Amazon/KDP, Returns, & Reviews
I've reached my breaking point. Let's put a couple myths to rest, shall we?
Writing and publishing is a lot—emotionally, mentally, fiscally, legally, organizationally… There’s a lot to know and to keep up with and to do.
So can we take away a couple sources of added stress and STOP SPREADING MYTHS??
Thank you.
If you want to TL;DR version, it’s “no, returning Kindle ebook does NOT cost indie authors money because Amazon does NOT charge us the delivery fee” and “no, there is no magical number of reviews where Amazon starts promoting your book for free.” Isn’t that a weight off your back? If you’re ready to go frolic with those myths cast off, farewell!
If you need convincing, I go into WAY TOO MUCH explanation and evidence below.
First up:
Myth 1: “Returning Kindle books costs indie authors money.”
This myth is based on a misunderstanding. See, Kindle books earn a royalty of either 70% or 30% depending on price and author choice (and market—countries that don’t have their own Amazon marketplace [you know, like .co.uk or .ca etc] and thus use the US .com store pay a royalty of 35%. But that’s not the point). Books at the 70% royalty also get charged a “delivery fee” that is supposed to help cover the like…internet and transfer costs associated with Amazon sending the book to customer devices. (I don’t really understand exactly how that cost works, but again, not the point.)
This myth claims that when someone returns a Kindle book, the (self-published) author still gets charged that delivery fee and therefore lose money. Even indie authors swear up and down this is true…but it’s so stupid easy to prove otherwise I don’t understand how this myth persists. (Okay, maybe not stupid easy, as you’ll see in a moment. Still. It doesn’t require special knowledge.)
First of all, you will NOT find any official Amazon or Kindle Direct Publishing (KDP) statements, terms & conditions, etc., that make this claim or say that it’s true. That’s definitely something that would be in the agreement somewhere, legally.
So let’s dive in, shall we?
I’ll go to KDP, where indie authors like myself typically publish their Kindle ebooks. To the KDP reports dashboard, to be exact, and from there to the royalties estimator page. There you’ll find a button that apparently many authors ignore: Download report. This downloads a spreadsheet with a more detailed breakdown of sales and royalties than what is available in the royalties estimator or month-to-date report online.
I’ll download that report and open it up—which I’m doing in Excel. From there, I navigate to the page labeled “eBook Royalty.” This sheet is broken down by date on the left-hand column, that is, the date that the payment was processed (usually but not always the same date the book was purchased). Then the royalties are broken by title, author name, ASIN (a unique code for Amazon to keep track of products, like an Amazon-specific ISBN or SKU), marketplace (US, Canada, etc), royalty type (30%, 35%, 70%), transaction type (standard being a normal sale, other options are a Kindle Countdown Deal or Free Book Promotion), and currency (USD, CAD, etc). If all of those are the same, the transactions for that date are grouped onto one line.
(So if Specific Book had five sales on June 10th, and all five were 70% royalty, standard transactions, on amazon.com in USD, they’d be on one line [my understand is, even if they had different prices, like if you changed the list price partway through the day, which is why it says “Average list price”). If one of them was at a different royalty rate or transaction type—say a countdown deal started partway through the day—or in a different country, it would be on its own line. With me? Good.)
Here’s a screenshot of this month’s ebook royalty report for me (with the lines I’m not talking about blurred because you don’t need to be that deep in my business, lol). The only editing I’ve done to this file is formatting (color, bold) for clarity and the math in cell Q7. I’ve not changed anything from Amazon’s reports in this workbook.
The yellow highlighted line reflects that on June 22, on Amazon.com, an ebook copy of Ties of Frost was purchased at the 70% royalty rate, and one was also returned. This gives, as reflected in column J, a net sale of that ebook for that date of zero (0). I also highlighted in peach for comparison the single ebook copy of Ties of Frost was sold on June 20th, also at 70% on Amazon.com.
On the peach line, you can see the delivery cost for Ties of Frost is 9 cents. $.09. In cell Q7 (the one with a green outline because it’s the active/selected cell), I’ve done the math (you can see the math equation in the formula bar, underlined with red for ease of finding it). It’s (list price-delivery cost) multiplied by 70%. ($4.99-$.09)*.7. For those of you who are a bit removed from learning order of operations, remember we do parentheses first, so it becomes $4.90x70%. 70%=0.7. (I know, I’m being obnoxiously over-explanatory, but this myth is so persistent, I need you to know exactly what I’m doing and why and what it means.)
4.90 x 0.7 = $3.43.
Good, because that’s what the spreadsheet shows my royalty for that book & date were.
So now back to the yellow row, that had a net units sold of ZERO.
…the short version is, clearly, the royalty is also zero. $0.00. If I was charged the delivery cost, that would be -.09. But it isn’t.
The longer version is because of how Amazon pays royalties—they subtract the delivery cost before paying you the royalty—they just take back the royalty.
Think of it like this: Customer pays Amazon $4.99 (plus tax, but we’re going to ignore tax because our royalties are pre-tax as well). Amazon pays Author $3.43. Customer returns book. Amazon returns $4.99 to Customer, because that is what Customer paid Amazon. Author returns $3.43 to Amazon, because that is what Amazon paid Author.
The result? 1-1=0. 1 unit sold minus 1 unit returned equals zero. 3.43-3.43=ZERO.
Not negative.
“But I’ve seen the reports dashboard display a negative amount!”
Yes. Because it doesn’t always work out that the same book is bought and returned for the same royalty rate and marketplace on the same date. Perhaps not even in the same month.
If the customer buys the book on May 31st and then realizes it was a mistake or not the book they thought it was or started it and immediately realized it was not for them, so they return it on June 1st, that is a new report. The purchased and returned book do equal zero, but not on the same day or in the same month. This can confuse authors into thinking they lost money. They didn’t. They just were paid for the book yesterday, or last month, and the money was taken later.
Here’s an example of that, from January of 2024 (again, only “editing” of the file is to color the cells for clarity). On Jan 10th, on Amazon.com in USD at 70% royalty as a standard transaction, someone bought an ebook of A Fated Quest (green highlight). On Jan 14th, with all the same qualifications, someone returned an ebook of A Fated Quest (yellow highlight). (Same person? Who knows. Unimportant. Unless they read the whole book and returned it, in which case, that’s a jerkish thing to do and the equivalent of stealing because they used the entire item for free and I didn’t get paid for them consuming my product, but at least they didn’t also cost me additional money. Anyway. NOT THE POINT, lol.)
I left the non-highlighted A Fated Quest purchase on there as well, simply because it’s a good example of what it looks like when someone outside the US buys a book on the .com site (because they have to and the lower royalty isn’t their fault, to be clear; only love for non-US readers).
Royalty earned on Jan 10=$3.40. Because (4.99-.13)*.7=3.40. (Well, and 2/10 of a cent, which Amazon rounds down, because that’s how rounding works, haha)
Royalty taken out of my earned royalty on Jan 14=$3.40. So -3.40. That works out to zero ($0) because the two transactions. Not -$0.13 as it would be if Amazon charged me the delivery cost on the return.
Got it? Cool? Good.
Myth #2: Amazon gives bonus marketing exposure to books with n (25, 50, 100, whatever) reviews/ratings, like including it in newsletters or features.
First, once again, Amazon/KDP HAS NEVER CONFIRMED THIS.
As best I can tell, this was started by a company that I can no longer recall the name of, selling review services in a post that was long ago deleted, but has been rehashed and reshared and now lives in legend. Often, it starts with, again, people selling services that either are directly selling reviews (illegal, btw) or selling services they claim will help you get reviews. Then, desperate authors looking for validation and for their ship to come in (lovingly, not in a denigrating way; most indie authors are at least a little bit desperate and most creatives desire external validation) tell their followers in an attempt to inspire them to review. Then passionate readers share it because they want to support their favorite authors. Then other authors see it and share it because it gives them hope—if they could just get another X number of reviews, their book will take off!
The only shaky support for this is:
Once upon a time, Amazon had “Top Rated” book lists and it seems that, on average, books that had more ratings would rank slightly higher in the list even if their average rating was slightly lower. Didn’t seem to be tied to an exact number of reviews. I don’t believe those lists exist anymore (?), replaced entirely by the bestselling lists.
I have heard second-hand (from a very successful author in a FB group) that high-level KDP reps have confirm that there is a complicated algorithm that affects what books get featured or the order they appear in search or bestseller lists. Reviews and ratings are a factor…but a very low one. Sales (how many total, consistency—ie, in the last two weeks did this book sell 10 copies in one day which indicates a mere spike or 1 copy every single day that indicates consistent attention) and keywords in the metadata and book description are far bigger factors.
Moreso in the past but even occasionally still, there are some third-party paid promotional sites that only will except books that have some ratings and decent average rating because they only want to promote quality books and that can help weed out really atrocious self-published books. That is not the same as Amazon doing free promo.
Most big indie authors agree: reviews follow sales, not sales follow reviews. If Amazon is going to feature a book, it’s going to be because it’s selling well, and that gets Amazon money, and Amazon likes money. Excluding ARC reviews, more ratings & reviews generally means more sales, especially since, on average, only 1%-10% of readers actually rate or review. Amazon is also highly targeted. If they think you’ll buy a book because of your past purchasing behavior or because you linged on the sales page, they’ll keep showing it to you. It has very little to do with number of reviews. You can find posts in groups discussing this myth and countless forum threads where this is repeatedly debunked by authors.
Ratings and reviews absolutely do provide some social proof that can encourage new readers to take a chance on a book and they absolutely do soothe author souls. We do crave them and the confirmation that people are actually reading our books. Negative reviews absolutely do help readers avoid books that aren’t their cup of tea, which is also a good thing (and conversely, sometimes help readers find books that are their cup of tea, too!).
As far as “you need 50 ratings to be shown in ‘Customers also bought’ or ‘Customers also enjoyed’” (on Amazon or Goodreads), that is demonstrably BS. I’ve seen book on preorder in “Customers also bought.” They had NO reviews!! I’ve seen books with 10 ratings in “Customers also enjoyed”! There are way more factors than number of ratings or reviews.
And take it from someone that half of my books have more than 50 ratings on Amazon and Goodreads, some have over 100, one has over 500 on Goodreads, and several have more than 50 or 100 reviews, there was no fanfare, no sign of promotion, and no sudden bump in sales. I didn’t even notice until I went and looked because there were no sudden and obvious changes in sales that would indicate a big promotional push.
Got it? Good? Good.
Now that we can all let go of these two needlessly stress inducing myths, we can move on a little bit lighter, yes? Yes. :)