Amazon’s delivery fee (cost) is applied to all eBooks published in the KDP 70% royalty program. The fee is a flat $.15/MB of the size of converted content files and it is taken out of each royalty payment whenever an eBook is sold. Your calculated file size and delivery fee are shown on the “Rights and Pricing” tab during the eBook setup process.

One of the methods I use to drastically lower the KDP delivery fee is to optimize my graphics and then convert my EPUB to a MOBI using the new “do not convert images” option in Calibre version 0.8.43 and later. This option forces Calibre to use your optimized .gif or .png files instead of converting them all to .jpg — which is the Calibre default. I had requested over on the MobileRead forums that  this feature be added to Calibre and Kovid Goyal really delivered. That discussion thread is located here: http://www.mobileread.com/forums/showthread.php?t=171866. I have pledged to donate half of the money he is saving me on my picture-heavy eBook sales for the rest of 2012 to Kovid and Calibre.

Summary: Use optimized graphics and Calibre’s “do not covert” option to drastically lower you Amazon KDP delivery fees.

In a future post I will go over how to cut your delivery fees in half using KindleStrip** to remove the full EPUBs from MOBI files that were created using Kindlegen.

**NOTE– Jean-Christian posted in the comments that KindleStrip is now unnecessary as the newest version of Kindlegen has a command line parameter to exclude the source file, which cuts the file size of MOBIs generated through Kindlegen in half. The command line parameter is: -dont_append_source

Amazon has created a smoke-screen of confusion surrounding the “delivery fee” or “delivery cost” associated with ebooks published under their 70% royalty option. This post will clear away some of that smoke.

If you select the 70% Royalty option for your Kindle books published through Amazon’s KDP then you must pay a flat $0.15/MB (rounded up to the nearest kilobyte) whenever you sell a book. The “delivery fee” is determined by the size of a MOBI file you upload when you are setting up your listing. Amazon’s wording is purposefully deceptive because it actually has nothing at all to do with “delivery,” how many times a customer loads a book on a Kindle, or the file size a customer receives or downloads when they make a purchase. It is a flat fee subtracted from your royalty with every sale.

The delivery fee is a strategy they use to give publishers the impression Amazon pays the highest royalty of the big three–Amazon, Barnes and Noble, and Apple–without actually having to pay out at that rate. The truly devious part is that Amazon’s own tools for creating Kindle-compatible MOBI files will actually double or triple the size of any non-MOBI file you upload for conversion. If you use their Kindlegen application to make your own MOBI it will also increase your file size two to three times over because the conversion to MOBI bundles the complete EPUB in so Amazon has future-proof compatibility. This bonus for Amazon doubles or triples the amount we pay in delivery fees.

If you upload your 30MB $6.99 eBook file, and are on a 70% royalty plan, you get dinged for a $4.50 delivery fee with every Amazon sale. Your 70% royalty for each sale is actually [$6.99 - (30MB x $0.15)] x 70% = $1.74. Since your 70% royalty is actually only paying you 25% you are then advised to just use the 35% royalty plan because there is no “delivery fee” at 35%. If I wanted to make the $4.89 royalty implied by the 70% plan I would need to price my $6.99 book at $11.50 so as to accommodate the delivery fee.

Another Example:
My $4.99 15MB book at 70% royalty is:
($4.99 – (15 * .15))*.70 = $1.92

My $4.99 book at 35% royalty is:
$4.99 * .35 = $1.74

If the book was just 1MB of text+cover the 70% royalty would be $3.32. This is a pretty brutal punishment just for offering an eBook that contains high-quality images.

The strategy is underhanded and deceptive. They use an ambiguous phrase like “delivery cost” to make us think it is probably situational or doesn’t apply to us. Then they bury the details and $.015/MB price so we are less likely to find it. And since text-only eBooks are 2MB or under most of the people selling them don’t notice the skimming and don’t understand why someone with a large file has a problem with the “delivery fee.”

If I publish a color comic book, or children’s book, aimed at looking as good as it can look on the Kindle Fire, I either have to charge exorbitantly to counteract the high fees or accept the fact that I will never make more than a 35% royalty from Amazon.

To summarize: If you upload a 30MB MOBI when you create your book listing you will pay a $4.50 fee per sale or have to chop yourself down to 35% royalty.

Solutions: I will detail some workarounds that decrease the size of converted MOBI files in subsequent blog posts.