Thursday, November 17, 2011

There is NO Amazon $.99 Pricing Loophole

There is a nasty rumor in regards to pricing on Amazon to game the system. It's basically showing that self-published authors ARE NOT READING WHAT THEY AGREED TO when they published with Kindle Direct Publishing and if their friend jumps off a bridge, they will go right after them. Ready? Here's how the rumor goes: 

"Guess what? We can make 70% on the $.99 price on Amazon. Here's what you do. Price your Amazon book at $2.99 or above, click 70% option, then go to Barnes and Noble and put your price at $.99. Amazon will match, making it look like your book is a huge deal, AND they will pay you 70% of the $.99 they sell the book for!"

Okay, before we get into why you CAN'T do this, think about it. Would Amazon really leave such a loophole open not in their favor? Probably not. And guess what? They DIDN'T. Authors who are doing this directly violate the KDP Terms and Conditions, specifically the Pricing Page (ref. in 5.3.1 of the Terms and Conditions) Provision Number 4 which states:

4. Setting Your List Price

You must set your Digital Book's List Price (and change it from time-to-time if necessary) so that it is no higher than the list price in any sales channel for any digital or physical edition of the Digital Book. 

But if you choose the 70% Royalty Option, you must further set and adjust your List Price so that it is at least 20% below the list price in any sales channel for any physical edition of the Digital Book. 

By "list price in any sales channel," we mean the suggested or recommended retail price or, if you sell your book directly to end users, your own sales price, for an edition of the book available outside of our Program. 
I am seeing many authors pulling this stunt, some I once thought were ethical and smart business men and women. No longer. Your true colors are shown to me. You are not reading the clearly worded print of the agreements you have made, and you are purposely defrauding Amazon. Remember, when you self-publish, YOU are the publisher. You set your price.

Now if Barnes and Noble decided to discount your sales price, without your approval (which BOTH Amazon and Barnes and Noble have the right to do at any time, read your Terms and Conditions), THEN you would rightfully get 70% of the sales price when Amazon matched it. But Barnes and Noble is not mass reducing all of the indie books to $.99, and when it comes to Amazon wondering about your integrity, I doubt they err on the side of the author. I certainly wouldn't want to be banned from Amazon's KDP for violating their Terms and Conditions, which is exactly what these authors are risking. Read Section 3 of the Terms and Conditions, they can terminate or suspend you at any time, at their discretion.

********UPDATE 11/18 1:24 PM **********
A phone conversation with an Amazon KDP representative confirmed that it is against the Terms and Conditions to abuse price matching and that there is a mechanism to monitor and adjust for abuse. Authors caught abusing the price matching system would be removed. Price matching for FREE is not included in this provision as there is no royalty paid to the author. Authors may use price matching to make their book FREE on Amazon. 

A robotics engineer asks his business partner to marry him, but a previous one-night stand is having his baby. CANCELLED is available on Amazon, Barnes and Noble, and Smashwords WIP: SERVED Two never married parents fight over their toddler's upbringing and moving on with their lives, without each other;(status: outlining)


  1. Thank you for the heads up. I hadn't heard of this "scam." Will tweet!

  2. I saw someone say they were doing this on a certain, popular discussion board. I didn't even understand what she meant about still getting 70% at the time. I kept thinking, "What? No, you would still get 30%." lol. This just shows I don't even have it in me to be unethical if I can't even understand that others are doing it, lol. The thing I DON'T like abo0ut this is people who take advantage, often times, end up hurting, not just themselves, but everyone around them. I really hope scammers don't ruin it for therest of us.

  3. sad, but true. people often tarnish a great thing by abusing their opportunity

  4. I'm glad I'm able to get the word out. I memorize just about everything I read (unintentionally). I combed through every shred of Amazon documentation I could before I published. I didn't want to accidentally give away any rights I did not intend to give.

  5. I had heard mumblings, but I'm the person who comes to a complete stop at stop signs. A rule follower from sun up to sundown. Interesting that people thought Amazon, who's been around the block a time or two, was this easily tricked. I wonder if these people cheat the IRS year after year. ;-)

    Thanks for sharing!

  6. One thing that everybody might want to consider about this issue is the following. If Amazon expected everyone to follow this rule they would throw out all the authors who make their books free on Smashwords in order to have Amazon match that price. Think about that TOP 100 FREE list that Amazon makes available. If everyone followed the terms of the KDP agreement, the only books that would be free would be those whose copyright has ended because it's sixty-five (or so) years old. There would be NO new free books. There is a reason that Amazon has that little button on each book page that says "Found a Lower Price?"

    While I agree that the language in the agreement is pretty clear, Amazon does not follow it. I have never heard of an author being banned from KDP for overpricing their product. If I'm wrong, please let me know.

    I am one of those rule breakers who, at one point, got the 70% commission for a 99-cent book by doing the very thing you described above. I did end up switching it back to the $2.99 price. But at no point did Amazon contact me to ask me to do so.

    If anybody has heard of someone being reprimanded or banned for doing this, I'd like to hear about it. There could be several incidents of this that I just haven't heard of yet.

    Sometimes rules are meant to be broken. Amazon makes a lot of money from independent e-publishers like ourselves. They know that. They have an excellent delivery system for our product. But they are aware that the authors don't follow every single rule set forth in the KDP agreement.

  7. By the way, I think I may be the one who wrote that post you quoted above. It was a pricing experiment. What I would like to do is go back to that post and add that every author should read the KDP agreement and use their own judgement.

  8. I wasn't actually talking about you, SJ. I had no idea you were following it. There is a difference with the FREE vs getting more money from Amazon. When you price your book FREE on Smashwords and Amazon matches suit, Amazon gives you nothing. Also, there is the issue that Amazon doesn't allow a FREE price, so therefore there was no way you COULD match the price. It still technically violates the KDP agreement, but I don't see a strong argument for Amazon to collect damages on a book that is free.

    In this scenario, authors are tricking Amazon into giving them an EXTRA $.35 on a $.99 price point. There are tangible pennies coming off Amazon's ledger and going to the author. It's a clear cut case of the author making $.40 on Barnes and Noble and using Amazon's system to trick it into giving the author $.70. And these books are catapulting up the charts, so they aren't just one or two books. Every 100 books is $35 to Amazon, and multiplied by the authors doing it, the books they are selling per day, that will compound very quickly.

    And your argument that they make enough money holds no weight with me. That's like saying it's okay to steal from your agent or publisher, because he or she makes more than enough money on their OTHER authors. Or that you should steal from your grocery store because the company is big, and makes more than enough on other shoppers.

    I won't say "Make your own decision." You either agree to the contracts you sign, or you don't (And I've never done the free book trick either, and now that you thankfully point it out to me, I probably won't). And perhaps no one has been "punished" though ethically, threat of consequence is not the only reason to do the right thing. But I sure wouldn't want to be someone testing this out when Amazon catches on and decides to do something about it.

    I've seen all kinds of crazy things happen with listings on Amazon, many times when the author has not done anything wrong. Just on suspicion of copyright infringement or poor editing, I've seen books pulled for weeks on end. Maybe Amazon has turned a blind eye to other violations of the KDP, but I doubt they will do that for long on a provision that is costing them money.

    What say the rest of you? Do you think I'm off base and that it's okay to break the KDP because Amazon makes enough money?

  9. Great post. As an Indie author I couldn't figure out how people could do this. The only way I can is to click on 35% royalty rate for a .99 cent read. It is sad though when you think how much work goes into writing a book and the author only gets a quarter.

  10. For about a month I was party to this unintentionally when I legitimately wanted to raise my price and a Kobo/Diesel prices were keeping me at 99cents. FYI that it doesn't work out to 70cents. At the 70% rate you are charged the delivery fee (but not at 35%), so they take that cut.

    That's just fact-clearing, though. It's not ethical to intentionally try to scam Amazon like this AND actively promote the practice. No author should do this on purpose. Amazon can drop you in an instant and no other distribution channel is as effective or profitable.

    I don't think this is the same as the free practice where an author gets nothing and is primarily used as a promotional tactic to get EVERYONE more money by upping the sales on other items. The point of Amazon's price matching rules is to ensure they can say they have the best prices and their business is not hurt through undercutting. Their willingness to allow free sales through price matching is a different beast entirely.

  11. I've been reading up on this a bit more since I first posted. I think that there's a lot of give and take between Amazon and independent authors. Amazon is aware that they have the power to do whatever they want when it comes to writers who have no agent or publisher. However, they have opened up a huge world of opportunity for us at the same time.

    They are determined to match the lowest price. They have it built into their systems. As an Indie author, I knew I needed to use every tool necessary in order to get my name out there. Amazon's price matching system is a tool.

    I'm not saying that I would go back and do it again, but getting the 70% on a 99-cent book is happening. When I think about what it takes to produce a book, a cover and get everything uploaded to Amazon correctly, it seems like getting an extra thirty-four or thirty-five cents isn't that big of a deal.

    There may come a time when Amazon starts banning authors for doing it. But until they do, I'm not going to criticize any new author trying to make their dream come true.

  12. I'm sorry S.J. but when you say "When I think about what it takes to produce a book, a cover and get everything uploaded to Amazon correctly, it seems like getting an extra thirty-four or thirty-five cents isn't that big of a deal." it troubles me.

    Part of being a published author, especially doing it yourself, is pricing your product to recoup your costs. Each author must choose his or her price point in accordance with their sales to earn out on the time frame they need to. I spent about $500 getting my book to press, not including my work hours, just money out of my pocket. I'm on target to earn that money back in 6-7 months if I keep my current pricing and sales rate. That's also when I plan to have my next book come out, so that I'm only negative on one book at a time. The $.99 price point and FREE books are usually used by established authors with more than one book already out and only on books they've already earned out (D.D. Scott for example didn't make Bootscootin' Blahniks free until after she recouped her costs on the book).

    No one says as a self-published author, when you publish at $.99, you deserve the 70% royalty. Amazon and Barnes and Noble have calculated the "cost" they need to recoup of every sale. They run servers, admin, support, plus a ton of other overhead to make the Whispernet and Nook networks operate.

    On a $.99 book, Amazon is recouping $.64. On my book at $2.99 (the lowest legitimate price in their system for 70%) they make $.94 with the small file transfer fee. They are ALREADY subsidizing their cut with the 35% royalty on the $.99 book. Amazon also advertises the Kindle, the device our books are read on. They also pay for new development in that device to be on the cutting edge.

    So I do criticize any author that purposely (not accidentally because they didn't realize) plays the price matching game to get 70% on the $.99 price point. It's unethical, and it's taking resources from Amazon that likely would have been spent for the better interests of the KDP community as a whole.

  13. Interesting topic Elizabeth. Thanks for bringing it to my attention.

  14. Thanks so much for posting this. I think the bottom line is that it's not ethical to do something like this since it violates terms of service. It seems seems almost like stealing. I'm also glad you mentioned in your update that the "free" price does not violate terms of service because I wanted to publish a free short story on Smashwords, but I knew I couldn't publish for free on Amazon. I'm glad to know I can get it down to free with price matching without doing something that violates Amazon's terms.