UPDATED 3 August 2014
It was reported that Amazon had updated its pricing policy and would now be paying 70% for books priced below $2.99 if the price were the result of price-matching a competitor (this is true). An indie author was blogging (read: bragging) how this new policy could be used to trick Amazon into paying a 70% royalty for a book normally priced in the 35% royalty category (ie., books priced below $2.99 or higher than $9.99): the trick, it was suggested, was to price one’s book at $0.99 on, for example, B&N and $2.99 on Amazon then have someone inform Amazon of the lower B&N price. Thus, when Amazon lowered their price to match B&N’s price of $0.99, the author would still be paid the 70% royalty and not 35%.
Instead, what happened was that Amazon booted said author off the Kindle site for violating its Terms and Conditions which state you cannot deliberately offer your book to a competitor at a list price lower than you offer your book to Amazon.
What makes the author’s actions even stupider was that she didn’t understand (or perhaps even read) the whole Kindle contract or the Kindle Pricing Page; scroll down to Section 5 and you will find this:
v. Non-Compliance: If at any time your Digital Book does not meet the requirements for the 70% Royalty Option, the Royalty for the Digital Book will be as provided in the 35% Royalty Option and we can adjust previously reported or paid Royalties based on the 35% Royalty Option.
If the price match is the result of deliberately lowering your price on another site, and this results in your book falling into the 35% category, that is what you will be paid. Amazon will only continue to pay you 70% if the lower price is not your fault; i.e., a retailer using the distributor discount model discounts your book to beat Amazon’s price. And if Kindle’s system accidentally pays you 70% for any reason, rest assured it will sort out its error and refund itself from your account.
This incident is yet another example of the dangers of trying to manipulate Amazon’s system and thinking a) that you can get away with it, and b) that system manipulation is a good substitute for a proper marketing plan. It isn’t.