it to their library in October had finished reading it.
Now let’s talk expenses
In part 1, I talked about how I would market things differently. For this release I started out using Amazon ads, then moved to Facebook ads. Spoiler-alert: For a low-priced item like mine, both cost me more than they earned me.
Amazon Ads
Amazon ads use a bidding system. You can pick very specific categories your book falls into, and you can also pick products that are similar to your own. For instance, if someone is checking out a book by famous author X, at the bottom of the page are sponsored ads for books that the same reader might also like. Or at least that’s the hope.
This is another place where setting my price low came back to bite me. A lot of bids for my categories were more than fifty cents, for instance anywhere from $0.50 to $1.25. Sure, you only pay when someone clicks on the ad, but remember I only make $0.52 per sale. I lowballed a few bids, but the end result is that I spent $10.68 and made exactly ONE sale.
$10.68 expense minus $0.52 royalty = <$10.12>
Facebook Ads
Facebook is a bit different. You’re paying for impressions, not necessarily clicks (if I understand things correctly). Facebook will let you target your audience based on keywords or demographics. For instance, I can target people within a certain age range and gender who indicate that they like Kindle books, or romance, or sci-fi, or whatever. You also set a daily spending limit, so you can create a long-term campaign that fits in your budget.
However, since I didn’t know what I was doing I decided to follow a method advocated by Matthew J Holmes (not a paid promotion). In short, he advocates NOT getting hyper-specific with your audience targeting. He recommends picking a few key demographics, try out several variations of ads, and let the Facebook algorithm figure out who to target. The outcome is that at first your clickthrough rate is low, but as Facebook learns what works then it zeroes in on your target audience for you.
I can see how this was starting to work for me, but the problem in my case was twofold. First, I got a way late start on this campaign. I didn’t start on Facebook ads until I realized I was striking out with Amazon, so my first ad didn’t hit until October 22. For a Halloween-themed book. That means I didn’t give the Facebook algorithm enough time to learn before the campaign was over. For this reason, while I saw my cost-per-click steadily decrease, it ended at $0.14/click.
The other problem was the same as with Amazon, namely budget. I wasn’t making enough money off each book sale or KU read to pay for all of this. If I’d set my novella at $2.99 and earned the 70% royalty then I’d be making more than $2 per sale instead of $0.52. Still, according to Holmes, the less you spend on daily impressions, the longer it takes Facebook to figure out the best audience for you. I set my campaign at $10/day, knowing that I wasn’t going to earn it back but also recognizing that I only had 10 days to make whatever impact I could and still chalking all of this up to an educational experience for when I publish my first full length novel.
The stats for my Facebook campaign are as follows:
Link clicks: 631
Facebook spend: $94.17
Purchases: 11
KU pages read: 2,835
So in a 10 day campaign, Facebook ads drove 40% of my sales and more than 75% of my KU pages read. That makes sense, because as you can see in the ad above, I really pushed the KU angle. I figured any royalties were better than none. But when I stopped the campaign after Nov 1, my sales and KU participation quickly dried up.
Bringing it all together
To recap, I was projected to earn $29.41 in royalties. For November, I’m projected to earn about $6 more, so we’ll be generous and say $35 total.
My advertising costs ran $104.85.
So this learning experience has cost me about $70. In addition to the value of what I learned, another silver-lining is that this will be going on my taxes as a deduction.
In the great scheme of things, I suppose that’s not bad for a course on how Amazon and Facebook advertising works. Still, I’d rather have made money.
If this weren’t a seasonal book, I could at least expect year-round sales. In this case, I haven’t sold enough for Amazon to recommend the book on its own and because it is seasonal I don’t expect much activity from it until next Fall. At that point I may try a social media campaign starting in September. Or not. It may be a matter of wasting too much investment on a low-return item.
Which is not to say that it’s a bad book. To the contrary, I love it, many readers loved it (4.6 stars), and I’m glad I published it. I just need to figure out how to get more people to buy it without breaking my bank account.
For those who are interested in seeing what the fuss is about, check out
Two Princesses: A Halloween Novella.
*Someone decided that novellas are 17K words or more, but it doesn’t feel right to call this a short story.
